Court Opinion

ID: 4653999
Source: CourtListenerOpinion
Date Created: 2021-01-22 23:00:17.614735+00
Date Added: 2024-06-11T07:57:58.124321
License: Public Domain

In the

    United States Court of Appeals
                 For the Seventh Circuit
                     ____________________
No. 19-2969
UNITED STATES OF AMERICA,
                                                 Plaintiff-Appellee,
                                 v.

MICHAEL THOMAS,
                                              Defendant-Appellant.
                     ____________________

         Appeal from the United States District Court for the
          Northern District of Indiana, South Bend Division.
     No. 3:18-cr-00045-JD-MGG-1 — Jon E. DeGuilio, Chief Judge.
                     ____________________

  ARGUED SEPTEMBER 21, 2020 — DECIDED JANUARY 22, 2021
                ____________________

   Before WOOD, BRENNAN, and SCUDDER, Circuit Judges.
    BRENNAN, Circuit Judge. Michael Thomas set ﬁre to numer-
ous properties in a mobile home park and then used the mail
to collect insurance money. The government charged Thomas
with mail fraud under 18 U.S.C. § 1341, which requires proof
of a “scheme to defraud.” At trial Thomas argued the ﬁres
were not part of a scheme because they were not a chain of
continuous and overlapping events, but rather discrete
2                                                 No. 19-2969

episodes of alleged criminality, so evidence of the ﬁres as
“other acts” was improperly admitted.
    A jury convicted Thomas, and on appeal he argues that all
but one of the fires were inadmissible character evidence. But
Thomas was charged with mail fraud, not arson. We conclude
the district court properly decided that six of the fires were
part of Thomas’s scheme and not “other acts” at all. The dis-
trict court also properly admitted evidence of another fire
that, although too far removed in time to be part of the
scheme, was evidence of Thomas’s modus operandi. So we af-
firm.
                       I. Background
   The Born’s mobile home park is a one-square-mile resi-
dential community of less than one hundred dwellings, lo-
cated in North Judson, Indiana. The park does not experience
many ﬁres—aside from those in this case, only three in the last
26 years. Over about nine years, however, Thomas has been
connected to eight blazes there.
    The ﬁrst ﬁre started just before 10 p.m. the night of Sep-
tember 17, 2004 in a mobile home Thomas owned at 2691 Julia
Drive. Thomas’s uncle said he and Thomas were out at a bar
when Thomas heard about the ﬁre. Later Thomas conﬁded in
his friend Kyle Nissen that Thomas had a family member start
the ﬁre. At the time the authorities could not determine the
cause of the ﬁre. Less than three weeks before, Thomas took
out an insurance policy on the home. He also secured a sec-
ond policy with another company that went into eﬀect Sep-
tember 17, 2004—the day of the ﬁre. When Thomas requested
payment, the insurance companies paid him $75,000.
No. 19-2969                                                 3

    The next ﬁres occurred on four properties during the night
of November 14, 2010. Thomas had recently purchased a new
mobile home with a garage at 5081 South 275 West. He origi-
nally planned to lease the property to tenants. Thomas also
could access the mobile home owned by his mother-in-law at
5326 South A Street. In the months leading up to the ﬁres,
Thomas pressured his former wife Jennifer to purchase insur-
ance on both properties, but she refused. One day Thomas
handed her a phone with the insurance company already on
the line. Jennifer capitulated and purchased policies on these
two residences. When Jennifer’s mother found out about the
new policy taken out on her home, she vehemently objected
and convinced Jennifer to tell Thomas that she planned to can-
cel the policy. That conversation took place on November
14th.
    According to Nissen, he and Thomas had already been
planning to burn the two homes and later that same day
Thomas urgently approached him with the news that Jennifer
wanted to cancel the policy. Thomas told Nissen that they
needed to act quickly and that they were “going to do all
four.” The “four” referred to ﬁres at Thomas’s new property,
his mother-in-law’s home, and two abandoned mobile homes
within Born’s located at 2729 Air Stream Court and 5370 Hol-
iday Street. The two abandoned homes were included to di-
vert suspicion from the ﬁres at properties connected with
Thomas. Thomas and Nissen each burned two properties. The
authorities determined that all four ﬁres were intentionally
set. Nevertheless, Thomas collected over $50,000 from the two
insurance policies.
   Another ﬁre occurred in January 2013. In 2012 Thomas
purchased a property located at 5101 South 275 West. He
4                                                   No. 19-2969

