248 F.3d 449 (5th Cir. 2001), 99-40454, United States v Loe

Docket Nº:99-40454, 99-40495, 99-41470, 00-40690
Citation:248 F.3d 449
Party Name:UNITED STATES OF AMERICA, Plaintiff - Appellee, v. CORNELIUS DEWITTE LOE, JR., also known as C.D. LOE; BABO BEAZLEY LOE; LOE'S HIGHPORT, INC., Defendants - Appellants. UNITED STATES OF AMERICA, Plaintiff - Appellee, v. LOE'S HIGHPORT, INC.; BABO BEAZLEY LOE, Defendants - Appellants. UNITED STATES OF AMERICA, Plaintiff - Appellee, v. BABO BEAZLEY LO
Case Date:April 17, 2001
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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Page 449

248 F.3d 449 (5th Cir. 2001)

UNITED STATES OF AMERICA, Plaintiff - Appellee,

v.

CORNELIUS DEWITTE LOE, JR., also known as C.D. LOE; BABO BEAZLEY LOE; LOE'S HIGHPORT, INC., Defendants - Appellants.

UNITED STATES OF AMERICA, Plaintiff - Appellee,

v.

LOE'S HIGHPORT, INC.; BABO BEAZLEY LOE, Defendants - Appellants.

UNITED STATES OF AMERICA, Plaintiff - Appellee,

v.

BABO BEAZLEY LOE; LOE'S HIGHPORT, INC., Defendants - Appellants.

UNITED STATES OF AMERICA, Plaintiff - Appellee,

v.

LOE'S HIGHPORT, INC.; BABO BEAZLEY LOE, Defendants - Appellants.

No. 99-40454, 99-40495, 99-41470, 00-40690

United States Court of Appeals, Fifth Circuit

April 17, 2001

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Appeals from the United States District Court for the Eastern District of Texas.

Before HIGGINBOTHAM and DeMOSS, Circuit Judges, and FISH,[*] District Judge.

PATRICK E. HIGGINBOTHAM, Circuit Judge:

Appellants seek reversal of their convictions for conspiracy, wire fraud, mail fraud, tax fraud, and money laundering. They further challenge the sentence imposed by the district court. We are unpersuaded by the majority of their numerous assertions of error. However, as the evidence was insufficient to support a conviction on three of the money laundering charges, we affirm in part, reverse in part, and remand for resentencing.

I

Loe's Highport, Inc. operated Loe's Highport Marina, reputedly the largest inland marina in the world. Situated on Lake Texoma, the marina contains hundreds of boat slips, facilities for the sale of boats, a disco, a corporate office, and other facilities. Appellants Cornelius and Babo Loe ran the marina, which was located on property leased from the U.S. Corps of Engineers. Under the lease, the Corps was to receive a percentage of marina revenues.

In 1990, the lake experienced the greatest flood in its history. Appellants submitted millions of dollars in claims to their insurers, Lexington Insurance Company and Chubb Insurance Company. In the wake of damage caused by a tornado in 1994, Appellants submitted additional claims to Continental Insurance Corporation.

In 1995, a disgruntled customer of LHI contacted the Federal Bureau of Investigations, claiming to be the victim of fraud. Further investigation by the FBI indicated that Appellants were underreporting boat sales to the Internal Revenue Service and the Corps. The FBI obtained a search warrant and seized thousands of documents from the marina.

On September 11, 1997, a grand jury sitting in the Eastern District of Texas indicted Appellants and three other individuals1

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on various conspiracy, tax fraud, wire fraud, mail fraud, and money laundering charges. A 1998 superseding indictment charged Appellants on thirty-one counts.2 The Government alleged that Appellants failed to report millions in boat sales to the IRS and the Corps. Appellants were also accused of having defrauded their insurers, who collectively suffered millions of dollars in damage due to Appellants' submission of altered or fabricated invoices for losses and mitigation costs. The indictment alleged that Appellants conspired to undertake these unlawful activities, and that they used the proceeds of the fraud to acquire various forms of property, including a house in Florida.

The district court severed the counts and held two trials. Appellants were each convicted on some counts and acquitted on others. The district court sentenced Cornelius and Babo Loe to jail and required the Loes and LHI to pay large fines and restitution damages.

II. CORNELIUS LOE

A

Cornelius Loe argues that his conspiracy conviction should be reversed, asserting that his prosecution was barred by the statute of limitations. The government alleged only one act in furtherance of the conspiracy that fell within the five-year statute of limitations.3 Cornelius Loe argues that the overt act alleged in the indictment could not support a conviction.

