Court Opinion

ID: 3034311
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:50:53.473973+00
Date Added: 2024-06-11T12:03:47.017631
License: Public Domain

United States Court of Appeals
                            FOR THE EIGHTH CIRCUIT
                                   ___________

                                   No. 03-1127
                                   ___________

United States of America,             *
                                      *
            Plaintiff-Appellee,       *
                                      * Appeal from the United States
      v.                              * District Court for the Western
                                      * District of Missouri.
James L. Parker,                      *
                                      *
            Defendant-Appellant.      *
                                 ___________

                             Submitted: June 11, 2003
                             Filed: April 20, 2004 (Corrected: May 5, 2004)
                                   ___________

Before MELLOY, HANSEN, and SMITH, Circuit Judges.
                           ___________

MELLOY, Circuit Judge.

       James L. Parker was charged in a twenty-count indictment with one count of
conspiracy to commit mail fraud in violation of 18 U.S.C. § 371, eight counts of mail
fraud in violation of 18 U.S.C. § 1341, and eleven counts of money laundering in
violation of 18 U.S.C. § 1956. A jury convicted him of each of these charges, and the
district court1 sentenced him to fifty-one months imprisonment and ordered him to
pay restitution in the amount of $704,720.00. Parker appeals his conviction, making
several challenges to the sufficiency of the evidence, evidentiary rulings, and the jury
instructions. We affirm.

                                           I.

       On April 12, 2000, a federal grand jury in the Western District of Missouri
indicted Parker, his son, Ethan Parker, and Lyle Perry on charges arising out of their
business activities with Parker’s corporation, FCI Marketing, Inc. (“FCI”). All three
co-defendants were charged with conspiracy to commit mail fraud. Only Parker and
Perry, FCI’s vice president, were charged with mail fraud, while Parker alone was
charged with money laundering.

       In 1981, Parker, together with his wife, formed FCI’s predecessor company,
Factory Connections, Inc. That company foundered, and it filed bankruptcy in 1987.
Burdened by personal, as well as corporate, debt, the Parkers themselves also filed
a petition for bankruptcy in 1988. The Parkers revamped their business approach
and, in June of 1989, founded FCI. James Parker functioned as the president and
controlling partner.

       Parker’s concept in forming FCI was to sell exclusive distributorships to
investors who would sell FCI brand-name automotive parts on a consignment basis.
In exchange for an initial investment of between $30,000-$250,000 (depending on
the initial package of inventory and the size of the investor’s territory), FCI agreed
not to set up other distributorships within the boundaries of the agreed-upon
exclusive geographic territory. In addition, FCI’s sales teams traveled to the

      1
       The Honorable Howard F. Sachs, United States District Judge for the Western
District of Missouri.

                                          -2-
distributors’ territories and set up accounts with garages. After an account was
established, the sales teams installed FCI cabinets and racks at these locations and
stocked them with FCI brand products, namely brakes, spark plugs, belts, tire repair
kits, starters, alternators, and other commonly used aftermarket automobile parts.

       The investors, or “distributors,” serviced these garages and replaced the
depleted inventory with parts that the distributors purchased directly from FCI. When
servicing the garages, the distributors also collected money for the parts that the
garages’ mechanics had used since the last servicing. Therefore, distributors paid FCI
for the inventory they used to stock garages, but the distributors themselves did not
receive any payment for the products until mechanics actually used them. The
distributors maintained a line of credit with FCI so that they could adequately service
their accounts.

       Investors’ execution of Parker’s consignment-based business model proved
considerably more difficult to carry out successfully than Parker advertised orally and
in printed media. At trial, the government sought to prove that Parker, in conjunction
with his co-defendants, fraudulently induced investors to purchase FCI
distributorships by making several false statements. The substance of these
statements concerned the quality of the automotive parts sold under the FCI brand
name, the quality of the distributorship accounts, FCI’s business history, and the
amount of actual and projected income.

       For example, Parker’s written promotional packages touted FCI products as
being of the highest quality. However, the evidence at trial showed that many of the
products, particularly the starters, alternators, and brakes, were of substandard
quality. This poor quality created friction between the distributors and the garages
that used these FCI products. Parker himself claimed in a 1996 lawsuit against his
brake manufacturer that the brakes were subject to premature wear, squealing, and
disintegration and that FCI lost distributorships as a result of the problems.

                                         -3-
Moreover, in a 1996 civil deposition, Parker claimed FCI had lost thirteen distributors
as a result of the inferior quality of the starters and alternators. Even so, when
distributors complained to Parker about the products, Parker assured the complaining
distributors that they were the only ones experiencing recurrent problems. In
addition, testimony at trial established that Parker often responded to these
complaints by accusing the mechanics of improperly installing the FCI products,
which exacerbated the tension between the distributors and the garages.

       Parker also represented that FCI would provide distributors with a professional
sales staff to set up high quality accounts. He described the accounts as garages that
employed several mechanics and had two or more bays. Instead, the government
alleged that the “professional” sales team members had little to no training and that
the accounts were oftentimes no more than dump sites for the sales person’s
inventory. There was evidence that FCI sales teams had set up accounts at a bait shop
and at a junk yard and that, in order to entice garage owners to accept an FCI account,
sales members would tell the owners that they need not use the product but could
keep it on hand for emergencies. The government alleged that Parker knew of these
deficiencies but continued to promote his sales staff as a professional one that would
establish income-producing accounts at high volume garages.

