128 F.3d 557 (7th Cir. 1997), 96-3166, United States v. Emerson

Docket Nº:96-3166.
Citation:128 F.3d 557
Party Name:UNITED STATES of America, Plaintiff-Appellee, v. Larry L. EMERSON, Defendant-Appellant.
Case Date:October 20, 1997
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit
 
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128 F.3d 557 (7th Cir. 1997)

UNITED STATES of America, Plaintiff-Appellee,

v.

Larry L. EMERSON, Defendant-Appellant.

No. 96-3166.

United States Court of Appeals, Seventh Circuit

October 20, 1997

Argued May 19, 1997.

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[Copyrighted Material Omitted]

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Rodger A. Heaton, Estaban F. Sanchez (argued), Office of the United States Attorney, Springfield, IL, for Plaintiff-Appellee.

Monroe McWard, Taylorville, IL, Jon G. Noll, Jeffrey T. Page (argued), Springfield, IL, for Defendant-Appellant.

Before RIPPLE, KANNE, and DIANE P. WOOD, Circuit Judges.

KANNE, Circuit Judge.

Larry Emerson, an employee of the United States Postal Service, set up a scheme for hiring contractors to perform work (some real and some phony) on post offices across central Illinois in exchange for kickbacks of money, vehicles, services, and real estate. This plan worked well for awhile, enabling Emerson to swindle more than a quarter of a million dollars from the Postal Service. The postal inspectors eventually discovered the fraud, and a jury convicted Emerson of mail fraud, money laundering, and conspiracy to commit money laundering. The jury also returned a special verdict of forfeiture against the proceeds of Emerson's illegal scheme. The district court subsequently sentenced Emerson to 216 months of imprisonment and three years of supervised release, and it ordered him to pay an $800 special assessment and $349,000 in restitution. On appeal, Emerson claims that the Government failed to present sufficient evidence to convict him of the charged crimes, that the district court improperly applied the sentencing guidelines, and that the district court erroneously refused to offset the value of the forfeited properties against the restitution amount. We reject all but one of Emerson's arguments and therefore remand only for resentencing.

I. HISTORY

Larry Emerson worked for the United States Postal Service ("Postal Service"), and in 1989, he became the Manager of Maintenance-Detached Units at the Springfield, Illinois main post office. In this position, Emerson hired independent contractors to perform minor repairs and alterations on associate post offices throughout central Illinois. In doing so, Emerson obtained approval for the repairs from the Postal Service management in Springfield, hired a contractor to perform each job, oversaw the work, and then submitted the contractor's certified invoices to the Postal Service for payment.

In 1993, Emerson gained additional duties as the Contracting Officer's Representative ("COR") for central Illinois. The contracting officer, Robert Rigsby, directed Emerson to obtain bids for formal contracts to perform work on certain post offices in order to make them accessible to handicapped individuals. Although Postal Service policy required competitive bidding for these contracts, Emerson selected John Keller, Wallis Biesenthal, and Johnnie White to perform the jobs without any bidding. As COR, Emerson also had to

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monitor the performance of the contractors and inspect the work sites. If the work conformed to the formal contracts, Emerson was to certify that the work had been performed and submit the contractors' invoices to the Postal Service for payment.

In late 1991 or 1992, Emerson began defrauding the Postal Service with the help of Biesenthal, Keller, and other contractors. The contractors would submit false or inflated construction invoices with Emerson's approval, and then they would provide kickbacks to Emerson in the form of cash, cars, trucks, construction equipment, building supplies, and free construction services on property owned by Emerson. Emerson submitted invoices for work he knew the contractors never performed, yet he certified to the Postal Service that the bills were correct. In 1993 and 1994, Emerson received over $350,000 in kickbacks from Biesenthal, Keller, and other unindicted contractors.

On several occasions, Emerson enlisted other contractors to do the work that Biesenthal and Keller were paid to do, and then Emerson would submit additional invoices to the Postal Service for the work actually performed by these other contractors. Under this scheme, the Postal Service would pay twice for the same work--i.e., Emerson would submit one invoice for the work performed under a formal contract and another invoice under the pretext that the job constituted minor repair work.

