Court Opinion

ID: 2997311
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:35:22.715262+00
Date Added: 2024-06-11T15:03:13.762736
License: Public Domain

In the
 United States Court of Appeals
              For the Seventh Circuit
                        ____________

No. 03-3681
UNITED STATES OF AMERICA,
                                             Plaintiff-Appellee,
                              v.

PAUL A. HENNINGSEN,
                                         Defendant-Appellant.

                        ____________
          Appeal from the United States District Court
             for the Eastern District of Wisconsin.
           No. 03 CR 10—J.P. Stadtmueller, Judge.
                        ____________
 ARGUED SEPTEMBER 13, 2004—DECIDED OCTOBER 15, 2004
                   ____________

  Before BAUER, RIPPLE, and ROVNER, Circuit Judges.
  BAUER, Circuit Judge. Defendant-Appellant Paul A.
Henningsen appeals his convictions on four counts of mail
fraud under 18 U.S.C. § 1341. Henningsen argues that there
was insufficient evidence to support the convictions and
challenges the factual findings made by the district court
judge during sentencing. We affirm the convictions, but va-
cate the sentence and remand the case to the district court
for resentencing. The mandate of this court is stayed pend-
ing the Supreme Court’s decision in United States v. Booker,
375 F.3d 508 (7th Cir. 2004).
2                                                  No. 03-3681

                       I. Background
   Henningsen is a former Milwaukee alderman who had
represented the city’s Fourth Aldermanic District since 1983.
He coordinated his re-election campaign fundraising activ-
ities through his “Henningsen for Alderman Committee.”
Typically, solicitations for re-election efforts involved provid-
ing prospective donors with pre-printed donation envelopes
that bore campaign language such as, “Yes! I want to help
re-elect Paul Henningsen for prosperous neighborhoods and
vital downtowns.” Donors would mail their contributions to
Henningsen’s re-election committee in the envelopes pro-
vided, whereupon the checks were supposed to be deposited
in the campaign’s bank account. Henningsen was the commit-
tee’s treasurer and the sole signatory on the account. Conse-
quently, he signed every check disbursing funds from the
account.
  In February 2002, Henningsen solicited a local developer,
Jeff Chitko, for a donation, providing Chitko with a cam-
paign contribution envelope. On February 12, 2002, Chitko
mailed a donation of $375.00 to Henningsen’s re-election
campaign in the pre-printed envelope. Henningsen depos-
ited the check in the campaign account, but first took back
$100.00 in cash.
  A similar pattern of soliciting and diverting funds con-
tinued. Again in February, Henningsen solicited another
local developer, Robert Monnat, for a campaign donation,
providing Monnat with a pre-printed envelope. On or about
February 18, 2002, Monnat mailed a contribution of $200.00
to Henningsen’s re-election committee. One month later,
Henningsen solicited Karl Rajani for a campaign donation,
providing him with an envelope. On or about March 13, 2002,
Rajani mailed a donation of $375.00 to Henningsen’s re-
election committee. Upon receipt of the check, Henningsen
deposited it in the campaign account, but first took back
$200.00 in cash. Also in 2002, Henningsen asked a local
No. 03-3681                                                   3

architect, Samuel Eppstein, for his assistance in raising a “war
chest” of campaign funds to intimidate opponents. Eppstein
agreed to help, and in April 2002 sent Henningsen the cam-
paign contribution checks he had solicited on Henningsen’s
behalf.
  These incidents of soliciting and then diverting campaign
contributions were not isolated. From January 1, 2001,
through July 22, 2002, the period at issue in the indictment,
Henningsen withdrew $31,395 from the campaign account
for his personal use, employing various methods. First,
Henningsen wrote checks to cash from the campaign ac-
count. During this period, Henningsen wrote more than 150
of these checks, which in the aggregate totaled more than
$23,000. Of these checks, Henningsen disclosed only five in
his state-mandated campaign finance reports. While many
of these checks were negotiated at the bank, others were
cashed at local bars, restaurants, and a liquor store. Sec-
ond, Henningsen diverted funds by taking cash back when
depositing donations. Between February and July 2002,
Henningsen obtained $1,000 this way, none of which were
disclosed in campaign finance reports. Third, Henningsen
wrote checks on the campaign account to cover personal ex-
penses, such as money for his wife ($6,500), payments to
cover a friend’s rent ($2,370), purchase of a door for his home
($880), and repayment of a personal loan from a college-age
campaign aid ($100).
  During this time, Henningsen failed to accurately disclose
the amounts that he was taking from the campaign account
and, frequently, failed to report contributions received.
From July through December 2001, Henningsen did not
disclose any of the 24 donation checks that his campaign
received, in amounts totaling $6,901. During that same six-
month period, Henningsen wrote more than 20 checks to
cash in a total amount in excess of $4,700.
  On January 14, 2003, Henningsen was indicted on one
count of extortion under 18 U.S.C. § 1951(a) and four counts
4                                                No. 03-3681