       What is more, FCI promotional materials included documentation concerning
the profitability of owning an FCI distributorship. The figures contained in these
materials were compiled by Parker and co-defendant Perry, who was a certified public
accountant. In 1993, at FCI’s annual seminar, Parker circulated an informal income
and sales survey. The idea to conduct such a survey was an impromptu one, and
distributors were told to estimate their sales revenues. Based on these responses,
Perry compiled a chart of gross and net incomes for the current year and, based on a
10% yearly growth rate, projected gross and net income for the following two years.

                                         -4-
      In 1994, Parker again surveyed distributors at FCI’s annual convention. The
figures obtained from this survey were significantly lower than the 1993 figures, and
Parker and Perry compiled a new chart with the updated 1994 figures. When the
survey showed yet another decline in income in 1995, Parker did not update his
promotional materials with the 1995 figures. Instead, he continued to provide
prospective investors with the 1994 chart. Moreover, the 1994 chart continued to
show a 10% annual increase in sales and profits even though the results of Parker’s
survey showed a decline in income for two consecutive years. After 1995, Parker did
not conduct any further surveys, nor did he tell new distributors that the most current
data showed significantly less profitability and growth than the information he
provided them.

       Representations concerning the profitability of an FCI distributorship, the
projected incomes, the professionalism of FCI’s sales staff, and the quality of its
goods and accounts were not the only bases of the crimes charged in the indictment.
At trial, the government produced evidence of other alleged misrepresentations
Parker made that tended to prove his intent to deceive and to induce potential
investors into buying FCI distributorships. Like the above-mentioned statements,
these other misrepresentations were mailed to interested investors as part of FCI’s
promotional literature packet. For instance, the government alleged that Parker
falsely represented to potential investors that FCI distributorships were 100%
successful when, in fact, Parker knew of failed distributorships and of distributorships
that were not profitable. Similarly, in print media, FCI advertised that it was
“Number 1,” and the advertisement further indicated that this ranking was based on
an “Independent survey conducted by FCI Marketing Inc.” No such survey had ever
been conducted.

       FCI was headquartered in St. Joseph, Missouri, and prospective investors
commonly traveled to FCI headquarters to meet with Parker before purchasing
distributorships. As part of Parker’s sales pitch to several investors, he informed

                                          -5-
them that the profitability of his son, Ethan Parker’s, distributorships was typical.
Parker failed to inform prospective investors, however, that his son received
substantial inventory free of charge and had a much higher line of credit than ordinary
distributors. The government alleged that Parker’s representations regarding the
normalcy and the profitability of his son’s distributorships were made (or omitted)
with the fraudulent intent of inducing and deceiving prospective investors.

                                          II.

       Parker’s first point of contention on appeal concerns the trial court’s admission
of the expert testimony of Steven Toporoff. Toporoff is a government lawyer with
the Federal Trade Commission. His job title, specifically, is Franchise Program
Coordinator. The thrust of his testimony summarized the scope and substance of the
so-called Federal Trade Commission’s “Franchise Rule.” Without offering any
opinion as to whether or not FCI distributorships were “franchises” within the
meaning of the Franchise Rule, Toporoff testified as to the Federal Trade
Commission’s definition of a franchise and the disclosure obligations under federal
franchise law that accompany classification as a franchise.

      Toporoff testified that the Franchise Rule requires that a franchisor make
several disclosures to potential investors. First, a franchisor must disclose the total
number of franchises that have opened, as well as the total number of those that have
closed. In addition, a franchisor must disclose its litigation history to the extent it
implicated the franchisor’s wrongdoing . Franchisors are also required to disclose all
bankruptcy proceedings in which the franchise or its principals have been involved.
And while the Franchise Rule does not require that a franchisor make any financial
disclosures, it governs those that are made. For example, a statement as to historical
performance must meet generally accepted accounting principles, and a projection
must proceed from a reasonable basis.

                                          -6-
      At trial, Parker’s counsel objected to Toporoff’s testimony on relevancy
grounds, while counsel for his co-defendant, Perry, objected to the testimony on the
ground it constituted an impermissible legal conclusion. The trial judge overruled the
objections, agreeing with the government’s contention that the testimony was
properly admissible to show intent and motive. At Parker’s request, the court did,
however, give the jury the following cautionary instruction at the conclusion of
Toporoff’s testimony:

             I advise you that whether FCI, that is the corporation that we’re
      [sic] been talking about, whether FCI created franchises is not
      something that the witness established by his testimony. He wasn’t
      asked that; he didn’t answer any such question. The question of whether
      a franchise or franchises were created by FCI with regard to its
      distributorships is something that would have to be determined to the
      extent it is pertinent by other evidence in the case.

             And I further remind you that even if FCI did create franchises,
      this prosecution is not a lawsuit claiming violation of the Federal Trade
      Commission, FTC requirements. The question in this case, at least one
      of the ultimate questions, would be whether one or more of the
      defendants knew of the obligations under the FTC written rules, whether
      one or more of them knew of the obligations and failed to comply in
      order to hide things from the investors and to deceive them into
      becoming distributors.

Parker did not object to the substance of this cautionary instruction.

       On appeal, Parker argues the trial court erred in admitting Toporoff’s testimony
for three reasons. First, Parker contends the testimony invaded the province of the
judge and the jury because it constituted opinion testimony concerning legal
standards. Second, he reasserts his relevancy objection. And third, for the first time,
he argues that, even if the testimony were relevant, the district court should have

                                         -7-
excluded it under Federal Rule of Evidence 403 because, according to Parker, its
probative value was substantially outweighed by its prejudicial effect.

      We review the district court’s decision to admit evidence over a party’s
objection for abuse of discretion. United States v. Rock, 282 F.3d 548, 551 (8th Cir.
2002). The government argued, and the trial court found, that the testimony was
properly admissible to show Parker’s intent to deceive. We agree.

