U.S. v. Majors

• Decision Date: 19 November 1999
• Docket Number: No. 97-2803,97-2803
• Citation: 196 F.3d 1206
• Parties: (11th Cir. 1999) UNITED STATES OF AMERICA, Plaintiff-Appellee, v. FENNIS OLEACH MAJORS a.k.a. F. O. Majors; GARETH EUGENE MAJORS, Defendants-Appellants
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1206

196 F.3d 1206 (11th Cir. 1999)

UNITED STATES OF AMERICA, Plaintiff-Appellee, v. FENNIS OLEACH MAJORS a.k.a. F. O. Majors; GARETH EUGENE MAJORS, Defendants-Appellants.

No. 97-2803

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

Nov. 19, 1999

[Copyrighted Material Omitted]

Appeal from the United States District Court for the Northern District of Florida D. C. Docket No. 5:95-CR-05036-1/LAC

Before ANDERSON, Chief Judge, and HILL, Senior Circuit Judge, and COOK^*, Senior District Judge.

HILL, Senior Circuit Judge:

Father and son appellants, F.O. Majors and Gareth Majors, were convicted by a jury in 1996 on sixteen counts of conspiracy to commit mail fraud; conspiracy to commit securities fraud; conspiracy to commit money laundering; mail fraud; and money laundering. While appellants raise eleven issues on appeal,¹ we find that only three trial-related issues merit discussion: (1) sufficiency of the evidence on the fraud counts, as to Gareth Majors only; on the money laundering counts, as to both Gareth Majors and F.O. Majors; (2) admissibility of the government's expert witness testimony; and (3) admissibility of evidence seized pursuant to a search warrant. Based upon the following, we affirm the judgments of conviction and sentences of both appellants.

I.

The thirty-six page indictment alleged that, over a twenty-year period, using four corporations,² F.O. and Gareth Majors, conspired to defraud investors by selling millions of dollars of worthless securities, bogus licenses and phoney distributorships, by representing: (1) that they possessed the rights to a patented new "secret formula" for producing a synthetic fuel additive;³ (2) that they were building a blending plant which would use as fuel buffalo gourds grown by local farmers;⁴ and (3) that they held the formula rights to a new cleaning fluid that killed the HIV virus.⁵

Aided by classic con-man methods and unmitigated gall, appellants claimed to be successful entrepreneurs who, through gilded representations, duped unwary investors to invest in their corporations, which were falsely touted to be viable, profitable, and manned by full staffs of office and laboratory personnel. Supplied with inconsistent, unsubstantiated and inflated balance sheets, stockholders were guaranteed large profits and dividends. From 1984 through 1996, they invested $3,296,900.72 with appellants. In turn, appellants used these funds⁶ for their own personal living and European travel expenses.

II.

In 1996, pursuant to an investigation by the Federal Bureau of Investigation, an FBI special agent submitted an affidavit in support of a request for search warrant to search the premises of one of appellants' corporations, Alliance Fuel Corporation (AFC). A search warrant was issued authorizing the search of the AFC premises for "[b]ooks, [l]edgers, [r]eceipts, [i]nvoices, [b]usiness records, the identification of [f]inancial accounts and any other evidence which is evidence in violation of Title 18 United States Code Sections 1341 and 1343." As a result of the search, thousands of documents were seized by the government.

After months of analyzing these documents, FBI financial analyst Mr. Michael Root testified as an expert witness for the government at trial. It was his opinion that $3.3 million approximated the dollar amount of fraud perpetrated by appellants upon investors for the relevant twelve-year time period.

At the conclusion of a two-week trial, the jury convicted appellants on all counts as charged. F.O. Majors was convicted of conspiracy to commit crimes against the United States, 18 U.S.C. 371 (count 1)⁷; mail fraud, 18 U.S.C. 1341 (counts 2-4); and laundering of monetary instruments, 18 U.S.C. 1956(a)(1) (counts 5-8, 10 and 14-16). He was sentenced to a total term of ninety-six months' imprisonment. Gareth Majors was convicted of conspiracy to commit crimes against the United States, 18 U.S.C. 371 (count 1); and money laundering, 18 U.S.C. 1956(a)(1) (counts 9 and 11). He was sentenced to sixty-three months' imprisonment. Appellants now appeal their convictions and sentences.

III.

A.

We limit our discussion of the sufficiency of the evidence of a scheme to defraud as to Gareth Majors only. We discuss the sufficiency of the evidence on the money laundering counts, as to both appellants.

