U.S. v. Johnson
| Citation | 297 F.3d 845 |
| Decision Date | 12 July 2002 |
| Docket Number | No. 99-10425.,No. 99-10413.,No. 99-10411.,No. 99-10414.,No. 99-10412.,No. 99-10423.,99-10411.,99-10412.,99-10413.,99-10414.,99-10423.,99-10425. |
| Parties | UNITED STATES of America, Plaintiff-Appellee, v. Harry JOHNSON, aka Richard Steiner; Micah Rudisill, aka Mike Rodgers; Larry Ray Eames, aka Robert Eames, aka David Rodgers; Louise Maria Clark, aka Kelly Collins, aka Lois Collins, aka Kisha Smith, aka Louise Marie Clark; Gene Burce, aka John Loman, aka John Logan, aka Gene Bruce, aka Eugene Burce, Jr., aka John Foley; Michael Kevin Davis, aka H.P. Wills, aka H.P. Wells, aka H.H. Willis, aka H.G. Willis, Defendants-Appellants. |
| Court | United States Courts of Appeals. United States Court of Appeals (9th Circuit) |
Dennis C. Jones; Dana Carpenter, Carpenter & Hamilton, P.A.; George F. Klink; Patrick E. McGillicuddy; James Logan and Philip A. Seplow, Wisdom and Logan; Jon M. Sands; and John W. Rood, III, Phoenix, AZ, for the appellants.
Scott Bales, Special Assistant U.S. Attorney, Phoenix, AZ, for the appellee.
Appeal from the United States District Court for the District of Arizona; Roslyn O. Silver, District Judge, Presiding. D.C. No. CR-97-00237-ROS.
Before: GOODWIN, HUG, and THOMAS, Circuit Judges.
Following a 17-week trial, Harry Johnson, Gene Burce, Michael Davis, Louise Clark, Micah Rudisill, and Larry Eames ("Defendants") were found guilty of conspiracy to commit fraud, conspiracy to commit money laundering, mail fraud, and wire fraud for their involvement in a fraudulent telemarketing scheme. Rudisill and Eames were also found guilty of money laundering. Each defendant appealed his or her conviction and sentence on multiple grounds, and the six appeals were consolidated into a single matter for consideration by this court. For the reasons set forth below, we affirm Defendants' convictions and sentences.
Facts introduced at trial revealed the following. In 1995 a telemarketing business known as American Eagle Advertising ("AEA") began operating in Chamblee, Georgia — a suburb of Atlanta. The company, managed by Larry Eames and Micah Rudisill ("Managers"), initially sold magnetic business cards, pens, coffee mugs, and other advertising speciality items strictly to solicited businesses. At some point, however, Eames and Rudisill determined that they could increase profits by expanding their operation to include sales to solicited individuals. To that end, Eames and Rudisill began developing the telemarketing scheme that forms the factual backdrop of this case. For the sake of clarity, the development of this scheme might be broken into two phases: the organizational phase and the operational phase.
The organizational phase began in December of 1995, when Rudisill approached Rahim Rashada, a former telemarketing co-worker (and cooperating co-conspirator at trial). At the time he was contacted by Rudisill, Rashada was employed as the sales manager at an Atlanta company known as Home Benefits Organization ("HBO"). Rashada's duties at HBO included the hiring, training, and supervision of a team of salespeople, a team that included Gene Burce, Michael Davis, Louise Clark, and Harry Johnson. Rudisill told Rashada that he and Eames were interested in developing a scheme for selling to solicited individuals, and offered to make Rashada a partner in the plan if Rashada would bring his sales team and leads over to AEA. Rashada agreed, and by January of 1996, Burce, Davis, Clark, and Johnson ("Reloaders")1 were all working as telemarketers at AEA.