hoped to sell it at a proﬁt, but he did not succeed. In December
2012 he took out an insurance policy on the property. Before
the insurance was set to expire, Thomas told Nissen that the
property “had to go.” The home at 5101 South 275 West
burned and Thomas ﬁled a claim and collected $60,000 in in-
surance proceeds.
    The ﬁnal ﬁre occurred three months later, on April 17,
2013. In February of that year Thomas had renewed the insur-
ance policy for his property at 2691 Julia Drive, the site of the
ﬁrst ﬁre. Around this time Thomas and Jennifer separated. In
early April Thomas told Jennifer “you better get out what you
want that’s important to you.” Thomas then contacted Nissen
and asked if he could help move a motorcycle out of the home.
Hours later the home caught ﬁre, and Thomas, who was at the
house when the ﬁre started, brieﬂy checked into the hospital
with smoke inhalation. Fire department oﬃcials came to the
scene and checked the house for “hot spots” where rekin-
dling—a second or subsequent ignition—might happen, but
they found none. Eight hours later, after the ﬁreﬁghters had
left, Thomas’s home again caught ﬁre. Thomas claimed both
blazes were caused by a pizza box he set on top of the stove.
An Indiana ﬁre marshal testiﬁed that the second ﬁre at the
property was intentionally set.
   After the ﬁre Jennifer and Thomas reunited brieﬂy.
Thomas enlisted Jennifer to make insurance claims for items
“lost” inside the house. He told Jennifer to look online and
“max out” the number of items they could claim. For this ﬁre
Thomas received four checks totaling $426,227.31 in insurance
money. These four checks served as the basis for four counts
of mail fraud on which Thomas was indicted in April 2018.
No. 19-2969                                                   5

The indictment charged a scheme that included all these ﬁres,
spanning from 2004 to 2013.
    Before trial Thomas moved to strike portions of the indict-
ment as surplusage. That motion asked the district court to
delete paragraphs in the indictment referring to the ﬁres in
2004, 2010, and January 2013. The magistrate judge granted
the motion in part, removing a paragraph referencing the two
diversionary ﬁres in 2010, reasoning that the government had
not suﬃciently established that these ﬁres were part of the
charged scheme. The magistrate judge retained the para-
graphs referring to the 2004 ﬁre, deciding it was properly part
of the scheme.
    Closer to trial Thomas moved in limine to exclude evi-
dence of the 2004 ﬁre on Julia Drive and the two 2010 “dis-
tractor” ﬁres. The district court ruled that the 2010 ﬁres were
part of the scheme and did not implicate Federal Rule of Evi-
dence 404(b). The court also concluded that the 2004 ﬁre was
too far removed in time to be part of the scheme, but that it
was admissible as modus operandi evidence and to prove iden-
tity. A jury convicted Thomas on all counts and he was sen-
tenced to 90 months’ imprisonment.
                        II. Discussion
    Thomas asks that his convictions be reversed because the
district court improperly admitted as character evidence the
2004 ﬁre, the 2010 ﬁres on his properties, the two 2010 diver-
sionary ﬁres, and the January 2013 ﬁre. We begin with an
overview of Federal Rule of Evidence 404(b) and then evalu-
ate the district court’s decisions to admit certain ﬁres as part
of the scheme and to exclude the 2004 ﬁre from the scheme.
6                                                    No. 19-2969