The indictment alleged that the defendants conspired to commit the following acts: "To devise and intend to devise a scheme and artifice to defraud insurance companies and to obtain money and property by means of false and fraudulent pretenses and promises and [to do so in violation of 18 U.S.C.A. § 1341 (mail fraud) and in violation of 18 U.S.C.A. § 1343 (wire fraud)]." Given the statute of limitations, the Government had to prove an act in furtherance of the conspiracy after September 11, 1992. The indictment alleged: "On or about December, 1992, BABO BEAZLEY LOE, C.D. LOE, JR. and LOE's HIGHPORT, INC. effected a settlement of the lawsuit and received a portion of the fraudulently obtained insurance proceeds."

These allegations arose out of the following circumstances: In July 1991, the Loes' insurer, Lexington, interpleaded $638,388.34 in state court to determine the portion of proceeds due to the Loes and one of their tenants, David Hull. Hull apparently had refused to endorse Lexington insurance checks that he received, checks made out jointly to him and the Loes.4 According to the Government, the vast majority of the interpleaded funds resulted from the insurance fraud undertaken by the Loes. On March 27, 1991, the state court ordered that $624,867.795 be paid to

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the Loes and that $15,520.55 be retained in the court registry. The court's calculation was incorrect, as these amounts sum to $640,388.34. The investment firm handling the proceeds consequently paid the Loes only $622,867.79. By subsequent order, the court awarded Hull $13,520.55, leaving $2,000 in the account. All of these events occurred before September 11, 1992.

Meanwhile, the Loes sued Hull over a debt. In November or December, 1992, Hull's attorney and the Loes' attorney negotiated a possible settlement of litigation between the two parties. Hull's attorney proposed a disposition of the funds remaining in the registry account from this and earlier interpleader actions. Following this conversation, Hull's attorney asked the court to disburse $17,500 from an earlier interpleader to the Loes, plus the $2,000 remaining by mistake, and to disburse the remainder to Hull. The motion explained that the $17,500 was actually owed to Hull, but should be given to the Loes to settle the debt litigation. The court entered an order of disbursement on February 10, 1993.6

Based on these facts, Cornelius Loe contends, first, that the $2,000 payment was merely the "result" of the conspiracy, and not its object. He argues that the object of the conspiracy was defrauding the insurance company. As the fraud was completed outside the limitations period, Cornelius argues that the Government can not demonstrate the commission of an overt act in furtherance of the conspiratorial agreement.7

We are unpersuaded by Loe's argument. Receipt of the money was an object, and not merely a collateral result, of the conspiracy. The indictment so alleged, and a rational trier of fact could have arrived at this conclusion.

Our holding in United States v. Girard8 is instructive. In Girard, we reversed the dismissal of an indictment, which the district court had found barred by the statute of limitations. The defendant in that case had allegedly conspired to defraud the government by rigging contract bids. Only the final payment was within the statute of limitations; the bid rigging had occurred long before.9 We held that the receipt of the money was properly alleged as an object of the conspiracy, which did not end until the last payment was made. Girard's overt act was the acceptance and retention of the payment.10 We made the common sense observation that the object of the conspiracy was not the making of rigged bids itself, but the subsequent receipt of the proceeds.11 Similarly, receipt

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of the $2,000 in this case constituted an overt act falling within the limitations period.

Cornelius Loe also contends that actions taken by Hull's attorney are not actions taken by conspirators and therefore cannot be actions taken in furtherance of a conspiracy.12 This argument fails, first, because receipt of the money by the Loes was an overt act within the scope of the conspiracy. Moreover, a rational jury could conclude that the Loes, as parties to the settlement agreement with Hull, took some overt action in connection with the terms of the agreement.

Third, Cornelius Loe argues that, even if the $2,000 payment made in February 1993 was an act in furtherance of the conspiracy, the indictment failed to allege this act. Loe notes that the indictment only alleged the 1992 settlement. In assessing whether a conspiracy conviction under 18 U.S.C. § 371 withstands a statute of limitations challenge, this Court has held that the overt acts alleged in the indictment and proved at trial mark the duration of the conspiracy.13 Proof of an unalleged act can not surmount the statute of limitations bar.

Loe's argument fails, however, because the motion to disburse the $2,000 was itself part of the settlement, which was negotiated in November or December 1992. The indictment indicated that Appellants had "effected a settlement" and "received a portion of the fraudulently obtained insurance proceeds." The broad language of the indictment was sufficient to encompass the Loes' receipt of the $2,000.

Finally, Cornelius Loe contends that the $2,000 is "interest" from the interpled funds and consequently not the insurer's money. This argument is creative advocacy, but wrong. The $2,000...

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