       Among other charges, Parker was convicted of mail fraud in violation of 18
U.S.C. § 1341. This statute prohibits the use of the mails to execute “any scheme or
artifice to defraud, or for obtaining money or property by means of false or fraudulent
pretenses, representations, or promises.” 18 U.S.C. § 1341. Intent to defraud is an
essential element of proving a violation of 18 U.S.C. § 1341. See United States v.
Manzer, 69 F.3d 222, 226 (8th Cir. 1995) (to prove a violation of 18 U.S.C. § 1341,
government must establish “(1) the existence of a scheme to defraud, and (2) the use
of the mails . . . for purposes of executing the scheme”). Toporoff’s testimony was
relevant to establishing this essential element.

       Toporoff did not testify that FCI distributorships were franchises subject to the
Federal Trade Commission’s Franchise Rule. Thus, contrary to Parker’s assertion,
Toporoff did not offer an impermissible legal opinion. He testified as to the scope
and obligations of the rule. Other evidence supported a finding that FCI
distributorships were, in essence, franchises. For instance, in the late 1980's, the State
of Nebraska sent Parker a letter, in which it informed him that FCI may be subject to
compliance with Nebraska’s seller-assisted marketing regulations. In addition,
Parker’s promotional materials indicated that the information contained therein was
given in compliance with state and federal regulations, and the referenced information
included disclosures that Toporoff testified were required by the Franchise Rule.

                                           -8-
       The most telling evidence that Parker believed he was marketing franchises and
was subject to compliance with the Franchise Rule was a document drafted by his
attorney. In 1995, Parker contemplated expanding FCI and incorporating a new
business entity, FCI Franchising, Inc. While Parker ultimately did not pursue this
venture, the document describes the FCI Franchising, Inc.’s franchises as similar to
the distributorships offered by FCI Marketing, Inc. Indeed, the description of FCI
Franchising, Inc.’s franchises is identical in substance to that of an FCI Marketing,
Inc. distributorship:     “FCI [Franchising, Inc.] sells franchises to operate
distributorships which sell aftermarket autoparts on consignment to automobile repair
shops, service centers, and repair garages,” while FCI Marketing, Inc. similarly
consists of “a marketing program of placing assortments of major product lines on
consignment at Automotive Repair Shops and Garages.”

       In short, the government presented sufficient evidence from which a reasonable
jury could have found that FCI was subject to the Franchise Rule, that Parker knew
he was selling franchises, and that he was aware of the obligations of the Franchise
Rule. Therefore, Toporoff’s testimony concerning the scope and substance of the rule
was relevant, as indicated by the trial judge in his cautionary instruction, to show
Parker’s intent to deceive if he knowingly failed to comply with the rule. The jury
was not compelled to make such an inference, and the trial judge specifically
instructed the jury that Toporoff’s testimony was relevant only if other evidence
established that FCI distributorships were subject to the Franchise Rule. Under these
circumstances, the trial court did not abuse its discretion in admitting Toporoff’s
testimony over Parker’s relevancy objection, especially in light of the cautionary
instruction that limited the jury’s use of the testimony to the issue of Parker’s intent
to deceive.

      Confronted with an almost identical argument to Parker’s, the Fifth Circuit
Court of Appeals affirmed the admission of evidence of violations of civil banking

                                          -9-
regulations in a bank fraud trial. In United States v. Harvard, 103 F.3d 412 (5th Cir.
1997), the court held that evidence of banking regulations violations was relevant to
show the defendant’s motive or intent. Id. at 422-23. The court reasoned that the
regulations,

      tended to prove that Harvard had a motive to make false entries in order
      to hide the nature of the sham loan . . . . Evidence that Harvard’s non-
      disclosure of the “consulting fee” was in violation of civil banking
      regulations went toward showing Harvard’s knowledge of his duty to
      disclose the fee and his motivation to hide his receipt of the fee.

Id. at 422.

       In yet another similar case to come before the Fifth Circuit, the court in United
States v. Parks, 68 F.3d 860 (5th Cir. 1995), affirmed the district court’s admission
of evidence of civil banking regulations on the ground that the evidence was relevant
to show intent and motive. Id. at 866-67. In that bank fraud case, the court held,
“Evidence of violations of civil banking regulations cannot be used to establish
criminal conduct. Evidence of such violations may, however, be admitted for the
limited purpose of showing the defendants’ motive or intent to commit the crime
charged.” Id. at 866 (internal citations omitted). As in Harvard and Parks, the
government in the present case was charged with proving intent to defraud, and the
district court took painstaking care to guard against the possibility that the defendant
would be convicted of a federal crime because he violated civil regulations.

      The paramount concern for the trial judge in these types of cases is not one of
relevancy, because, as discussed above, evidence of civil violations is clearly relevant
insofar as a defendant’s knowledge and violation of the regulations are relevant to
show intent and motive. Instead, the question is one of undue prejudice. The district
courts in Harvard, Parks, and in the present case recognized the potential for unfair

                                         -10-
prejudice and confusion and guided the juries’ use of such evidence by instructing the
juries as to its proper, limited use.

       Moreover, Parker did not object to Toporoff’s testimony at trial as being
unduly prejudicial, and we are not swayed by his Rule 403 argument on appeal,
particularly in light of the district court’s cautionary instruction. The Federal Rules
of Evidence instruct that relevant evidence is admissible unless “its probative value
is substantially outweighed by the danger of unfair prejudice, confusion of the issues,
or misleading the jury, or by considerations of undue delay, waste of time, or needless
presentation of cumulative evidence.” Fed. R. Evid. 403. To the extent Toporoff’s
testimony implicated Rule 403 concerns, the district court adequately minimized the
testimony’s prejudicial impact. The court instructed the jury regarding the Federal
Trade Commission regulatory evidence and guided the jury’s consideration of such
evidence by way of a cautionary instruction, which immediately followed Toporoff’s
testimony. The district court was mindful of the potential prejudice that this
testimony could have on Parker’s trial and, accordingly, explicitly admonished the
jury that the trial was “not a lawsuit claiming violation of the Federal Trade
Commission, FTC, requirements.”