With leads and a sales team in place, AEA moved on to the operational phase of its individual-solicitation scheme. The idea behind the scheme was fairly straightforward. Individuals were called and run through a "qualifying pitch," during which the AEA telemarketer would determine if the individual was a "mooch" — that is, someone who would be susceptible to the scheme. In qualifying individuals, AEA focused primarily on relatively isolated, elderly individuals who had demonstrated a past interest in telemarketing promotions. Once a person was qualified, AEA would call them back and tell them that they had won a prize, the collection of which was contingent upon the purchase of AEA ad specialty products. As the ad specialty products were worth a small fraction of the sale price, and the large prizes did not exist, AEA realized significant profits on every transaction it made with these qualifying individuals.
The scheme did not end, however, with a single sale to an individual. Once an individual made a purchase, they were deemed excellent targets for additional sales. Thus, AEA telemarketers would "reload" these people — that is, they would call them to encourage additional purchases, always with the promise of larger and more certain rewards that, again, did not exist. In order to facilitate the "reload" sale, AEA would send out nominal prizes to purchasers — typically, in the form of gold coins — to foster a belief that large prizes were potentially available. In addition, AEA told these buyers that AEA could donate items to charity on the customer's behalf, thereby creating an additional incentive to buy. Because few gifts were ever donated to charities, charitable purchases generally succeeded only in raising AEA's profits.
Just as the scheme to sell to individuals was fairly straight-forward, the plan implemented to cover-up AEA's activities was relatively simple. In December of 1995, at about the same time that Rudisill was recruiting Rashada, Eames opened up a new AEA office in Phoenix, Arizona. Although the Phoenix office did engage in AEA's traditional operation of selling ad specialty products to solicited businesses, its main purpose was to provide cover for the individual solicitations being conducted out of Atlanta. As described below, this cover was achieved by concealing the existence of the Atlanta office and making sales to individuals look like sales to businesses.
Prior to each individual solicitation, AEA's Atlanta telemarketers dialed *671 to prevent victims from tracing any calls back to Atlanta. If in the course of the sales pitch, a customer asked where the company was located, the telemarketer would say that the company was located in Phoenix and that he was calling from that location. AEA's Atlanta address and phone number were never given to customers, and, upon making a sale, the telemarketers always instructed the individual to send payment to the AEA office in Phoenix. By employing these tricks, AEA ensured that individual customers believed that they were dealing with the Phoenix office of AEA. This was important, as it guaranteed that any complaints or suspicions would be directed at that office, which was specifically designed to withstand inspection.
The Phoenix office was able to withstand external scrutiny because AEA made all individual sales out of Atlanta look like sales to businesses. This was accomplished primarily through the verification process. Upon making a sale, Reloaders would coach their victims on what to say when another AEA employee called to verify the purchase of the ad specialty items. In particular, individuals were told to describe themselves as a business customer. Once instructed on what to say, and after payment had been received, an AEA employee in the Phoenix office, Teresa Eames (Eames' ex-wife), would call and tape-record a "clean" tape of the individual confirming their purchase as a business. If the customer failed to say the right things, an AEA telemarketer would call for another rehearsal, and Ms. Eames would reverify the sale.
In addition to the verification process, AEA covered up its Atlanta sales through its "bonus credit release" form. With each shipment of ad specialty goods, an individual received a "bonus credit release" form, which the customer was instructed to sign and return to receive gold coins and other prizes. The forms lent an aura of legitimacy to AEA — customers did receive items after submitting forms, albeit items of little value in relation to their payments to AEA — while allowing AEA to obtain signed statements from the customer confirming that they were a business. Essentially, together with the verification process, the "bonus credit release" forms washed over the individual solicitation operation of the Atlanta office by making it appear as though AEA sold only to businesses, and sold only through Phoenix.
