U.S. v. Sloan
| Citation | 492 F.3d 884 |
| Decision Date | 09 July 2007 |
| Docket Number | No. 06-2392.,06-2392. |
| Parties | UNITED STATES of America, Plaintiff-Appellee, v. James L. SLOAN, Defendant-Appellant. |
| Court | United States Courts of Appeals. United States Court of Appeals (7th Circuit) |
Joe Vaughn (argued), Office of the United States Attorney, Indianapolis, IN, for Plaintiff-Appellee.
Marcia G. Shein (argued), Decatur, IL, for Defendant-Appellant.
Before BAUER, FLAUM, and KANNE, Circuit Judges.
A jury convicted James L. Sloan of six counts of mail fraud and 26 counts of wire fraud in violation of 18 U.S.C. §§ 1341 and 1343. The district court sentenced Sloan to 18 months of incarceration, followed by two years of supervised release, and ordered him to pay $19,654.60 in restitution. Sloan now appeals his judgment of conviction and sentence. We affirm.
With an offer of and other similar offers, Sloan enticed at least ninety individuals to join his organization, the Christian Freedom Foundation. To take advantage of these offers advertised in the March, April, July, and August 2001 editions of Sloan's Christian Freedom Chronicle, these individuals were required to join the Christian Freedom Foundation.
A new member would join the Christian Freedom Foundation by sending his or her application and payment of $498.75, or up to four multiples thereof, to a post office box located in New Trenton, Indiana, of which Sloan was the signatory, or to a fax number subscribed to Sloan at his residence. A new member also could join the organization by submitting an application and a check for $49.95, one month's payment, which would allow Sloan to withdraw membership fees on a monthly basis from that person's bank account.
Unfortunately, the offers of free electricity and the chance to make hundreds of thousands of dollars were too good to be true; none of the new members of the Christian Freedom Foundation received free electricity or any payments in excess of what they had paid to the organization.
Sloan operated the Christian Freedom Foundation from his home in Lawrenceburg, Indiana. He ran a different enterprise, Christian Singles International, from an office in Cincinnati, Ohio. Christian Singles International published "Christian Singles News and Contacts," which was included as an insert in each issue of the Christian Freedom Chronicle and of which Sloan was the editor.
The advertisement on the back page of the March 2001 issue of the Christian Freedom Chronicle stated that by joining the Christian Freedom Foundation at a cost of $498.75 per year, new members would receive a subscription to the Christian Freedom Chronicle, a Free Electricity Certificate, and the opportunity to participate in the Christian Freedom Foundation's "network marketing program." It specified that the new member would receive "a Free Electricity Certificate issued by the United Community Services Association (UCSA) in conjunction with the International Tesla Electric Company (ITEC)." The new member also would have use of a 26,000 kilowatt per year generator, when such units became available, that would be set up on his or her property at no additional cost. According to the advertisement, there was a waiting list for these units and "[f]irst come, first served."
The advertisement also described the network marketing program. New members of the Christian Freedom Foundation would be entered into a "3×8 Forced Matrix." When the new member's matrix became full, which would require an additional 9,840 people to join the organization, he or she would receive $40 for each new member of the matrix, totaling $393,600. Even better, the advertisement claimed that members did not have to wait for their matrix to become full before they would receive payments. Additionally, members had the opportunity to earn up to $492,000 per year by bringing just three other people into the Christian Freedom Foundation because he or she would receive $50 for each person in the matrix.
In smaller type, the advertisement stated that the free electricity offer was for residential use and property owners only. Tenants and commercial establishments, however, were eligible to participate in the Christian Freedom Foundation, including the business opportunity.
The April 2001 edition of the Christian Freedom Chronicle ran a similar advertisement on its back page but with minor adjustments to its offer. In this offer, members of the Christian Freedom Foundation "have a chance" to get free electricity for life and that "[i]f and when" the new member's generator is available, it would be set up on his or her property at no cost.
The July 2001 and August 2001 editions contained additional, significant changes. Like the April 2001 advertisement, these identical advertisements gave new members of the Christian Freedom Foundation "a chance" to get free electricity for life by paying to join the Christian Freedom Foundation. They also offered the opportunity to make $472,320 per year and contained a photograph of the generator. Rather than merely joining a 3×8 forced matrix, however, new members would be entered twice into a "Double Flip-Flop 3×8 forced matrix." The advertisements stated that new members The advertisements claimed that new members who recruited additional members would have even greater earning potential. These advertisements also contained a chart that showed how the Double Flip-Flop 3×8 matrix purportedly operated and offered various "quick start bonuses," including a bonus of $15 for each person introduced by the new member to the Christian Freedom Foundation.
These solicitations even asked the attractive question, (Emphasis in original.) Readers were asked to call a telephone number for an explanation as to how the guarantee works.
In a smaller typeface, the advertisements hedged on the guarantee, stating,
Caveat on all the numbers in this article: No one knows for sure what anyone else's future earnings will be. The figures in the article and on the chart are projections only of what is possible. What your actual earnings will be is determined by your own efforts and the rest of your team—those people who are above and below you in your matrix, eight levels each way.
In an about-face, the advertisements continued: They directed the readers to rush to submit their applications to the Christian Freedom Foundation by exclaiming, "First come; first served!" Because applications were time and date stamped, the advertisements explained, two applications received ten minutes apart could mean that the first person would make money sooner than the second person as a result of their different placements in the Double Flip-Flop 3×8 forced matrix.
In December of 1993, Sloan hired Marcia Harting at Christian Singles International. Harting assisted Sloan in preparing the materials that were mailed out to the new members of the Christian Freedom Foundation regarding the free-electricity generator. These materials consisted of two letters, "Dear Free Electricity Applicant" and "Letter of Confirmation," as well as a document entitled "Registration For A Free Electricity Generator on a Residence." Each of these documents was pre-printed. Harting completed each of these forms with information that Sloan gave to her. At Sloan's direction, she also stamped the name "Emily Stewart" on the registration forms on the line for the dealer; however, no one named "Emily Stewart" worked with Harting at Christian Singles International. Once completed, the documents were mailed to the named individuals.
The advertisements in the Christian Freedom Chronicle directed individuals interested in additional information to call a telephone number subscribed to Sloan at his residence or a telephone number subscribed to and located at the office of Christian Singles International.
Between March 1, 2001 and September 30, 2001, the checks and money orders sent by new members to the Christian Freedom Foundation were transmitted by wire communications in interstate commerce to an account held in the name of Christian Singles International. Sloan was the signatory on the account. The payments sent to new members from the Christian Freedom Foundation were drawn from a bank account of the Christian Freedom Foundation. Again, Sloan was the signatory on the account.
On May 25, 2005, a federal grand jury returned an indictment that charged Sloan with six counts of mail fraud and 26 counts of wire fraud. During the course of the trial, eight witnesses testified to being victims of Sloan's advertisements: Donald Cobb, John Scholl, Frieda Challender, Renard Carpenter, Jody Smith, Theresa Lynn Jordan, Linda Wantland, and JoAnn Bemiller. Steve Cannon also testified that he joined and solicited others to join the Christian Freedom Foundation. Each of these witnesses joined the Christian Freedom Foundation after seeing the advertisements for the generator that would produce free electricity and the opportunity to make money. Each witness submitted an application and payment. Cobb, Scholl, Challender, Carpenter, Smith, Jordan, Wantland, and Bemiller testified that they never received the generator but did receive documents pertaining to the...
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