       We conclude that, in light of the court’s cautionary instruction and able
guidance to the jury, the court did not abuse its discretion, much less commit plain
error,2 in admitting Toporoff’s testimony. The trial judge employed appropriate
measures to prevent undue prejudice and jury confusion that otherwise could have
resulted from evidence that Parker may have violated Federal Trade Commission civil

      2
        Parker did not object to the admission of Toporoff’s testimony on the ground
it was unduly prejudicial. Instead, he objected to the testimony as irrelevant. To the
extent that Parker’s appeal is based on evidence to which he did not object at trial, our
standard of review is plain error. See United States v. Whitetail, 956 F.2d 857, 861
(8th Cir. 1992).

                                          -11-
regulations. Therefore, we conclude that the trial court properly admitted Toporoff’s
testimony for the limited purpose of showing intent and motive.

                                           III.

      We turn next to Parker’s second argument for reversal—that is, whether the
government presented sufficient evidence to support his mail fraud conviction.
Specifically, Parker claims that the government failed to sustain its burden of
negating all reasonable interpretations of the allegedly false statements that would
render the statements literally true. In the alternative, Parker argues that the trial
judge committed plain error in failing to sua sponte instruct the jury that, if under one
reasonable construction of the allegedly false statements the statements were factually
correct, the jury must return a verdict of not guilty.

                                           A.

        “We review the sufficiency of the evidence de novo, viewing evidence in the
light most favorable to the government, resolving conflicts in the government’s favor,
and accepting all reasonable inferences that support the verdict.” United States v.
Washington, 318 F.3d 845, 852 (8th Cir. 2003). “The verdict must be upheld if ‘there
is an interpretation of the evidence that would allow a reasonable- minded jury to find
the defendant[ ] guilty beyond a reasonable doubt.’” United States v. Nambo-Barajas,
338 F.3d 956, 960 (8th Cir. 2003) (quoting United States v. Vig, 167 F.3d 443, 445
(8th Cir. 1999)). The standard of review is, thus, a strict one, and a jury’s verdict will
not be lightly overturned. “Reversal is appropriate only where a reasonable jury
could not have found all the elements of the offense beyond a reasonable doubt.”
United States v. Armstrong, 253 F.3d 335, 336 (8th Cir. 2001).

                                          -12-
                                           B.

       To prove mail fraud, the government bore the burden of proving: (1) a scheme
to defraud by means of material false representations or promises, (2) intent to
defraud; (3) reasonable foreseeability that the mail would be used, and (4) the mail
was used in furtherance of some essential step in the scheme. 18 U.S.C. § 1341; see
also United States v. Frank, 354 F.3d 910, 916 (8th Cir. 2004) (conviction under 18
U.S.C. § 1341 requires proof that the defendant “voluntarily and intentionally devised
or participated in a scheme to defraud the United States by concealing his assets, that
he entered into the scheme with the intent to defraud, that he knew that it was
reasonably foreseeable that the mails would be used, and that he used the mails in
furtherance of the scheme”). Parker’s challenge to the sufficiency of the evidence
implicates only the first element—that is, whether the government proved the falsity
of his statements. The government alleged that the scheme to defraud in this case
consisted of Parker making a number of false representations, nine of which the
district court enumerated in its instructions to the jury. To support his conviction, the
government must have proved that Parker knowingly made at least one of the nine
false representations as part of the scheme to defraud.

       Parker relies on United States v. Anderson, 579 F.2d 455 (8th Cir. 1978) for
the proposition that the government was required to disprove all interpretations of his
allegedly false statements that would render them factually true. First, it is not
altogether clear whether there is a legal basis for Parker’s argument because the cases
he cites refer to an external source of ambiguity. E.g., United States v. Whiteside,
285 F.3d 1345, 1351-52 (11th Cir. 2002) (“In a case where the truth or falsity of a
statement centers on an interpretive question of law, the government bears the burden
of proving beyond a reasonable doubt that the defendant’s statement is not true under
a reasonable interpretation of the law.”) (emphasis added); United States v. Prigmore,
243 F.3d 1, 18 (1st Cir. 2001) (looking to defendant’s asserted reasonable

                                          -13-
interpretation of federal regulation and stating, “if the evidence at trial gives rise to
a genuine and material dispute as to the reasonableness of a defendant’s asserted
understanding of applicable law, the judge, and not the jury, must resolve the
dispute”) (emphasis added); United States v. Rowe, 144 F.3d 15, 21-23 (1st Cir.
1998) (finding that government bore burden of negating reasonable interpretations
because a reasonable interpretation of the underlying disclosure requirement would
render the defendant’s statement true); United States v. Migliaccio, 34 F.3d 1517,
1523-25 (10th Cir. 1994) (reversing and remanding for new trial where district court
refused to instruct on ramifications of ambiguity of healthcare reporting procedures
in a mail fraud case); Anderson, 579 F.2d at 459 (finding government had duty to
disprove defendant’s interpretations of statements where ambiguity arose from
certification clauses in defendant’s reimbursement invoices). Nevertheless, for the
reasons stated below, we need not reach that issue today.

