13 F.3d 1421 (10th Cir. 1994), 93-3159, United States v. Smith

Docket Nº:93-3159.
Citation:13 F.3d 1421
Party Name:UNITED STATES of America, Plaintiff-Appellee, v. Brenda Lu SMITH, Defendant-Appellant.
Case Date:January 06, 1994
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit

Page 1421

13 F.3d 1421 (10th Cir. 1994)

UNITED STATES of America, Plaintiff-Appellee,

v.

Brenda Lu SMITH, Defendant-Appellant.

No. 93-3159.

United States Court of Appeals, Tenth Circuit

January 6, 1994

Page 1422

Julie A. Robinson, Asst. U.S. Atty. (Randall K. Rathbun, U.S. Atty., with her on the brief), Kansas City, KS, for plaintiff-appellee.

James R. Wyrsch (Ronald D. Lee, Cheryl A. Pilate, with him on the brief) of Wyrsch, Atwell, Miriakian, Lee & Hobbs, P.C., Kansas City, MO, for defendant-appellant.

Before: BALDOCK, ALDISERT [*], and BRORBY, Circuit Judges.

ALDISERT, Circuit Judge.

In this appeal by Brenda Lu Smith from her conviction for mail fraud and money laundering, the major question for decision is whether she was entitled to a "good faith" jury instruction as a defense to charges of using the mails to defraud. We hold that she was not.

We must decide also whether the district court erred in including the word "attempt" in the mail fraud jury instruction, in failing to dismiss several counts of the indictment for lack of specificity and in failing to properly apply the Sentencing Guidelines' grouping requirements and prohibition against double counting. We will affirm the judgment of the district court in all respects.

Jurisdiction was proper in the trial court based on 18 U.S.C. Sec. 3231. This court has jurisdiction pursuant to 28 U.S.C. Sec. 1291.

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The appeal was timely filed under Rule 4(b) of the Federal Rules of Appellate Procedure.

I.

Appellant Smith was indicted for her participation in a scheme to defraud foreign and domestic airlines of thousands of dollars. She was charged with two counts of mail fraud in violation of 18 U.S.C. Sec. 1341, three counts of money laundering in violation of 18 U.S.C. Sec. 1957 and one count of forfeiture pursuant to 26 U.S.C. Sec. 7203. Several other counts were dismissed prior to trial.

The Appellant's arrest and conviction stemmed from her operation of Globemaster Travel, a travel agency in Lenexa, Kansas. Globemaster Travel was originally owned by Smith and later sold to local investors, although she stayed on as manager. Globemaster was a member of the Airline Reporting Corporation, an intermediary organization that assists in the transmission of paperwork and funds between the airlines and travel agencies.

Globemaster was required to mail to Airline Reporting each week a report of its cash and credit sales, credit card refunds, cash refunds, ticket exchanges and earned commissions. From the documentation provided, Airline Reporting would determine the net amounts due Globemaster or owed by it to the various airlines. Thus, the reporting of ticket refunds by a travel agency to Airline Reporting created a credit in favor of the agency tantamount to a bank deposit. Similarly, the reporting of a ticket sale was equivalent to a debit or withdrawal.

Evidence was presented at trial showing that between May 8, 1989 and June 7, 1989, Smith purchased eighteen airline tickets in names other than her own for multiple-leg travel in foreign countries. These tickets consisted of several ticket coupons printed in two or more ticket booklets. These multi-leg tickets are known in the trade as "conjunctive tickets."

Smith and several employees under her direction reported as refunded each coupon of these conjunctive tickets. Globemaster was credited with the entire purchase price each time a coupon from the conjunctive ticket was reported as refunded. As a result, each foreign ticket was refunded multiple times, creating a pool of credits in Globemaster's bank account far exceeding the actual value of the conjunctive tickets originally issued and far exceeding the credit to which Globemaster was entitled. For example, if a conjunctive ticket, issued for a total cost of $3,000, contained five separate ticket coupons, by redeeming each coupon for the total amount of $3,000, Globemaster stood to receive $15,000 as credit refunds for a conjunctive ticket for which it was entitled to only $3,000. This was a classic case of "cooking the books."

In addition, some of the original eighteen conjunctive tickets were exchanged for additional conjunctive tickets, which were then split and either reported as refunded or exchanged for still more multi-leg tickets.