Whether there is sufficient evidence to support the convictions is a question of law subject to our de novo review. United States v. Fischer, 168 F.3d 1273, 1276 (11th Cir. 1999), petition for cert. filed, 68 U.S.L.W. 3080 (July 15, 1999) (No. 99-11). In reviewing the sufficiency of the evidence to support the jury verdict, we view the evidence in the light most favorable to the government . . . all reasonable inferences and credibility choices are made in the government's favor. Id. Accepting all reasonable inferences from the evidence which support the verdict, we will affirm the convictions if a reasonable fact-finder could have reached a conclusion of guilt beyond a reasonable doubt. United States v. Lopez, 985 F.2d 520, 524 (11th Cir. 1993). It is not necessary for the government to disprove every reasonable hypothesis of innocence, as a jury is "free to choose among reasonable constructions of the evidence." United States v. Jones, 913 F.2d 1552, 1557 (11th Cir. 1990).

1.

Gareth Majors adopts his father's argument on appeal that he is not guilty of conspiracy to commit fraud because he made "no real misrepresentations" and that "to the extent any statements were inaccurate or misleading, any reasonable person could have - and would have investigated or evaluated the claims and the investment before handing over thousands of dollars." He claims that shareholders knew that the projects would not succeed unless financing was obtained; that European travel expenses were incurred in an attempt to obtain financing; and that shareholder investments were, by their very nature, risky.

Gareth characterizes his actions as "just puffing, misunderstandings, and . . . failed business efforts," United States v. Brown, 79 F.3d 1550, 1557 (11th Cir. 1996), not actionable under the mail fraud statute. "[W]ithout some objective evidence demonstrating a scheme to defraud, all promotional schemes to make money, even if 'sleazy' or 'shrewd,' would be subject to prosecution on the mere whim of the prosecutor. More is required under our criminal law." Id. at 1562 n. 20 (quoting United States v. Goodman, 984 F.2d 235, 240 (8th Cir. 1993)).

The government contends that at trial it presented objective evidence of a scheme to defraud and proved Gareth's participation in the conspiracy beyond a reasonable doubt. See United States v. High, 117 F.3d 464, 468 (11th Cir. 1997) (to support a conviction for conspiracy, the government must prove only that two or more persons agreed to commit a crime, that the defendant knew of the conspiratorial goal, and that he voluntarily participated in helping to accomplish that goal). The existence of such an agreement may be proved by either direct or circumstantial evidence; a common scheme or plan may be inferred from the conduct of the alleged participants or from other circumstances. Jones, 913 F.2d at 1557.⁸

We have reviewed the entire record, including the trial transcript. Evidence of Gareth's participation in the conspiracy to defraud investors is present throughout. He was president and a director of two of the four corporations involved. He had signatory authority on stock certificates. He signed fraudulent newsletters and corporate literature misrepresenting the financial condition of the companies. He signed at least one letter of investor inducement and provided inflated financial statements to potential investors. In addition, Gareth participated in the European trips, stockholder meetings and board meetings. When his father was absent from the office, he served as office manager, accountant and signatory, answering stockholder inquiries by telephone. It is clear from the evidence presented that there was a scheme to defraud investors; that Gareth knew of its general purpose; and that he knowingly and voluntarily participated in it. High, 117 F.3d at 468. Instead of disassociating himself from on-going illegal activity, Gareth knowingly associated himself, furthering its purpose. See United States v. Rudisill, 187 F.3d 1260 (11th Cir.1999).

In short, the record is replete with objective evidence of actions by Gareth which far surpass puffing or sellers' talk. Brown, 79 F.3d at 1557. While perhaps Gareth was not the ringleader of the conspiracy, the apple did not fall far from the tree. Viewed in the light most favorable to the government, the evidence is pervasive to support the jury's verdict. Fischer, 168 F.3d at 1276.

2.

a.

We next examine the sufficiency of the evidence supporting the convictions of the appellants on the money laundering counts. Counts V through XVI⁹ of the indictment charge appellants with money laundering under Section 1956 (a)(1)(B)(I).¹⁰

Section 1956 (a)(1)(B)(I) is sometimes referred to as the "concealment" or "design" provision of the money laundering statute. See United States v. Calderon, 169 F.3d 718, 720 (11th Cir. 1999);¹¹ United States v. Burns, 162 F.3d 840, 848 (5th Cir. 1998).¹² A violation of the concealment provision must "follow in time" the completion of the underlying transaction as an activity designed to conceal or disguise the origins of the proceeds. See United States v. Dimeck, 24 F.3d 1239, 1246 (10th Cir. 1994).¹³ This section of the money laundering statute was designed to punish defendants who thereafter take the additional step of attempting to legitimize their proceeds so that observers think their money is derived from legal enterprises. Id. (citations omitted).¹⁴ In this case, the government had to prove to the jury that: (1) that appellants conducted or attempted to conduct a financial transaction; (2) that the transaction involved the proceeds of a...