of mail fraud under 18 U.S.C. § 1341. On June 20, 2003, the
jury found Henningsen guilty on the four mail fraud counts,
but he was acquitted on the extortion count. Henningsen
then filed a motion for a judgment of acquittal pursuant to
FED. R. CRIM. P. 29, contending that the evidence was
insufficient to support the jury’s finding. The district court
denied the motion. A sentencing hearing was convened on
September 26, 2003, at which Henningsen challenged
factual findings made by the district court judge that had
enhanced Henningsen’s base offense level under the federal
sentencing guidelines. Specifically, Henningsen challenged
the factual basis for the enhancements in connection with
the amount of loss, the number of victims, and obstruction
of justice. The judge denied Henningsen’s objections and
imposed a 33-month sentence for each of the four counts of
mail fraud, to run concurrently. Henningsen was also
ordered to pay a fine of $2,500 and restitution in the
amount of $7,370.

                       II. Analysis
            A. Sufficiency of the Evidence
  Henningsen appeals the denial of his motion for a judg-
ment of acquittal, contending that the evidence at trial was
insufficient to support the jury’s findings of guilt. On
appeal, we consider the evidence in the light most favorable
to the government and ask whether any rational jury could
have found Henningsen guilty of mail fraud beyond a
reasonable doubt. United States v. Morris, 80 F.3d 1151,
1160 (7th Cir. 1996).
  The mail fraud statute prohibits devising a “scheme or
artifice to defraud, or for obtaining money or property by
means of false or fraudulent pretenses, representations, or
promises,” and executing that scheme by use of the mails.
18 U.S.C. § 1341. A conviction must satisfy three elements:
(1) the defendant’s participation in a scheme to defraud; (2)
No. 03-3681                                                    5

the defendant’s intent to defraud; and (3) the defendant’s use
of the mails in furtherance of the fraudulent scheme. United
States v. Hickok, 77 F.3d 992, 1002-03 (7th Cir. 1996).
Furthermore, the evidence must establish that the false
representations were material. Neder v. United States, 527
U.S. 1, 25 (1999). A false statement is material if it has “a
natural tendency to influence, or is capable of influencing,
the decision of the decisionmaking body to which it was
addressed.” United States v. Fernandez, 282 F.3d 500, 508
(7th Cir. 2002). Henningsen challenges the sufficiency of
the evidence with regard to the first two elements of the
statute. We take each in turn.

                  1. Scheme to Defraud
  Henningsen contends that the evidence at trial was in-
sufficient to prove his participation in a scheme to defraud
because his representations to contributors were not false.
Specifically, Henningsen claims that all he promised donors
was that he would run for re-election. Henningsen concludes
that since he made good on this promise, no false represen-
tations were made, without which there can be no scheme
to defraud.
  This Circuit has found that a scheme to defraud exists
when the conduct at issue has “demonstrated a departure
from fundamental honesty, moral uprightness and candid
dealings in the general life of the community.” United States
v. Hammen, 977 F.2d 379, 383 (7th Cir. 1992). The conduct
must have also been material, in that it must have had “a
natural tendency to influence . . . the decision of the decision-
making body to which it was addressed.” Fernandez, 282
F.3d at 508.
  We believe that the jury’s finding of a scheme to defraud
was rational and supported by the evidence. There was am-
ple evidence that Henningsen represented one thing to
donors, but did another. The government showed that
6                                               No. 03-3681

Henningsen solicited donations using pre-printed campaign
envelopes. Language on the envelopes included a pitch to
support Henningsen’s re-election bid and a blank for the
amount contributed. The government presented evidence
that Henningsen diverted $31,395 in campaign donations
for private use through various methods, including writing
checks to cash from the campaign account, taking back cash
upon deposit of donations, and writing checks to pay for
personal expenses. In addition, the evidence indicated that
Henningsen failed to fully disclose campaign revenue and
expenditures in campaign finance reports mandated by the
State of Wisconsin. A rational jury could have easily
determined on these facts that Henningsen’s solicitation of
campaign funds for private use was dishonest, and that it
influenced donors’ decisions to contribute.
  Henningsen also makes a second argument: Since he had
not met all of the donors who contributed to his campaign,
he could not have made false representations to each of them.
Here, however, Henningsen misunderstands the law. The
crime of mail fraud does not include an element requiring a
contemplated harm to a specific, identifiable victim.
Fernandez, 282 F.3d at 506-07. Therefore, it makes no dif-
ference that Henningsen may not have solicited each donor
individually. Each person who gave to Henningsen’s re-elec-
tion campaign and whose money was diverted for non-
campaign expenses was a victim of his false representations.