      In Anderson, the defendant was convicted of making false statements in
matters within the jurisdiction of a federal agency, to wit, the Federal Highway
Administration. Anderson, 579 F.2d at 457. The events that gave rise to the charges
against Anderson arose out of a federally-funded road construction project. Id. The
defendant obtained certain materials and labor free of charge through an unrelated
federal reimbursement program. Id. Nevertheless, he submitted a claim to the
Federal Highway Administration for full reimbursement without disclosing that he
had been reimbursed for some costs under the unrelated federal program. Id. The
defendant, therefore, was reimbursed twice for the same work. Id. at 457-58.

       In submitting his claim for reimbursement to the Federal Highway
Administration, the defendant certified that “funds have not been received from the
State or expended for such services under any other contract agreement or grant.” Id.
at 459. The government alleged that this certification was false. Id. On appeal after
his jury conviction, the defendant argued that the government failed to prove the

                                          -14-
falsity of his statement because a host of reasonable interpretations would have
rendered the ambiguous certification statement true. Id. The Anderson court agreed
and held that, when the statement alleged to be false is facially ambiguous, “it [is]
incumbent upon the government to introduce proof sufficient to establish the falsity
of the statements as well as the defendant’s knowing and willful submission of the
statements. In carrying out that burden the government must negative any reasonable
interpretation that would make the defendant’s statement factually correct.” Id. at
460.

       Parker’s reliance on Anderson is misplaced. We held in Anderson that the
government bears the burden of negating literally truthful interpretations of
statements in a fraud case when the statements (1) are ambiguous and (2) are subject
to reasonable interpretations. See id.; accord United States v. Colin Anderson, 879
F.2d 369, 376-77 (8th Cir. 1989) (rejecting contention that government bears burden
to disprove all of defendant’s interpretations of allegedly false statement and holding
that government bears burden to “negative only any reasonable interpretation of an
ambiguous statement. The statements at issue here—‘never been in force’ and ‘null
and void’—have accepted meanings. It was the jury’s role then to determine whether
Lundin made these unambiguous statements with the required knowledge that they
were false.”). Parker’s statements were neither facially ambiguous, nor were they
subject to multiple reasonable interpretations. Consequently, under the facts of this
case, the government did not have the burden to negate the stretched interpretations
Parker now offers on appeal.

       To accept Parker’s argument that the government failed to sustain its burden
of proof at trial, we would have to find that statements, such as FCI had been in
business since 1977, FCI was ranked “Number 1” based on an independent study,
FCI’s “planned program” was 100% successful, FCI supplied the best quality auto
parts, and FCI established high quality accounts for distributors, were ambiguous and

                                         -15-
subject to multiple rational interpretations. See Anderson, 579 F.2d at 460. Even
under the most generous construction of ambiguity, Parker’s statements are clear and
are not subject to reasonable interpretations that would render them true. Unlike
Anderson, there is nothing facially ambiguous about Parker’s statements. To the
extent Parker offered differing explanations of the meaning of his statements, the jury
evidently rejected them, and we cannot say that its conclusion was not based on
sufficient evidence.

       For the same reasons discussed above, the district court did not commit plain
error in failing to sua sponte give an instruction on the additional proof required if
ambiguity were found to reside in Parker’s statements. Defendants are entitled to
instructions on their theories of defense only insofar as those theories are supported
by an adequate factual basis. See, e.g., Mathews v. United States, 485 U.S. 58, 63
(1988) (stating that defendant is “entitled to an instruction as to any recognized
defense for which there exists evidence sufficient for a reasonable jury to find in his
favor”). Parker’s strained interpretations of facially unambiguous statements do not
entitle him to an instruction on this theory, and certainly the district court’s failure to
sua sponte give such an instruction does not rise to the level of clear error. Moreover,
even if he had been entitled to it, there was more than sufficient evidence at trial to
negate all interpretations of Parker’s statements that would have made them literally
truthful. Therefore, to the extent any error was committed, it was harmless.

       In short, we have examined the evidence in the light most favorable to the
government and have considered each of Parker’s arguments urging reversal of his
mail fraud conviction. We conclude that the evidence was sufficient to sustain the
conviction. Moreover, the errors that Parker claims require reversal in this case, even
if committed, were harmless. This is so because the evidence, viewed as a whole,
strongly demonstrates the falsity of Parker’s statements. And because Parker’s
statements were not facially ambiguous and because they were not subject to any

                                           -16-
reasonable interpretations, the district court did not commit clear error by failing to
sua sponte instruct the jury on the legal effect of an interpretation that would make
the statements literally correct. Accordingly, we affirm the district court’s denial of
Parker’s motion for new trial.

                                         IV.

       Parker’s third argument on appeal posits that the trial court abused its
discretion in submitting a “deliberate ignorance” instruction to the jury because the
evidence showed actual, not constructive, knowledge. “[I]n reviewing a district
court’s decision to give a willful blindness instruction, we must review the evidence
and any reasonable inference from that evidence in the light most favorable to the
government.” United States v. Hiland, 909 F.2d 1114, 1131 (8th Cir. 1990). In this
case, the district court instructed the jury that it could find that Parker acted
“knowingly” if it found that he,

      was aware of a high probability that the gross sales and gross projections
      overstated the average gross sales and gross profits of FCI Marketing
      Distributors in 1993 and 1994, and that he deliberately avoided learning
      the truth. The element of knowledge may be inferred if Defendant
      James L. Parker deliberately closed his eyes to what would otherwise
      had been obvious to him.