In the second stage of the scheme, the Appellant or her employees drew upon the pool of credits created by the multiple refunding of conjunctive tickets by issuing tickets for travel in the United States on domestic airlines. These domestic tickets were reported as cash sales, and Airline Reporting debited the pool of credits in Globemaster's account to show payment for the domestic tickets. Subsequently, the Appellant, together with some friends and various employees operating under her direction, redeemed these domestic tickets at airline ticket counters located in various airports throughout the United States, receiving cash or refund checks.

The government presented evidence at trial that the Appellant's scheme resulted in a loss of approximately $389,230.22 to the foreign airlines and approximately $184,533.50 to the domestic airlines. Evidence was also presented that the Appellant used the mails to effectuate her scheme. Each week, she had her employees mail to Airline Reporting's processing center in El Paso, Texas, Globemaster Travel's report which contained the fraudulent tickets, refund notices and exchange notices.

On June 28, 1989, after discovering the fraudulent activity at Globemaster Travel, Airline Reporting dispatched representatives

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to the travel agency to seize their ticket stock and access plates. On that same day, the Appellant instructed one of her employees, Joann Gustin, to move money out of two of Globemaster's bank accounts. Ms. Gustin withdrew $12,683 from one and $115,494 from the other and deposited funds totalling $128,177 into her own account. On July 3, 1989, Gustin and the Appellant opened a bank account at First National Bank of Overland Park under a new name, LeShoppe Ltd., and deposited the entire $128,177. Within a four month period, the Appellant allegedly used the funds to pay personal debts.

At trial, Smith testified in her own defense. She said that she was unaware of any plan to create an inflated pool of credits in the Globemaster bank account by claiming multiple refunds of foreign airline tickets. She testified that she authorized the purchase of only six foreign airline tickets worth approximately $100,000 on her American Express card and the subsequent refund of those same tickets so that Globemaster could obtain the benefit of a 60-day float through the use of her credit card. She contended that Globemaster was suffering from cash flow problems and that she had developed the American Express card plan in order to reduce Globemaster's weekly liability to Airline Reporting. She testified that she did not intend to steal money, but to use her American Express card to obtain a legitimate credit float.

Significantly, the government noted that, at best, Smith's testimony explained only six of the 18 conjunctive tickets which formed the basis of the prosecution. The remaining 12 tickets were purchased with cash from Globemaster's account.

The Appellant was tried before a jury which returned a verdict of guilty on December 3, 1992 on all five counts and a special verdict ordering forfeiture on the remaining count. The court sentenced Smith to 48 months in prison, 3 years supervised release, imposed a special assessment of $250 and imposed a fine of $75,000.

After her trial, Smith unsuccessfully moved for a judgment of acquittal or, in the alternative, for a new trial on several grounds, some of which she has raised again on appeal.

II.

On appeal, Smith contends that the district court committed reversible error by failing to give her requested good faith instruction concerning the mail fraud counts; that it committed plain error by including the word "attempt" in certain instructions dealing with mail fraud and by failing to give a specific unanimity instruction; that it erred by failing to dismiss Counts Two and Three of the indictment for failure to state an offense or, in the alternative, for failure to grant a new trial; and that it erred when it applied the sentencing guidelines by failing to group the mail fraud and money laundering offenses pursuant to U.S.S.G. Sec. 3D1.2 and by double counting.

The appropriate standard of review for challenges to jury instructions is whether the jury, considering the instructions as a whole, was misled. United States v. Mullins, 4 F.3d 898, 900 (10th Cir.1993). Only where the reviewing court has "substantial doubt that the jury was fairly guided" will the judgment be disturbed. Id. We apply a de novo standard of review to determine the propriety of an individual jury instruction to which objection was made at trial. United States v. Sasser, 974 F.2d 1544, 1551 (10th Cir.1992), cert. denied, --- U.S. ----, 113 S.Ct. 1063, 122 L.Ed.2d 368 (1993).

Where no objection was made to the giving of a jury instruction or its contents, we review only under the plain error standard. United States v. Uresti-Hernandez, 968 F.2d 1042, 1046 (10th Cir.1992). Plain error, in this context, is error that affects the defendant's right to a fair and impartial trial. Id. Similarly, we review a court's failure to instruct a jury for plain error if the defendant fails to raise the contention at trial. United States v. Brown, 996 F.2d 1049, 1052 (10th Cir.1993). In order to constitute plain error, the district court's error must have been both "obvious and substantial." Id. at 1053.

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We review a district court's order granting or denying a motion to dismiss an indictment for abuse of...

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