Emerson, Biesenthal, and Keller took additional action to conceal and to further their fraudulent scheme. For example, Emerson directed them to operate under different business names to avoid the appearance that a single contractor received too much work; he suggested that Keller's girlfriend act as an officer of a construction company to create the impression that he awarded a contract to a minority-run business; he instructed them to submit invoices below his $2,000 spending limit; and he asked them not to include work dates or locations on the invoices. In addition, Emerson either conducted or directed Biesenthal and Keller to perform certain financial transactions involving the proceeds of the mail fraud scheme. In particular, Emerson had Biesenthal maintain a separate bank account for the kickbacks; he directed Biesenthal and Keller to purchase goods for him and make payments on his rental property loans; and he enlisted contractors to perform work and purchase supplies for his various homes free of charge.

The Government discovered Emerson's schemes and charged him in a seventeen-count indictment with ten counts of mail fraud in violation of 18 U.S.C. § 1341, five counts of money laundering in violation of 18 U.S.C. § 1956(a)(1)(A)(i), one count of conspiracy to commit money laundering in violation of 18 U.S.C. § 1956(h), and one count of criminal forfeiture under 18 U.S.C. § 982(b)(1). A jury convicted him of all the charges, and the district court sentenced him to 216 months imprisonment, three years supervised release, an $800 special assessment, and $349,000 in restitution. The jury also found that several pieces of Emerson's real and personal property were proceeds of Emerson's illegal schemes, and the court ordered the forfeiture of that property.

II. ANALYSIS

  1. Sufficiency of the Evidence

    Emerson first complains that the Government failed to present sufficient evidence from which a rational jury could determine that he committed the charged crimes. A defendant bears a heavy burden in challenging the sufficiency of the evidence after a conviction. See United States v. Hickok, 77 F.3d 992, 1002 (7th Cir.), cert. denied, --- U.S. ----, 116 S.Ct. 1701, 134 L.Ed.2d 800 (1996). We review all the evidence in the light most favorable to the Government, draw all reasonable inferences in the Government's favor, and reverse "only when the record is devoid of any evidence, regardless of how it is weighed, from which a jury could find guilt beyond a reasonable doubt," United States v. Thompson, 106 F.3d 794, 798-99 (7th Cir.1997) (quoting United States v. Gutierrez, 978 F.2d 1463, 1468-69 (7th Cir.1992)).

    Emerson cannot meet this heavy burden. To prove mail fraud, the Government needed to establish Emerson's participation

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    in a scheme to defraud, his intent to defraud, and use of the mails to further that scheme. See United States v. Strang, 80 F.3d 1214, 1219 (7th Cir.1996); see also 18 U.S.C. § 1341. Emerson complains that the Government did not prove his knowing participation in a scheme to defraud the Postal Service, and he maintains that Biesenthal's and Keller's testimony to the contrary is unworthy of belief.

    We reverse a conviction based on the incredulity of testimony only if that testimony is incredible as a matter of law. See United States v. Dunigan, 884 F.2d 1010, 1013 (7th Cir.1989). To meet this standard, the testimony must be unbelievable on its face, physically impossible for the witness to observe, or contrary to the laws of nature. See id. Moreover, we do not assess the credibility of witnesses even where the testimony is "totally uncorroborated and came from an admitted liar, convicted felon, large-scale drug-dealing, paid government informant." United States v. Davis, 15 F.3d 1393, 1398 (7th Cir.1994) (quoting United States v. Beverly, 913 F.2d 337, 358 (7th Cir.1990) and United States v. Molinaro, 877 F.2d 1341, 1347 (7th Cir.1989)). In this case, we find nothing suspect in Biesenthal's and Keller's testimony, let alone anything that would warrant a reversal. In addition, the Government provided a mountain of evidence, including photographs, checks, and postal service forms, to corroborate Biesenthal's and Keller's testimony implicating Emerson in the mail fraud scheme.

    Emerson's additional arguments are also without consequence. The fact that Emerson may not have had final approval authority on the disbursement of Postal Service monies does not diminish his participation in a scheme to defraud the Postal Service out of that money. Finally, we reject Emerson's argument that his conduct amounted to mere negligent business practice. Emerson maintained that his abundant workload prevented him from adequately monitoring construction projects and thus permitted Biesenthal and Keller to charge the Postal Service for work that they did not perform. Emerson's co-conspirators testified, however, that Emerson not only willingly participated in the scheme, but that he also created and controlled that scheme. Relying on this evidence, the jury reasonably concluded that Emerson committed mail fraud.

    To prove money laundering, the Government needed to show that Emerson conducted a financial transaction affecting interstate commerce with property representing the proceeds from some illegal activity, that he knew the property represented illegal proceeds, and that he...

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