U.S. v. Evans

• Citation: 473 F.3d 1115
• Decision Date: 26 December 2006
• Docket Number: No. 05-10624.,05-10624.
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Hubert Garland EVANS, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (11th Circuit)

Page 1115

473 F.3d 1115

UNITED STATES of America, Plaintiff-Appellee, v. Hubert Garland EVANS, Defendant-Appellant.

No. 05-10624.

United States Court of Appeals, Eleventh Circuit.

December 26, 2006.

COPYRIGHT MATERIAL OMITTED

Benjamin S. Waxman, Robbins, Tunkey, Ross, Amsel & Raben, P.A., Miami, FL, for Evans.

Harriett R. Galvin, Anne R. Schultz, Asst. U.S. Atty., Miami, FL, Phillip DiRosa, Ft. Lauderdale, FL, for U.S.

Appeal from the United States District Court for the Southern District of Florida.

Before PRYOR and FAY, Circuit Judges, and STEELE,^* District Judge.

STEELE, District Judge:

Appellant Evans was convicted of wire fraud under 18 U.S.C. § 1343, based on a May 22, 1997 telefax from the victim to Evans. The sole issue presented is whether the jury was entitled to find that Evans caused this telefax to be sent "for the purpose of executing" the scheme within the contemplation of Section 1343.¹ We conclude that the jury was so entitled.

I. BACKGROUND

Evans was president of Jagar Limited, which imported produce to the Bahamas for resale. Mark Mayrsohn was president of Produce Direct, Inc. ("PDI"), which was Jagar's primary supplier of produce. In 1995, PDI acquired credit insurance from the Export-Import Bank to address the risk of non-payment by Jagar. In mid-1996, in conjunction with its application to renew its policy, PDI requested a financial report from Jagar. Jagar produced to PDI a financial statement showing the company as profitable through the fiscal year ending June 30, 1996, even though an independent auditor's report prepared in February 1997 reflected that Jagar suffered a net loss of almost $1,000,000 during that fiscal year and described its survival as in "substantial doubt." The renewal policy was issued effective September 1, 1996, with a term expiring May 1, 1997. Under the terms of the policy, PDI was required to report to the insurer arrearages of over 120 days and to make reasonable collection efforts before filing a claim.

Jagar regularly purchased $100,000 or more of produce a week and, until early 1997, it paid PDI's invoices within 30 days or a bit more. At that point, Jagar's payments became smaller, such that its outstanding balance swelled to over $1,100,000 by late April. On April 25, Jagar abruptly switched suppliers, but on May 2 and May 13 it made payments to PDI totaling approximately $70,000.

On May 20, Mayrsohn telefaxed Evans a letter announcing his imminent visit to the Bahamas and requesting a meeting to discuss the companies' present and future business relations. Mayrsohn then called Jagar's bookkeeper, Diane Fletcher, and scheduled a meeting with Evans for May 26. On May 22, Mayrsohn telefaxed to Fletcher the letter on which conviction was based,² the body of which reads as follows:

Just a short note to confirm our meeting together with Mr. Evans on Monday at 2:30 p.m. at your offices.

For your review I've enclosed some preliminary information, a report of the current receivables with the aging from the invoice date. As discussed, we must stay within 120 days for the Ex-Im Bank.

Your account is right now at that limit and we should be receiving your payments now in order to keep up with the schedule.

We hope that you are preparing something to send us for this week and can continue to stay within the 120 day Ex-Im requirement.

We look forward to a positive and successful meeting together.

On May 23, Fletcher telefaxed a letter to Mayrsohn confirming the Monday meeting and listing invoices that needed to be reconciled between the parties. At the May 26 meeting in the Bahamas, Evans made clear that Jagar would not give PDI any new business or write a check on the spot, but he assured Mayrsohn that Jagar would promptly send another check and would pay off its debt. On May 30, Jagar sent PDI a check for $27,511.60, which paid in full the three oldest invoices. On June 16, Jagar sent PDI a check for $12,015.90, which paid in full the next oldest invoice. These were the last payments Jagar made, leaving an unpaid principal balance of almost $1,100,000.

The jury convicted Evans on three counts of wire fraud, involving the May 22 telefax as well as subsequent transmissions from Mayrsohn to Evans dated June 27 and July 3. The district court granted Evans' motion for judgment of acquittal with respect to the latter two letters but denied the motion with respect to the May 22 telefax.

II. STANDARD OF REVIEW

"We review de novo the denial of a motion for judgment of acquittal." United States v. Hernandez, 433 F.3d 1328, 1332 (11th Cir.2005). "When the motion raises a challenge to the sufficiency of the evidence, we review the sufficiency of the evidence de novo, drawing all reasonable inferences in the government's favor." Id. (internal quotes omitted). "To affirm the denial ..., we need determine only that a reasonable factfinder could conclude that the evidence established the defendant's guilt beyond a reasonable doubt." United States v. Perez, 443 F.3d 772, 774 (11th Cir.2006).

