U.S. v. Thomas

• Decision Date: 28 July 2004
• Docket Number: No. 02-1029.,02-1029.
• Citation: 377 F.3d 232
• Parties: UNITED STATES of America, Appellee, v. Wade THOMAS, Defendant — Appellant.
• Court: U.S. Court of Appeals — Second Circuit

377 F.3d 232

UNITED STATES of America, Appellee, v. Wade THOMAS, Defendant — Appellant.

No. 02-1029.

United States Court of Appeals, Second Circuit.

Argued: December 4, 2003.

Decided: July 28, 2004.

Appeal from the United States District Court for the Eastern District of New York, Reena Raggi, J.

COPYRIGHT MATERIAL OMITTED

William M. Bloss, Jacobs, Grudberg, Belt & Dow, P.C., New Haven, CT, for Defendant-Appellant.

Barbara Underwood, Assistant United States Attorney, of counsel, for the Eastern District of New York, Catherine L. Youssef, Assistant United States Attorney, of counsel, for the Eastern District of New York (Roslynn R. Mauskopf, United States Attorney, and Peter A. Norling, Assistant United States Attorney, of counsel), Brooklyn, NY, for Appellee.

Before: CARDAMONE, SACK, and JOHN R. GIBSON,^* Circuit Judges.

GIBSON, Circuit Judge.

Wade Thomas appeals from his conviction of inducement of travel in interstate commerce for a fraudulent purpose, in violation of 18 U.S.C. § 2314. Thomas argues that there is insufficient evidence to sustain the conviction, that the district court erred in instructing the jury and in restricting the cross-examination of the victim, and that the prosecutor made improper statements in her summation. We affirm.

In 1996, Dannie Holmes was the pastor of the Greater Hope Baptist Church, located in a low-income area of Memphis, Tennessee. Wishing to make improvements to the church, Pastor Holmes began preparations to build a family life center. The plans called for a gym, a fellowship hall, office space, classrooms, a kitchen, and day-care facilities. The estimated cost of the project was at least $1.3 million. Because the church only had about $20,000 in its account at that time, it needed outside financing to fund the project.

Pastor Holmes had no training in finance, so for several years he had employed Robert Mukes, president of Mukes Management Company, to assist him in making the church's financial decisions and to provide financial services for the church. Mukes had incorporated the church as a tax-exempt organization and had assisted in purchasing and renovating a house for a needy congregant. Mukes reconciled the church's books every month and the church paid him a regular monthly salary.

Pastor Holmes hired Mukes to secure the outside financing needed to fund the family life center project. If Mukes was successful, he would be paid 4% of the loan amount, in addition to his usual salary. Mukes prepared a business loan package to present to local banks, in which he proposed to restructure the church's current mortgage and borrow funds to build the family life center. Because the church's cash assets were less than the amount the banks required to secure the requested loan amount, Mukes was unable to obtain loans large enough to cover the estimated cost of the project from Memphis banks.

Continuing to seek financing on behalf of the church, Mukes's inquiries eventually led him to Wade Thomas, a self-described financial consultant in New York City. Thomas told Mukes that he could secure financing for the church through a no-risk, high-yield investment program. Because Mukes was not familiar with the type of program and did not fully understand it, he asked Thomas to come to Memphis to explain the program in further detail. Thomas replied that he could not leave New York and suggested instead that Mukes come to New York to meet with him. Mukes agreed.

In May of 1996, Mukes flew from Memphis to New York City to meet with Thomas. At the meeting, Thomas explained the program to Mukes as a high-yield investment plan in which Thomas would pool a group of clients and use the "proof of funds"¹ from their respective financial institutions to secure a line of credit. Thomas would then take that line of credit and invest it, and return a portion of the profit from the investments to the clients who participated in the program. Thomas claimed that the program would secure $2 million for the church. Thomas told Mukes that because he needed only a "proof of funds" to secure the line of credit rather than the cash itself, there was absolutely no risk to the church's money at any time. Mukes told Thomas that he was interested in the program, but that the final decision was not his to make. He invited Thomas to come to Memphis to meet with Pastor Holmes.