    Rule 404(b)(1) states “evidence of any other crime, wrong,
or act is not admissible to prove a person's character in order
to show that on a particular occasion the person acted in ac-
cordance with the character.” This general prohibition of
“character evidence” is supplemented by section (b)(2) that
states proﬀered evidence “may be admissible for another pur-
pose, such as proving motive, opportunity, intent, prepara-
tion, plan, knowledge, identity, absence of mistake, or lack of
accident.” Courts have long policed the sometimes blurry line
between evidence that must be excluded under Rule 404(b)(1)
and evidence that may be admitted under Rule 404(b)(2).
    In United States v. Gomez, 763 F.3d 845 (7th Cir. 2014), this
court articulated a general framework for analyzing Rule
404(b) cases, jettisoning a previous multi-factor test. First, the
proponent of the other acts evidence must show, through a
chain of propensity-free inferences, that the evidence is rele-
vant for a reason other than propensity. Id. at 860. Second, the
court must determine under Federal Rule of Evidence 403
whether the probative value of the evidence is substantially
outweighed by the prejudicial eﬀect of the evidence on the
defendant, paying close attention to whether the fact the evi-
dence helps establish is disputed. Id. Third, even if evidence
was improperly admitted, the court must conduct a harmless
error analysis. Id. at 863. Of course, before we apply the anal-
ysis from Gomez the proof must actually be evidence of other
acts. “Direct evidence of a crime is almost always admissible
against a defendant” and is not “other act evidence.” United
States v. Gorman, 613 F.3d 711, 717 (7th Cir. 2010); United States
v. Bradford, 905 F.3d 497, 506 (7th Cir. 2018) ("Evidence that
'tend[s] to prove the elements of the oﬀense' does not violate
Rule 404(b).").
No. 19-2969                                                              7

    Thomas was charged with mail fraud under 18 U.S.C.
§ 1341, which requires “(1) a scheme or artiﬁce to defraud, (2)
the use of the mailing system for the purpose of executing the
scheme, and (3) the defendant's participation in the scheme
with the intent to defraud.” United States v. Seidling, 737 F.3d
1155, 1160 (7th Cir. 2013). Thomas contests the scope of his
alleged “scheme to defraud.”
   “We review a district court’s decision to admit evidence of
other bad acts for an abuse of discretion.” United States v. Nor-
weathers, 895 F.3d 485, 490 (7th Cir. 2018). But, if evidentiary
objections are not made at trial, they are reviewed for plain
error.
    A. The ﬁres at Thomas’s properties in 2010 and January
    2013 1
    The district court ruled that these ﬁres were evidence of
the “scheme or artiﬁce to defraud” required by § 1341.
Thomas argues these ﬁres were distinct events, separated by
several years, and with unique participants. Thomas asserts
only the April 2013 ﬁre can be part of the scheme because that
is the discrete event to which the four charged mailings relate.
He contends evidence of any other ﬁre is impermissibly
tainted by a propensity inference.

1 The parties dispute whether Thomas preserved his objection to the in-
troduction of evidence of the November 14, 2010 and January 2013 fires at
his properties. It is undisputed that Thomas moved to strike as surplusage
references to all fires other than the April 2013 fire and did not move to
exclude these fires. Thomas also discussed FED. R. EVID. 404(b) in his sur-
plusage motion, even though it was filed under Federal Rule of Criminal
Procedure 7(d). Because that motion can be read as objecting to evidence
of the fires under FED. R. EVID. 404(b), we review this challenge under the
abuse of discretion standard.
8                                                     No. 19-2969