III. DISCUSSION

A transmission is "for the purpose of executing" the scheme if it is "incident to an essential part of the scheme." Pereira v. United States, 347 U.S. 1, 8, 74 S.Ct. 358, 362-63, 98 L.Ed. 435 (1954). "Letters mailed after a scheme has reached fruition cannot have been `for the purpose of executing' the scheme within the meaning of 18 U.S.C. § 1341." United States v. Georgalis, 631 F.2d 1199, 1204 (5th Cir.1980).³ This description of "fruition" as the critical juncture derives from Kann v. United States, 323 U.S. 88, 65 S.Ct. 148, 89 L.Ed. 88 (1944), in which the Court held that, because the scheme "had reached fruition" before the transmissions at issue, "[i]t cannot be said that the mailings in question were for the purpose of executing the scheme, as the statute requires." Id. at 94, 65 S.Ct. at 151. Supreme Court and Eleventh Circuit cases have since repeatedly identified "fruition" of the scheme as the point beyond which mail and wire transmissions cannot be in furtherance of the scheme.⁴ E.g., Schmuck v. United States, 489 U.S. 705, 711-12, 109 S.Ct. 1443, 1448, 103 L.Ed.2d 734 (1989); United States v. Maze, 414 U.S. 395, 402, 94 S.Ct. 645, 649, 38 L.Ed.2d 603 (1974); United States v. Adkinson, 158 F.3d 1147, 1163 (11th Cir.1998) ("We have not hesitated to reverse mail fraud convictions where the underlying scheme has reached fruition prior to the mailing.").

A scheme has "reached fruition" when it is "fully consummated." Henderson v. United States, 425 F.2d 134, 141 (5th Cir.1970); accord United States v. Kent, 608 F.2d 542, 546 & n. 6 (5th Cir. 1979); see also Kann, 323 U.S. at 94, 65 S.Ct. at 151 ("The scheme in each case had reached fruition [because] [t]he persons intended to receive the money had received it irrevocably" and "[i]t was immaterial to them, or to any consummation of the scheme, how the bank which paid or credited the check would collect from the drawee bank.").

Evans describes the "true objective" of the scheme as getting PDI to continue supplying produce on credit. That objective, Evans continues, was fully accomplished by April 25, when Jagar stopped acquiring produce from PDI. Thus, he concludes, the scheme had reached fruition by that date, such that Mayrsohn's telefax of May 22 could not have been for the purpose of executing the scheme.⁵

To the extent Evans assumes that a scheme to defraud necessarily reaches "fruition" when the defendant receives the "fruit" of his fraud, he is mistaken. "[I]t is a well-established principle of mail fraud law that use of the mails after the money is obtained may nevertheless be `for the purpose of executing' the fraud." United States v. Ashdown, 509 F.2d 793, 799 (5th Cir.1975). "If the scheme continues, mailings made after receipt of the money can clearly support conviction." United States v. Knight, 607 F.2d 1172, 1175 (5th Cir. 1979). "This is another way of saying that the scheme may embrace more than just fraudulent acquisition of money or documents." United States v. Kent, 608 F.2d 542, 546 (5th Cir.1979). For example, a "two pronged" scheme may include both "writing checks on closed accounts to obtain goods and services without paying for them" and "working to retain those goods as long as possible by convincing merchants and banks that the ... checks were actually legitimate." United States v. Lee, 427 F.3d 881, 888 (11th Cir.2005).

More specifically, "[p]recedent is clear that letters designed to conceal a fraud, by lulling a victim into inaction, constitute a continuation of the original scheme to defraud." Georgalis, 631 F.2d at 1204. That is, when the scheme includes not only obtaining the benefit of the fraud but also delaying detection of the fraud by lulling the victim after the benefit has been obtained, the scheme is not fully consummated, and does not reach fruition, until the lulling portion of the scheme concludes. The Government concedes that Evans had received the full benefit of his fraud as of April 25. The issue is whether Mayrsohn's May 22 telefax falls within this lulling doctrine.

The doctrine traces its roots to United States v. Sampson, 371 U.S. 75, 83 S.Ct. 173, 9 L.Ed.2d 136 (1962):

[T]he indictment in this case alleged that the defendants' scheme contemplated from the start the commission of fraudulent activities which were to be and actually were carried out both before and after the money was obtained from the victims [and] specifically alleged that [certain documents] were mailed by the defendants to the victims for the purpose of lulling them by assurances that the promised services would be performed. We cannot hold that such a deliberate and planned use of the United States mails by defendants engaged in a nationwide, fraudulent scheme in pursuance of a previously formulated plan could not ... be found ... to be "for the purpose of executing" a scheme within the meaning of the mail fraud statute.

Id. at 80-81, 83 S.Ct. at 176. The mailings at...