While the Phoenix office was the heart of AEA's cover-up, additional methods were employed to avoid detection. Messages from Phoenix about Atlanta customers were destroyed, and all leads, pitch-books, and sales records used by Reloaders were collected by Rudisill at the end of the day and removed from the Atlanta office. In addition, Reloaders (1) falsified their sales orders by including the fictitious business names they had instructed customers to adopt, (2) understated the sales amounts to hide the volume of sales to individuals (generally by dropping the last zero), and (3) used aliases whenever contacting customers.
Though the idea and cover-up were fairly simple, AEA's scheme was incredibly effective. Targeting the elderly, AEA took in more than 10 million dollars through roughly 1300 sales to over 300 individuals. This amounted to about $8.5 million in profit after AEA's direct expenses for the scheme, which included $1.5 million in "hard gifts" for its reloaded customers, and $117,000 on the ad specialty items sold to its customers.
In addition to its financial achievements, AEA successfully concealed its scheme for close to 18 months. Perhaps this is unsurprising, given that by all outward appearances AEA looked to be a legitimate telemarketing operation. AEA's offices regularly communicated about sales, and Reloaders held daily sales meetings, periodic training...
To continue reading
Request your trial
-
U.S. v. Lazarenko
...Schreiber Distrib. Co. v. Serv-Well Furniture Co., Inc., 806 F.2d 1393, 1399-1400 (9th Cir.1986); see, e.g., United States v. Johnson, 297 F.3d 845, 871 (9th Cir.2002) (upholding a wire fraud conviction where the wire involved was a telephone call). In a case such as this, where the wire at......
-
U.S. v. Tarallo
...to be material, it must be "important" to a reasonable person. Defendant's argument is contrary to our holding in United States v. Johnson, 297 F.3d 845, 866 (9th Cir.2002), that the Supreme Court in Neder did not intend to supplant the previously existing definition of materiality provided......
-
U.S. v. Novak
...contention that this language demonstrated an obvious venue defect, the Government points to a Ninth Circuit case, United States v. Johnson, 297 F.3d 845 (9th Cir.2002). In Johnson, the indictment bore some similarity to that charging Novak. There, a narrative paragraph and a grid were used......
-
U.S. v. Lazarenko
...Schreiber Distrib. Co. v. Serv-Well Furniture Co., Inc., 806 F.2d 1393, 1399-1400 (9th Cir.1986); see, e.g., United States v. Johnson, 297 F.3d 845, 871 (9th Cir.2002) (upholding a wire fraud conviction where the wire involved was a telephone call). In a case such as this, where the wire at......
-
Federal criminal conspiracy.
...overt act in furtherance of the conspiracy); United States v. Svoboda, 347 F.3d 471,476 (2d Cir. 2003) (same); United States v. Johnson, 297 F.3d 845, 868 (9th Cir. 2002) (same); United States v. Dadi, 235 F.3d 945, 950 (5th Cir. 2000) (same); United States v. Edwards, 188 F.3d 230, 234 (4t......
-
Federal criminal conspiracy.
...United States v. Beverly, 369 F.3d 516, 532 (6th Cir. 2004) (same); Svoboda, 347 F.3d at 476 (same); United States v. Johnson, 297 F.3d 845, 868 (9th Cir. 2002) (same); United States v. McKinney, 954 F.2d 471, 475 (7th Cir. 1992) (asserting the defendant's conversation with the other person......
-
Trials
...Cir. 2014) (Confrontation Clause not implicated because witness called by defense and did not testify for prosecution); U.S. v. Johnson, 297 F.3d 845, 856 n.4 (9th Cir. 2002) (Confrontation Clause not implicated when defense unable to cross-examine codefendant because limiting instructions ......
-
Federal criminal conspiracy.
...United States v. Beverly, 369 F.3d 516, 532 (6th Cir. 2004) (same); Svoboda, 347 F.3d at 476 (same); United States v. Johnson, 297 F.3d 845, 868 (9th Cir. 2002) (same); United States v. McKinney, 954 F.2d 471, 475 (7th Cir. 1992) (asserting the defendant's conversation with the other person......