A few weeks later, Thomas traveled to Memphis and met with Mukes and Pastor Holmes in Mukes's office. Thomas again explained the program, stating repeatedly that the church's money would never be at risk. Feeling the pressure from his congregation to get the family life center built, trusting Mukes's advice that he should consider the offer, and believing Thomas's representation that there was no financial risk to the church by participating in the program, Pastor Holmes agreed to proceed.

To participate in the program, Thomas required that the proof of funds show that $100,000 was in the church's account. However, the church only had about $20,000, raised by offerings from the congregation, in its account at that time. To cover the difference, Pastor Holmes took $80,000 out of his personal retirement account and put it into the church's account. To avoid losses on the retirement funds, Pastor Holmes had to return the $80,000 to his pension account in thirty days. Thomas assured him that the retirement money, along with the $2 million profit for the church, would be back within that time.

Once the $100,000 was in the church's account and the church was supposedly participating in the program, Thomas told Pastor Holmes that he was having trouble "getting the returns to flow" to Union Planters Bank in Memphis, where the church's account was located. Thomas asked Pastor Holmes to wire the $100,000 to Chemical Bank in New York City, repeatedly reassuring him that the money was still safe. Against Mukes's advice, Pastor Holmes transferred the money.

Thomas did not return Pastor Holmes's retirement funds within the thirty days. Months began to pass without the return of the church's original investment or the promised profits. As Pastor Holmes began to question where the church's money was, Thomas repeatedly urged him to be patient and assured him that the money was on its way. Thomas buttressed these assurances with various documents that made it appear that the program was working and Thomas had plenty of money at his disposal. For example, he sent Pastor Holmes what purported to be a $110 million Japanese bond. The government offered proof at trial that the bond was fraudulent. Thomas sent a letter purporting to be from the First Union National Bank stating that Thomas had $7 million "under management certificate of deposit." Thomas admitted to an FBI Agent that parts of the letter were misleading. To support his claim that the church could soon expect its $2 million return, Thomas sent a letter on the stationery of U.S. Clearing Corporation, a stock clearing house. Again, the government offered proof that the stationery was forged.

Despite Thomas's many reassurances and promises, the church never saw the return of its initial investment or the promised profits. In actuality, Wade Thomas took the $100,000, formed from a combination of Pastor Holmes's pension fund and contributions by congregants of the church, and transferred it to his personal account as well as other accounts and wrote personal checks to family members.

Thomas was indicted in the Eastern District of New York for a single count of inducing another to travel in furtherance of a scheme to defraud, in violation of 18 U.S.C. § 2314. He was tried in front of a jury and Judge Reena Raggi. Thomas's defense was that the money was lost as a result of a business deal gone bad, not intentional fraud. After the jury returned a guilty verdict, Judge Raggi sentenced Thomas to fifty-one months in a federal prison followed by three years of supervised release, fined him $75,000, and ordered $100,000 restitution. This appeal followed.

I.

Thomas's first claim on appeal is that a proper construction of the statute does not cover his conduct in this case. The second paragraph of 18 U.S.C. § 2314 prohibits inducing another to travel in furtherance of a fraud, or "travel fraud." Section 2314 provides:

Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transports or causes to be transported, or induces any person or persons to travel in, or to be transported in interstate or foreign commerce in the execution or concealment of a scheme or artifice to defraud that person or those persons of money or property having a value of $5,000 or more [shall be fined or imprisoned, or both].

In order to convict Thomas of travel fraud, the government had to prove two elements: (1) that the defendant devised a scheme intending to defraud a victim of money or property of a minimum value of $5,000, and (2) that as a result of this scheme, a victim was induced to travel in interstate commerce. United States v. Myerson, 18 F.3d 153, 164 (2d Cir.1994). At oral argument, Thomas conceded that under the facts of this case, a jury could reasonably find a scheme to defraud. He also conceded in his brief that either Pastor Holmes or the Greater Hope Baptist Church could be classified as the victims of his fraudulent scheme. He argues that there was insufficient evidence of the victim's travel and that the district court erred in its instruction on this issue. He also asserts that there was insufficient evidence of inducement.

A.

Basic to Thomas's arguments regarding the victim's travel is an issue inherent in each. Both Thomas and the government agree that to violate 18 U.S.C. § 2314, the defendant must induce the victim to travel in interstate commerce. Id. at 164. Thomas argues that Mukes's travel cannot satisfy the interstate travel requirement of § 2314...