       Parker argues that the willful blindness instruction created an impermissible
risk that the jury would convict him by applying a negligence standard. We have
recognized that the willful blindness instruction “should not be given . . . when the
evidence ‘points solely to either actual knowledge or no knowledge of the facts in
question.’” United States v. Regan, 940 F.2d 1134, 1136 (8th Cir. 1991) (emphasis
added) (quoting Hiland, 909 F.2d at 1130). However, “‘even where there is evidence
of actual knowledge, a willful blindness instruction is proper if there is sufficient
evidence to support an inference of deliberate ignorance.’” United States v.

                                         -17-
Gruenberg, 989 F.2d 971, 974 (8th Cir. 1993) (quoting Hiland, 909 F.2d at 1130-31);
accord United States v. Ruhe, 191 F.3d 376, 384 (4th Cir. 1999) (“If the evidence
supports both actual knowledge on the part of the defendant and deliberate ignorance,
a willful blindness instruction is proper.”); United States v. Kellermann, 992 F.2d
177, 179 (8th Cir. 1993) (holding district court did not err in giving willful blindness
instruction where “a reasonable jury easily could find beyond a reasonable doubt that
Kellermann either had actual knowledge of his wrongdoing in making false
statements . . . or deliberately failed to make detailed inquiry into KT & R's activities
before making such statements”) (emphasis added).

       The district court in Parker’s case did not commit reversible error in giving the
willful blindness instruction because there was evidence of both actual and
constructive knowledge. The evidence of actual knowledge included Parker’s
response to questioning during an interview with a Federal Bureau of Investigation
special agent. When asked about the inflated income projections that Parker provided
to distributors, Parker acknowledged that the most recent data from 1995 showed a
decline in income. According to the special agent’s testimony, Parker stated, “I guess
they are [lower]. I guess I should have updated these things with the new
information.” At the same time, however, there was also evidence that Parker
remained willfully blind to the inaccuracy of the data by not conducting any surveys
after the 1995 survey showed a decline in income for the second consecutive year.
Therefore, because the evidence viewed in the light most favorable to the government
showed that Parker intentionally remained ignorant of the true facts and had actual
knowledge, we will not disturb the district court’s decision to submit the deliberate
ignorance instruction to the jury.3

      3
         To the extent Parker complains that the willful blindness instruction created
a risk that he would be convicted on a mere negligence standard, any such danger was
adequately addressed by the court’s admonition to the jury,

                                          -18-
                                          V.

       Parker also challenges the sufficiency of the evidence regarding his money
laundering and aiding and abetting money laundering convictions under 18 U.S.C.
§ 1956 and 18 U.S.C. § 2, respectively. To support these convictions, the government
was required to prove that Parker “‘engaged in financial transactions with the
knowing use of the proceeds of illegal activities’ and with the ‘intent to promote the
carrying on’ of unlawful activity.” United States v. Jolivet, 224 F.3d 902, 909 (8th
Cir. 2000) (quoting United States v. Hildebrand, 152 F.3d 756, 762 (8th Cir. 1998)).
Parker contends that the government failed to establish the “intent to promote”
element of the charge because the allegedly laundered money was used to pay for
auto parts and supplies that had already been delivered by the vendors to the
distributors. Hence, contrary to the government’s assertion that the money was
reinvested and used to purchase auto parts to resupply distributors, Parker contends
that the money was used to pay vendors for an antecedent unlawful activity.

      As noted above, we review Parker’s challenge to the sufficiency of the
evidence de novo, viewing the evidence in the light most favorable to the
government. E.g., United States v. Washington, 318 F.3d 845, 852 (8th Cir. 2003).
We accept as established all reasonable inferences that support the verdict. See
United States v. Hawkey, 148 F.3d 920, 923 (8th Cir. 1998). The transactions the
indictment charged as money laundering consisted of expenditures, paid by checks
written by FCI, that allegedly promoted the fraudulent distributorship scheme. These

             You may not find that the defendant acted knowingly, however,
      if you find that the defendant did not personally sponsor the figures or
      that he actually believed that the gross sales and gross profits projections
      for 1993 or 1994 were as represented, or if you find that the defendant
      James L. Parker was simply careless or inattentive. A showing of
      negligence, mistake, or carelessness is not sufficient to support a finding
      of knowledge.

                                         -19-
checks were signed by Ralph Stover, who was FCI’s secretary and treasurer. His
duties required him, among other responsibilities, to negotiate checks on behalf of
FCI to pay automotive parts manufacturers and vendors.

       For reversal, Parker relies primarily on our decision in Jolivet. In that case, a
jury convicted the defendant of mail fraud, money laundering, and conspiracy.
Jolivet, 224 F.3d at 905. The defendant and her husband perpetrated four insurance
schemes wherein they obtained insurance and then claimed to have caused an
accident, submitting false accident claims and false expenses and medical records to
their insurance company. Id. On appeal, the defendant challenged the sufficiency of
the evidence to support her money laundering convictions on the ground that
depositing the proceeds of her insurance scams and making the funds available for
use was not enough to prove the “intent to promote the carrying on” element of
money laundering under 18 U.S.C. § 1956(a)(1)(A)(i). Id. at 909.

      The Jolivet court agreed, explaining:

      In order to be found guilty of money laundering under §
      1956(a)(1)(A)(i), the government must prove that the defendant
      “engaged in financial transactions with the knowing use of the proceeds
      of illegal activities” and with the “intent to promote the carrying on” of
      unlawful activity.       Hildebrand, 152 F.3d at 762 (quoting §
      1956(a)(1)(A)(i)).       Thus, although the prohibited conduct is
      characterized as money laundering, it is different from traditional money
      laundering because the criminalized act is the reinvestment of illegal
      proceeds rather than the concealment of those proceeds. See id.
      (contrasting § 1956(a)(1)(A)(i)’s prohibition of reinvestment money
      laundering to § 1956(a)(1)(B)(i)’s prohibition of concealment money
      laundering).