    Thomas deﬁnes the scheme he is charged with too nar-
rowly. The government is “entitled to prove the scheme as a
whole” and a scheme is not limited to an isolated instance of
conduct. United States v. Kolbusz, 837 F.3d 811, 812 (7th Cir.
2016). Instead, a scheme is a “continuing course of conduct,
during a discrete period of time.” United States v. Davis, 471
F.3d 783, 790 (7th Cir. 2006). A scheme can involve several acts
by the same actor, playing the same role, and done in a similar
way. See, e.g. United States v. Swinton, 75 F.3d 374, 378 (8th Cir.
1996). In a mail fraud prosecution, the charged mailings trig-
ger federal jurisdiction, but can relate to a scheme with a sig-
niﬁcantly wider scope, United States v. Boone, 628 F.3d 927, 935
(7th Cir. 2010), one that “can produce proceeds long before
the act that ultimately triggers jurisdiction.” United States v.
Lanas, 324 F.3d 894, 901 (7th Cir. 2003).
    In Lanas, for example, the defendants were charged with a
scheme to receive kickbacks for investigative work. Id. They
objected to the introduction of evidence of attempts they
made to solicit kickbacks that were unsuccessful, arguing that
this evidence was unrelated to the mailings charged in the in-
dictment. Id. at 900. This court disagreed and decided that
these attempts were part of the scheme because they shared
characteristics of time and manner that made them part of a
continuous eﬀort to defraud. Id. at 901. See also United States v.
O’Brien 953 F.3d 449 (7th Cir. 2020) (concluding that discrete
transactions occurring over three years with diﬀerent ﬁnan-
cial instructions were part of the defendant’s scheme).
   The district court correctly concluded here that the ﬁres in
November 2010 and January 2013 on Thomas’s properties
were part of the scheme to defraud. They were similar occur-
rences designed to defraud in a similar way and took place
No. 19-2969                                                     9

over a relatively short period of time. Several facts show this:
these ﬁres took place within a span of less than three years
(with three on the same day), each property was located
within the Born’s mobile home park, and each ﬁre involved a
property Thomas owned or in which he had an interest. Even
more, less than thirty days before each ﬁre Thomas or his wife
took out a new insurance policy on the property, experts re-
ported and testiﬁed that each of the ﬁres was arson, and
shortly after each ﬁre Thomas requested and received money
from the insurance company. Given the overwhelming simi-
larity of these events and their proximity in time, the district
court did not abuse its discretion in determining that these
ﬁres were part of the same scheme under 18 U.S.C. § 1341.
    Because the ﬁres in 2010 and January 2013 on Thomas’s
properties were direct evidence of Thomas’s mail fraud
scheme, Rule 404(b) is not implicated, and the evidence was
properly admitted. Neither was the probative value of this ev-
idence substantially outweighed by its risk of unfair prejudice
to Thomas under Federal Rule of Evidence 403. Although the
district court did not explicitly engage in this balancing, im-
plicit in its description of the highly probative nature of this
evidence was a ﬁnding that it did not unfairly prejudice the
defendant. See, e.g., Gorman, 613 F.3d at 720 (admitting evi-
dence “[a]lthough the district court might have better ex-
plained the rationale behind its Rule 403 conclusion”), citing
United States v. Price, 617 F.2d 455, 460 (7th Cir. 1979). As part
of the charged scheme, evidence of these ﬁres was highly pro-
bative of proving the crime charged, which was not substan-
tially outweighed by the risk of unfair prejudice to Thomas.
10                                                   No. 19-2969

     B. The ﬁres at 2729 Air Stream Court and 5370 Holiday
     Street
    The district court also ruled that these ﬁres were part of
the 18 U.S.C. § 1341 scheme. Nissen testiﬁed they were set to
make it look like someone had been burning abandoned trail-
ers and to divert suspicion from Thomas. In his arguments
Thomas does not distinguish between the ﬁres on his proper-
ties and these diversionary ﬁres. Instead he asserts that, as
with the other ﬁres, Rule 404(b) precludes their admission be-
cause they were discrete events.
    The district court correctly reasoned that eﬀorts to conceal
a scheme can be part of the scheme itself. See United States v.
Anzaldi, 800 F.3d 872, 881–82 (7th Cir. 2015) (admitting evi-
dence in a tax fraud case of eﬀorts by the defendants to avoid
detection by requesting smaller refund checks from the IRS);
United States v. Ryan, 213 F.3d 347, 349–50 (7th Cir. 2000). Alt-
hough this court in Anzaldi analyzed evidence under Rule
404(b), its reasoning is consistent with the ﬁnding that eﬀorts
to conceal can be part of a mail fraud scheme. 800 F.3d at
881-82. The object of fraud is to deceive without detection. It
follows that eﬀorts to make the deception more eﬀective are
part and parcel of the fraud itself. See United States v. LeDonne,
21 F.3d 1418, 1430 (7th Cir. 1994) (“[a]voidance of detection is
often a material part of a fraudulent scheme; for an illegal
scheme would hardly be undertaken were there to be no
proﬁt to the plotters.”)
    The diversionary ﬁres were part of Thomas’s mail fraud
scheme, so evidence of them was properly admitted as direct
evidence of the scheme. The ﬁres were set to distract authori-
ties’ attention from Thomas and in turn to make the insurance
companies more likely to pay on the claims without
No. 19-2969                                                      11