                  2. Intent to Defraud
   Henningsen also argues that a rational jury could not
have found beyond a reasonable doubt that he acted with
the specific intent of defrauding donors. While Henningsen
admits to having diverted campaign funds for personal use,
he claims that he was only compensating himself for prior
loans that he had made to his campaign. Henningsen testi-
fied that he had loaned his campaign as much as $71,000.00
No. 03-3681                                                  7

since 1983. Consequently, Henningsen argues, he could not
steal that which he was entitled to recoup.
  The jury, having heard Henningsen’s testimony at trial,
rejected this explanation. Such is its right; the jury is enti-
tled to assess the credibility of Henningsen’s testimony and
to draw inferences from the rest of the evidence to conclude
that Henningsen intended to defraud contributors. Hickok,
77 F.3d at 1003. Again, we believe that the jury’s determi-
nation was supported by the evidence and was not irrational.
  The government presented abundant evidence that
Henningsen concealed his personal use of campaign funds.
First, the government showed that Henningsen failed to dis-
close expenses, the result being that the account balances he
reported to the public were wildly inaccurate. For example,
Henningsen reported that as of December 31, 2000, he had
a campaign account balance of $7,813.20, when in fact the
actual balance was $652.21. At the end of June 2001,
Henningsen reported a campaign account balance of
$13,125.77, when the actual balance was $1,177.94. And at
the end of June 2002, Henningsen reported a campaign
account balance of $23,218.20, when the actual balance was
$112.37. The government also demonstrated that Henningsen
failed to document donations. For example, Henningsen did
not disclose that he received 24 campaign checks totaling
$6,901 between July and December 2001, while during that
same period he wrote over 20 checks to cash, drawing over
$4,700 from the campaign account. Additionally, the govern-
ment established that Henningsen made false notations on
the memo lines of campaign checks to cash, indicating names
of persons who were to receive this cash. None received any
of this money.
  The government also demonstrated that Henningsen
failed to document most of his personal loans to the cam-
paign. By contrast, Henningsen carefully documented loans
from others, including loans as minor as a $2.44 copying
8                                                No. 03-3681

charge. Finally, the government presented evidence demon-
strating Henningsen’s need for money, which included debts
to the IRS totaling over $20,000, credit card debt, and his
daughter’s college expenses.
  This court has found that to act with intent to defraud
means to act “willfully and with specific intent to deceive or
cheat, usually for the purpose of getting financial gain for
one’s self or causing financial loss to another.” United States
v. Moede, 48 F.3d 238, 241 (7th Cir. 1995). Proof of intent to
defraud is often proven through circumstantial evidence or
by inferences drawn from the scheme itself. Id. The evi-
dence at trial was certainly adequate to permit the jury to
find an intent to defraud beyond a reasonable doubt.

                      B. Sentencing
  Henningsen also argues on appeal that the district court
misapplied the federal sentencing guidelines. Specifically,
Henningsen challenges the judge’s factual findings that led
to increases in the base offense level for his mail fraud
convictions. Henningsen’s challenge during sentencing and
in his brief on appeal did not extend to the constitutionality
of the enhancements. However, between submission of
Henningsen’s brief and Henningsen’s argument before this
court, the Supreme Court decided Blakely v. Washington,
124 S. Ct. 2531 (2004), which has called into question the con-
stitutionality of sentencing enhancements based on facts not
found by a jury. Following Blakely, this court held in
Booker, 375 F.3d 508 (7th Cir. 2004), that such enhance-
ments violate the Sixth Amendment.
  Although Henningsen did not raise the issue of constitu-
tionality in his brief, he made notice of the Blakely and
Booker decisions in a subsequent filing and raised the issue
during argument. In light of the uncertainty surrounding
this issue and the questionable constitutionality of
Henningsen’s sentencing enhancement, we do not find that
No. 03-3681                                                9

Henningsen has waived his right to challenge the validity
of the district court’s sentencing enhancement.
  The Supreme Court has granted certiorari in Booker,
whereupon in the coming weeks it will determine the ap-
plication of Blakely to the federal sentencing guidelines.
Therefore, we will stay our mandate until Booker is decided.
Within fourteen days of the Supreme Court’s decision in
Booker, both parties may submit a memorandum setting
forth their views on the application of that decision to this
case.

                     III. Conclusion
  For the foregoing reasons, we AFFIRM the judgment of the
district court on the merits, and VACATE the sentence and
REMAND to the district court for resentencing. This court’s
mandate is stayed pending the Supreme Court’s decision in
Booker.

A true Copy:
      Teste:

                        ________________________________
                        Clerk of the United States Court of
                          Appeals for the Seventh Circuit

                   USCA-02-C-0072—10-15-04