      ....

                                         -20-
             The government must prove that the defendant, using illegally-
      gained proceeds, undertook a financial transaction “with the intent to
      promote the carrying on of specified unlawful activity.”               §
      1956(a)(1)(A)(i). It is true that the deposit of funds in a bank account
      may promote an antecedent unlawful activity by making the funds
      available to the wrongdoer. However, the government bears the burden
      of proving that the money was used to further the carrying on of such
      illegal activity. We find no logic in the government’s suggestion that
      Jolivet could promote the carrying on of an already completed crime.
      Cf. United States v. Edgmon, 952 F.2d 1206, 1214 (10th Cir. 1991)
      (“Congress aimed the crime of money laundering at conduct that follows
      in time the underlying crime rather than to afford an alternative means
      of punishing the prior ‘specified unlawful activity.’”).

Id.

         In Jolivet, the appellant-defendant’s money laundering convictions could not
stand because the government did not prove that Jolivet “used the proceeds from any
one incident to further [her] future schemes. Rather, the undisputed evidence showed
that most of the money went to pay daily living expenses and to pay credit card debt
. . . .” Id. at 911. Thus, a money laundering conviction cannot stand where there is
“no evidence that the proceeds were used for anything other than personal expenses.”
Id. However, contrary to Parker’s contention, such evidence exists here. The checks
on which the money laundering counts against Parker were based were drawn from
FCI accounts and written to pay auto parts manufacturers and suppliers. Without the
constant resupply of auto parts, Parker could not have continued to operate his
fraudulent distributorship scheme. The evidence that Parker reinvested in FCI with
funds derived from the fraudulent scheme is sufficient to show that he intended to
promote the carrying on of that scheme.

      Parker also relies on United States v. Brown, 186 F.3d 661 (5th Cir. 1999) for
reversal. In Brown, the defendant operated an automobile dealership and conducted

                                        -21-
a significant amount of legitimate business. Id. at 662-63. However, he was also
engaged in a fraudulent scheme to charge some customers more than the amount
authorized by state law for document and title fees. Id. at 663. The indictment
alleged eighteen instances of overcharging and alleged that the defendant laundered
the proceeds of the excessive fees. Id. The jury convicted the defendant of money
laundering, but the Fifth Circuit reversed this conviction, finding insufficient
evidence to establish that the charged expenditures were used with the intent to
promote the defendant’s fraudulent scheme, as opposed to his legitimate business
activities. Id. at 670. The evidence showed that the allegedly laundered funds paid
for the dealership’s basic operations, such as parts, paints, materials, trade-in car
purchases, a computer system lease, glass repair, a health plan, coffee mugs, etc. Id.
at 668 n.13. No evidence linked the charged expenditures to the defendant’s scheme
to defraud purchasers by overcharging for document and title fees.

       In reversing Brown’s conviction, the Fifth Circuit recognized that, under some
circumstances, “the intent to promote criminal activity may be inferred from the
particular type of transaction.” Id. at 670. For instance, an intent to promote drug
trafficking can be inferred where a defendant, who was both a drug dealer and a
preacher, purchased beepers because “beepers were not necessary to the defendant’s
legitimate business operations and played an important role in [the defendant’s] drug
trafficking scheme.” Id. (referencing United States v. Jackson, 935 F.2d 832 (7th Cir.
1991)). However, the court found that those circumstances did not exist in Brown.

       Parker’s reliance on Brown and Jolivet is misplaced, because those cases are
factually inapposite to his case. In Jolivet, the government conceded that it could not
trace the use of the insurance scheme proceeds after the defendant withdrew them
from her bank account. Jolivet, 224 F.3d at 911. In addition, the evidence showed
that Jolivet’s four insurance scams were not an ongoing criminal enterprise but rather
were four discrete unlawful scams. Id. at 910-11. In Brown, there was no evidence

                                         -22-
that the defendant’s charged expenditures were for items other than “above the board”
business expenses. Brown, 186 F.3d at 668-69. In short, what was missing in both
Jolivet and in Brown was a nexus between the charged expenditures and a specified
criminal activity. Parker, however, was charged to have fraudulently induced
investors into buying FCI distributorships by, inter alia, misrepresenting the quality
of FCI brand automotive supplies. The evidence at trial showed that the charged
expenditures paid for belts, filters, tire repair kits, ignition parts, starters, alternators,
and brake pads. The supplies were part and parcel of the underlying fraudulent
scheme and, therefore, were integral to the transactions from which the jury could
reasonably have inferred Parker’s intent to promote the fraudulent scheme.

       Parker’s case is, furthermore, analogous to United States v. Hildebrand, 152
F.3d 756 (8th Cir. 1998). There, we sustained the defendants’ money laundering
convictions for defendants’ participation in a scheme to defraud would-be members
of a class action. Id. at 761. In Hildebrand, the defendants formed a group, “We The
People.” Id. at 760. This group had no legitimate purpose, as it was formed solely
to recruit people to join a class action and pay a $300 “administrative fee.” Id. No
claims were ever submitted to the court, class certification had been denied in the
underlying litigation, and the case had ultimately been dismissed. Id. at 761. In
analyzing the defendants’ sufficiency-of-the-evidence challenges as to their intent to
promote an unlawful scheme, we cited the evidence that proceeds from the scheme
were used to pay for office supplies, secretarial services, office staff wages, and
reimbursement to claims writers for promotional expenses and commissions on fees
collected from fraud victims. Id. at 762. The Hildebrand case is instructive because,
like the Hildebrand defendants, Parker’s distributorship business was ongoing, and
he did not conduct any business that was not intimately connected to his fraudulent
scheme. The nexus between the unlawful activity and the ill-gotten proceeds in cases
like Hildebrand and Parker’s case is obvious.