investigation. This evidence was also highly probative as it
was a part of the charged crime and therefore not unfairly
prejudicial, satisfying Rule 403.
   C. The 2004 ﬁre at 2691 Julia Drive
    The district court correctly excluded this ﬁre from the mail
fraud scheme. The other ﬁres took place within a three-year
period, 2010 through 2013, with relatively short spans of time
elapsing between each one. The 2004 ﬁre is six years removed
from any of the other ﬁres. Although a scheme has no set du-
ration, a long gap in time between occurrences may result in
one event being excluded. See Boone, 628 F.3d at 935 (“[a]s ev-
idence regarding the scheme moves farther, both temporally
and in terms of the defendant's involvement, from the defend-
ant's actions that form the crux of the criminal claim, that bal-
ance may well tip in favor of exclusion.”)
    As a threshold matter, Thomas argues evidence of the 2004
ﬁre should have been excluded because a jury could not ﬁnd
by a preponderance of the evidence that Thomas intentionally
caused the 2004 ﬁre to collect insurance money, as required
by Huddleston v. United States, 485 U.S. 681 (1988). But Huddle-
ston explicitly rejected the proposition that a district court
must make a ﬁnding about whether a party in fact committed
an “other act,” so the absence of a ﬁnding does not doom this
evidence. Id. at 690. Thomas also did not object on this point
in the district court, and “[i]t is, of course, not the responsibil-
ity of the judge sua sponte to insure that the foundation evi-
dence is oﬀered; the objector must move to strike the evidence
if at the close of the trial the oﬀeror has failed to satisfy the
condition.” Id. at 690 n. 7. Because Thomas failed to object, we
review for plain error. Bradford, 905 F.3d at 505. There was no
plain error here. Testimony at trial established that in 2004
12                                                    No. 19-2969

Thomas told his friends and relatives that he had a family
member start the ﬁre and that two insurance companies paid
him. The district court also could consider the other ﬁres that
were part of the scheme in determining whether Thomas had
set the 2004 ﬁre for a fraudulent purpose. Cf. Huddleston, 485
U.S. at 691.
    Because the 2004 ﬁre was not part of the mail fraud
scheme, Rule 404(b) and the Gomez framework apply. First,
the government oﬀered evidence of the 2004 ﬁre for the non-
propensity purpose of establishing identity and intent. That
past similar and idiosyncratic events can be probative of iden-
tity, intent, or lack of accident is ﬁrmly rooted in the legal tra-
dition. See, e.g., Rex v. Smith 11 Cr. App. R. 229 (1915) (the
“brides of the bath” case where in defendant’s prosecution for
murder of his third wife found dead in a bathtub, evidence
was admitted that two of defendant’s previous wives had
drowned in the bathtub). Such modus operandi evidence must
“bear a singular[ly] strong resemblance to the pattern of the
oﬀense charged with the similarities between the two crimes
suﬃciently idiosyncratic to permit an inference of pattern for
purposes of proof” and not a character inference. United States
v. Thomas, 321 F.3d 627, 634–35 (7th Cir. 2003) (internal quota-
tion marks omitted). Where the defendant does not admit to
performing the prior acts, those acts must be suﬃciently
unique that the predominate inference is that it is unlikely
that the defendant would be involved in two or more situa-
tions with such similar circumstances without having any-
thing to do with them. See DAVID P. LEONARD, THE NEW
WIGMORE: A TREATISE ON EVIDENCE: EVIDENCE OF OTHER
MISCONDUCT AND SIMILAR EVENTS § 13.2 (2020).
No. 19-2969                                                    13

