U.S. v. Massey

• Citation: 48 F.3d 1560
• Decision Date: 06 March 1995
• Docket Number: Nos. 93-6026,s. 93-6026
• Parties: 41 Fed. R. Evid. Serv. 1004 UNITED STATES of America, Plaintiff-Appellee, v. Von Dale MASSEY, Sr., Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Sandra WILKINS, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Jack Z. WILKINS, Defendant-Appellant. to 93-6028.
• Court: United States Courts of Appeals. United States Court of Appeals (10th Circuit)

Page 1560

48 F.3d 1560

41 Fed. R. Evid. Serv. 1004

UNITED STATES of America, Plaintiff-Appellee, v. Von Dale MASSEY, Sr., Defendant-Appellant.

UNITED STATES of America, Plaintiff-Appellee, v. Sandra WILKINS, Defendant-Appellant.

UNITED STATES of America, Plaintiff-Appellee, v. Jack Z. WILKINS, Defendant-Appellant.

Nos. 93-6026 to 93-6028.

United States Court of Appeals Tenth Circuit.

March 6, 1995.

June E. Tyhurst, Asst. Federal Public Defender, Oklahoma City, OK, for defendant-appellant Von Dale Massey.

Edward Crandall, Oklahoma City, OK, for defendant-appellant Sandra Wilkins, submitted on the briefs.

Jill M. Wichlens, Asst. Federal Public Defender, Denver, CO (Michael G. Katz with her, on the brief), for defendant-appellant, Jack Z. Wilkins.

H. Lee Schmidt, Asst. U.S. Atty., Oklahoma City, OK (Vicki Miles-LaGrange, U.S. Atty., John E. Green, U.S. Atty., and Susan Stewart Dickerson, Asst. U.S. Atty., were on the briefs), for plaintiff-appellee.

Before TACHA and EBEL, Circuit Judges, and SAM, District Judge. ^*

EBEL, Circuit Judge.

Three codefendants appeal from their convictions and sentences arising out of an extensive fraud scheme. On appeal, they complain that: 1) there was insufficient evidence to support the convictions; 2) the court's sentences violated the Ex Post Facto Clause of the United States Constitution; 3) the court erred in not granting their motions for a mistrial; 4) the court double-counted certain conduct during sentencing; 5) there was an illegal disparity between the sentences of coconspirators; 6) the court improperly admitted evidence of the prior bad acts of one

defendants' coworkers; 7) the court improperly increased one defendant's offense level for his role in the offense; and 8) the court erred in enhancing one defendant's sentence for obstruction of justice. We remand for further findings on the obstruction of justice enhancement, but affirm on all other issues.

BACKGROUND

Defendants-Appellants Von Dale Massey ("Massey"), Jack Z. Wilkins, and Sandra Wilkins were indicted and convicted on ten counts, including one count of conspiracy to defraud, in violation of 18 U.S.C. Sec. 371 (count one); eight counts of mail fraud, in violation of 18 U.S.C. Sec. 1341 (counts two through nine); and one count of money laundering, in violation of 18 U.S.C. Sec. 1957(a) (count ten). Jack and Sandra Wilkins are married. Also indicted was Roy Thornton ("Thornton"), who pled guilty during the trial. Edward Price ("Price"), also involved in the scheme, pled guilty to conspiracy but was not part of the indictment with the others.

In 1987, Price, an officer of J.R. Edwards Mortgage Investment Corp. ("JRE"), an Oklahoma City loan broker, contacted Massey and hired him at JRE due to Massey's knowledge about creative loan programs. One of these programs was the "European Loan Program," which ended up constituting the alleged fraud at the heart of this case. As part of this program, clients paid an advance fee to JRE to help secure a loan through certain Atlanta "lending" institutions and then another fee of $35,000 to the Atlanta "lender." The fee to JRE consisted of an application fee ($595 to $895) and a committal fee ($9,000 to $10,000) for JRE to obtain the loan. The borrowers sought loans between $500,000 and $150,000,000, and were told that the Atlanta loans were to be funded by various European sources. The loans were to be "self-liquidating," in that the borrower would only pay the interest on the debt for ten years and then have the principal liquidated. Part of the $35,000 fee paid to the Atlanta lenders was supposed to be used to purchase collateral that would generate enough income over the ten-year life of the loan to "liquidate" the principal. This fee did not vary based on the amount of the loan sought by the borrower and promised by the Defendants and JRE never performed credit checks on any clients. JRE solicited clients through nationwide newspaper advertisements in publications including the Wall Street Journal and the Chicago Tribune.

JRE used the revenue from the fees paid to it to pay commissions to the loan originators, Massey's commissions, and operating expenses. Massey allegedly received a cut on almost every JRE "European Loan Program" application, totalling approximately a third of the total fees paid to JRE. Thirty-three clients applied for this program, but the indictment focused on three JRE clients: Happy Trails Charter, Pet Care, and Clarion Airport Inn.