                                            -23-
       Moreover, we cannot accept Parker’s argument that the charged transactions
do not support his convictions as a matter of law merely because the expenditures
were for the payment of products that had already been delivered to distributors. To
do so would be nonsensical and would insulate wrongdoers from criminal prosecution
if they simply used a charge account or maintained a line of credit in order to reinvest
in their criminal activities. Indeed, in Hildebrand, one of the transactions we cited as
supporting the defendants’ convictions was payment for services previously rendered
by claim writers. Id.

        When illegal proceeds are used to reinvest in a fraudulent scheme and when
reinvestment is done with the purpose of promoting that scheme, § 1956(a)(1)(A)(i)
makes reinvestment criminal. United States v. Oberhauser, 284 F.3d 827, 829 (8th
Cir.), cert. denied, 537 U.S. 1071 (2002). Here, the evidence viewed in the light most
favorable to the government establishes that Parker engaged in illegal reinvestment
money laundering. The principal evidence at trial of Parker’s guilt was checks signed
by Stover to automotive parts manufacturers. Stover testified that these parts were
used to resupply FCI distributors. Without the resupply of inventory, Parker would
have been unable to continue his scheme to defraud new and existing distributors.
The nexus between his unlawful activity and the ill-gotten proceeds is evident from
the nature of the transactions themselves. From this nexus, a reasonable jury could
have inferred intent to promote the charged mail fraud conspiracy. Accordingly, we
affirm the district court’s denial of Parker’s motion for new trial on his money
laundering conviction.

                                          VI.

      Parker’s final argument on appeal concerns the district court’s instruction
regarding the government’s burden of proof to show the interstate commerce
component of Parker’s money laundering charges. Only days after Parker’s trial, in

                                         -24-
United States v. Evans, 272 F.3d 1069 (8th Cir. 2001), cert. denied, 535 U.S. 1029
(2002), we held that the Eighth Circuit Model Criminal Jury Instruction 6.18.1956J
misstated the government’s burden as to the charged transaction’s effect on interstate
commerce. Id. at 1081. The instruction at issue in Evans provided:

      It is not necessary for the government to show that a defendant actually
      intended or anticipated an effect on interstate commerce, or that
      commerce was actually affected. All that is necessary is that the natural
      and probable consequences of a defendant’s actions would be to affect
      interstate commerce no matter how minimal.

Id. (quoting jury instruction in defendant’s trial). At Parker’s trial, the jury was
similarly instructed:

              It is not necessary for the Government to show that the defendant
      actually intended or anticipated an effect on interstate or foreign
      commerce, or that commerce was actually affected. All that is necessary
      is that the natural and probable consequences of the defendant’s action
      would be to affect interstate or foreign commerce no matter how
      minimal.

        The nearly identical language of the instruction at issue in Evans and in
Parker’s case compels us to conclude that the instruction given at Parker’s trial
understated the government’s burden of proving the interstate commerce element of
the money laundering charges against him. However, because Parker failed to object
at trial, we must consider whether or not Parker was harmed. See Evans, 272 F.3d at
1081-82 (applying harmless error review). In Evans, we held that the defendant was
not entitled to a new trial even though the interstate commerce instruction was
incorrect, because the error was harmless. Id. at 1082.

      In Evans, the transaction at issue was the purchase of a vehicle from a used car
dealership. Id. at 1080. That alone was sufficient to establish an effect on interstate

                                         -25-
commerce. Id. at 1082. Here, the government proved that two of the banks on which
funds were drawn and into which proceeds were deposited were involved in interstate
commerce. Counsel for the government explicitly asked the witnesses who were
called to testify regarding FCI bank statements whether their banks were involved in
transactions that “go from one state to another” and that cross state lines. Both
witnesses responded in the affirmative. They each identified loans and money
transfers to and from out-of-state banks and specifically identified some of the checks
deposited into FCI’s account as having originated from out-of-state banks.

       In addition, exhibits admitted into evidence indicate that the bank, to wit,
Provident Bank, is insured by the Federal Deposit Insurance Corporation. That is
enough to show an effect on interstate commerce. See United States v. Wadena, 152
F.3d 831, 853 (8th Cir. 1998) (“The government presented evidence that the checks
referenced in Counts 10 through 18 were all deposited in either the First National
Bank of Detroit Lakes, Minnesota or the State Bank of Winger, Minnesota. As these
institutions are FDIC-insured, the government’s evidence that these checks were
deposited into these institutions is sufficient proof of an interstate commerce nexus.”).

       Therefore, as in Evans, the erroneous instruction to which Parker did not object
at trial does not require reversal because the government proved the interstate
commerce component of the money laundering charges; consequently, Parker was not
harmed. In addition, it should also be noted that we “will affirm if the entire charge
to the jury, when read as a whole, fairly and adequately contains the law applicable
to the case.” United States v. Casas, 999 F.2d 1225, 1230 (8th Cir. 1993). In
Parker’s case, the district court did instruct the jury that it had to find beyond a
reasonable doubt that the transactions at issue affected interstate commerce. In listing
the elements of the money laundering counts, the first element the jury was instructed
to consider was whether Parker “conducted or caused to be conducted a financial
transaction which in any way or degree affected interstate commerce.” As a whole,
then, the instructions adequately contained the applicable law.

                                          -26-
                                     VII.

      We have considered each of Parker’s arguments, and for the reasons stated
above, we affirm the district court.
                      ______________________________

                                     -27-