     Distinctiveness is key to whether something is proper mo-
dus operandi evidence. Such uniqueness lies on a spectrum. On
one end are acts such as run-of-the-mill drug deals with no
special characteristics or geographical relationship to the
crime charged. See United States v. Simpson, 479 F.3d 492, 498
(7th Cir. 2007), abrogated in part on other grounds by United
States v. Richards, 719 F.3d 746 (7th Cir. 2013); United States v.
Wright, 901 F.2d 68, 69 (7th Cir. 1990). Such evidence is so ge-
neric it is unhelpful for proving a Rule 404(b)(2) element and
is likely to give rise to the forbidden propensity inference. On
the other end are events that share singular methods, loca-
tions, participants, and scope. The paradigmatic example is
the robber who holds up banks in the same geographic area,
in a speciﬁc manner, wearing the same type of mask or cloth-
ing. See United States v. Brewer, 915 F.3d 408, 415 (7th Cir.
2019). Because those events are more distinct, they are more
probative of a Rule 404(b)(2) element and less likely to pro-
voke a propensity inference. Id.
    Thomas argues the 2004 ﬁre is generic and more like a run-
of-the-mill drug deal than a bank robbery done with a “calling
card.” He asserts there is nothing distinct about (1) taking out
an insurance policy on a home, (2) a ﬁre occurring at that
home, and (3) collecting the insurance money. But Thomas
misses at least two salient points of distinctiveness that make
the 2004 ﬁre proper modus operandi evidence. First is the tim-
ing of the insurance policy. Like the ﬁres that were part of the
scheme, the insurance policy renewal in 2004 was less than 30
days before the ﬁre. An insurance expert testiﬁed at trial that
across thousands of claims, it is very rare for ﬁres to occur
within a month of a new insurance policy. The second is the
geographical proximity of the ﬁres. See United States v. Smith,
103 F.3d 600, 603 (7th Cir. 1996) (“Geographic proximity is
14                                                   No. 19-2969

certainly relevant to 404(b) analysis”). The 2004 ﬁre occurred
at 2961 Julia Drive, the same location as the April 2013 ﬁre.
Like the other ﬁres, it happened in the one-square-mile mo-
bile home park. These two similarities separate the 2004 ﬁre
from a random ﬁre or act of arson. Propensity does not enter
this chain of inferences. The probative value comes from its
unique circumstances, not any inference about Thomas’s
character or general propensity to set ﬁres.
    The district court also did not err in determining that the
probative value of the evidence of the 2004 ﬁre was not sub-
stantially outweighed by its prejudicial eﬀect. Identity and in-
tent were contested in this case. Thomas claimed a pizza box
left on the stove top caused the 2013 ﬁre. Evidence of the 2004
ﬁre helps to rebut this assertion. These circumstances—not
Thomas’s presence alone—make this evidence probative of
him setting the ﬁres and defrauding the insurance companies.
The district court also did not abuse its discretion in deciding
that this probative value was not substantially outweighed by
unfair prejudice. As the district court aptly described, the
prejudice to Thomas from evidence of the 2004 ﬁre stems from
its inclusion with the other ﬁres. On its own, the ﬁre is not
particularly prejudicial.
     Even if the district court had erred in admitting evidence
of the 2004 ﬁre, that error must be harmful to warrant rever-
sal. United States v. Conner, 583 F.3d 1011, 1025 (7th Cir. 2009).
“An error is harmless when the reviewing court is convinced
that the jury would have convicted even absent the error.” Id.
If we exclude the 2004 ﬁre, the evidence of Thomas’s guilt is
still overwhelming. The 2010 and 2013 ﬁres were all properly
admitted as part of Thomas’s scheme. The testimony of Jen-
nifer Thomas, Nissen, a ﬁre marshal, and insurance experts
No. 19-2969                                               15

about these ﬁres was more than enough for a reasonable jury
to convict Thomas of mail fraud. Any error the district court
committed in admitting the 2004 ﬁre was harmless.
                      III. Conclusion
   For these reasons we agree with the district court’s deci-
sions in all respects and AFFIRM Thomas’s convictions.