Much of the $35,000 fee that these clients paid to the Atlanta lenders was supposed to have been paid into an escrow account to purchase collateral to liquidate the loans, but the fees were instead placed into the operating accounts of the Atlanta lenders or the personal accounts of Sandra and Jack Wilkins. Some of this money was spent by Sandra Wilkins on personal items such as remodeling her home.

On the Atlanta side of the scheme, Jack Wilkins was involved with all the "lending" institutions, which included Aslanien, Mortgage Trust Services, International Brokers Group, International Mortgage Exchange, and Global Investments. Global eventually held all the JRE accounts. Sandra Wilkins did not formally become employed by Global until after all the clients had sent their money, although some of the money was placed in her personal account before she started the work at Global. Codefendant Thornton worked as a loan originator for Aslanien and International Mortgage Exchange, but did not work with the other organizations in Atlanta.

When the clients did not receive their loans on the expected date, Global and JRE sent them letters explaining why the funding of the loans had not occurred. Sandra Wilkins signed many of the letters and personally vouched for the program. The prosecution alleged that these letters were part of the fraud, because they lulled the clients into During February 1989, Price, Massey, and Jack Wilkins met in Atlanta to discuss the program. Allegedly, Price wanted more money from Wilkins in order to continue obtaining clients. Wilkins eventually sent $17,000 by wire to Price at JRE, and characterized it as a loan. The money came from the fees that four JRE clients had paid the Atlanta operations. The government claimed that this transaction involved the illegal proceeds of the mail fraud and thus gave rise to the money laundering count. 18 U.S.C. Sec. 1957(a).

thinking that the loans were forthcoming. Many excuses were used for the delays in the loans, such as excessive rainfall in Spain. Sandra Wilkins also sent clients inspirational poetry on the subject of not quitting. Eight of these letters formed the basis for mail fraud counts two through nine.

All three Defendants were convicted of all ten counts. After sentencing, Massey and the Wilkinses filed their appeals.

DISCUSSION

I. Sufficiency of the Evidence

Jack Wilkins, joined by Sandra Wilkins and Massey, argues that the government failed to proffer sufficient evidence to establish money laundering under 18 U.S.C. Sec. 1957(a). ¹ In essence, they claim that the money wired to Oklahoma City, that formed the basis of the money laundering count, was not derived from acts of mail fraud--the predicate offense upon which the government relied. They argue that any acts of mail fraud relating to the money occurred after the wire to Oklahoma rather than before.

Section 1957(a) provides:

Whoever ... knowingly engages or attempts to engage in a monetary transaction in criminally derived property that is of a value greater than $10,000 and is derived from specified unlawful activity, shall be punished....

The essential elements of a Sec. 1957 violation are that "(1) the defendant engage or attempt to engage (2) in a monetary transaction (3) in criminally derived property (4) knowing that the property is derived from unlawful activity, and (5) the property is, in fact, derived from 'specified unlawful activity.' " United States v. Lovett, 964 F.2d 1029, 1041 (10th Cir.), cert. denied, --- U.S. ----, 113 S.Ct. 169, 121 L.Ed.2d 117 (1992). ² "Criminally derived property" is defined as "any property constituting, or derived from, proceeds obtained from a criminal offense." 18 U.S.C. Sec. 1957(f)(2). The crimes constituting "specified unlawful activity" are laid out in Sec. 1956(c)(7). 18 U.S.C. Sec. 1957(f)(3).

Included among these specified crimes is mail fraud, a violation of 18 U.S.C. Sec. 1341. 18 U.S.C. Sec. 1956(c)(7)(A); 18 U.S.C. Sec. 1961(1)(B). The mail fraud statute 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, ... for the purpose of executing such scheme or artifice or attempting to do so, places in any post office or authorized depository for mail matter, any matter or thing to be delivered by the Postal Service, or takes or receives therefrom, any matter or thing ... shall be fined not more than $1,000 or imprisoned not more than five years, or both.

18 U.S.C. Sec. 1341. The statute thus requires the government to show that (1) in furtherance of (2) a scheme or artifice to defraud, (3) the defendant placed an item in (or received an item from) the care of the Postal Service.

We have recently stated that the text and legislative history of Sec. 1957(a) suggest that The Defendants present evidence that the $17,000 wire transfer at issue came from an account that was opened with money obtained from five European Loan Program clients: Chris and Karen Kastner, Steven Ennis, Dale VanWyk, and Kermit Dehaii. No other money was placed in this account from March 13, 1992--when the account was opened with $102,000 of the above clients' fees--to March 24, 1992, when the wire to Oklahoma occurred. The indictment specifies eight instances of mail fraud as the predicate specified criminal activities for the alleged money laundering. However, none of the lulling letters alleged as...