U.S. v. Treadwell

• Decision Date: 28 January 2010
• Docket Number: No. 09-50023.,No. 09-50024.,No. 08-50562.,08-50562.,09-50023.,09-50024.
• Citation: 593 F.3d 990
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Randall T. TREADWELL, Defendant-Appellant. United States of America, Plaintiff-Appellee, v. Ricky D. Sluder, Defendant-Appellant. United States of America, v. Larry C. Saturday, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

593 F.3d 990

UNITED STATES of America, Plaintiff-Appellee, v. Randall T. TREADWELL, Defendant-Appellant.

United States of America, Plaintiff-Appellee, v. Ricky D. Sluder, Defendant-Appellant.

United States of America, v. Larry C. Saturday, Defendant-Appellant.

No. 08-50562.

No. 09-50023.

No. 09-50024.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted November 3, 2009.

Filed January 28, 2010.

David J. Zugman, Burcham & Zugman, San Diego, CA, for defendant-appellant Ricky D. Sluder.

Jami L. Ferrara, Law Office of Jami L. Ferrara, San Diego, CA, for defendant-appellant Larry C. Saturday.

Kathryn Thickstun Leff, Law Offices of Kathryn Thickstun Leff, San Diego, CA, for defendant-appellant Randall T. Treadwell.

William P. Cole, Assistant U.S. Attorney, San Diego, CA, for plaintiff-appellee United States of America.

Appeal from the United States District Court for the Southern District of California, Thomas J. Whelan, District Judge, Presiding. D.C. Nos. 3:05-cr-01570-W-1, 3:05-cr-01570-W-3, 3:05-CR-01570-W-4.

Before: RONALD M. GOULD and CARLOS T. BEA, Circuit Judges, and DONALD W. MOLLOY, District Judge.^*

GOULD, Circuit Judge:

A federal jury convicted Defendants-Appellants Randall Treadwell, Ricky Sluder, and Larry Saturday (collectively "defendants") of wire fraud and conspiracy to commit wire fraud under 18 U.S.C. §§ 371 and 1343. The charges stem from a massive four-year Ponzi scheme in which more than 1,700 investors across the United States lost over $40 million. Sluder and Saturday appeal their convictions; Treadwell, Sluder, and Saturday appeal their sentences. We disagree with the defendants on all counts. We affirm the convictions of Sluder and Saturday and the sentences of all three defendants.

I

On September 8, 2005, Randall Treadwell, Ricky Sluder, and Larry Saturday were indicted by a federal grand jury on one count of conspiracy to commit wire fraud under 18 U.S.C. § 371 and four counts of wire fraud under 18 U.S.C. § 1343. The indictment alleged that the trio, along with their attorney, Arnulfo Acosta,¹ were involved in an extravagant four-year Ponzi scheme² that ultimately defrauded investors out of more than $40 million.

Treadwell, Sluder, and Saturday were tried jointly. At trial, the government alleged that beginning in 2001, Treadwell and Sluder set up a series of investment companies, including Qwest International ("Qwest"), Wealth Builders Club ("WBC"), Learn Waterhouse, Inc. ("LWI"), and Grande Belgravia ("GB"). Between 2001 and 2005, Treadwell, Sluder, and Saturday—Saturday joining the scheme sometime near the end of 2003 or the beginning 2004—pitched these companies to prospective investors in restaurants and motel conference rooms. Their pitch was simple, though fraudulent: Temporarily "loan" money to these investment companies, they said, and in exchange you will be rewarded with very large future financial returns, and with no risk. It may seem surprising that investors would be so foolish as to fall for such a line, but they did, and in large numbers.

According to the misrepresentations made by the defendants, the loans were "zero risk," often paying returns of 50% interest per month and 2% interest compounded monthly. The defendants claimed that their companies were making investments with "the top three banks in the United States," had "clients in twenty-nine countries," made investments guaranteed by the United States government, had invested $2 billion in a gold mine in Mexico, and were working on a billion-dollar Columbus-era "find" on the bottom of the ocean. In a meeting in October of 2004, Sluder stated that the companies were directing investments towards "humanitarian" projects, including projects benefitting "people that are hungry and . . . in various needs throughout the world." The defendants' sales pitch convinced many victims of the fraud; the government alleged, and the defendants did not dispute, that over the course of the four-year operation investors "loaned" over $50 million to the defendants' companies.

Treadwell often claimed that he had a God-given ability to make money, but in hindsight it appears that his talents lay in extracting funds from duped investors. The purported investments did not exist at all. By the time the defendants' far-reaching Ponzi scheme collapsed, more than 1,700 investors throughout the United States had lost their investments. At trial, the defendants produced no evidence to suggest that any investment profit was generated by their companies. In contrast, the government's expert testified that after analyzing the Qwest, WBC, and LWI bank records, the only sources of funds in those bank accounts were investor deposits.³

The government portrayed Treadwell as the mastermind of the scheme, with Sluder as his second-in-command and Saturday acting as a salesman and sales-force trainer. Evidence also suggested that as state regulators in Florida and Alabama began to investigate the scheme, Treadwell and Sluder attempted to evade legal action by moving the investment program offshore under the guise of a new company called "Grande Belgravia." Videotaped conversations between an FBI informant and Treadwell captured Treadwell's attempt to pay the informant in exchange for not talking to the FBI.

The defendants' response was that although they misrepresented the nature of the various corporations' earnings, the defendants always believed that their investors would eventually make money.⁴ However, the jury instructions defined "intent to defraud" under 18 U.S.C. § 1343 as "an intent to deceive or cheat" and stated that it is no defense to fraud that "[the defendant] honestly holds a certain opinion or belief, [but] also knowingly makes false or fraudulent promises, representations, or promises to others." The defendants did not object to that instruction before they were convicted.

The jury convicted Treadwell and Sluder on the conspiracy count and all four counts of wire fraud as pleaded in the indictment. Saturday was convicted on the conspiracy count and three of the four wire fraud counts.

Treadwell was sentenced on December 11, 2008, to 300 months' imprisonment, followed by 3 years' supervised release and a mandatory restitution order of $44,872,152. At sentencing, the district court calculated an advisory United States Sentencing Guidelines ("Guidelines") range of 324 to 405 months. That range included a twenty-two level upward adjustment for between $20 million and $50 million in losses caused by fraud. See USSG § 2B1.1(b)(1)(L) (2008). It also included a two-point upward adjustment for misrepresentations that Treadwell was "acting on behalf of a charitable . . . organization," see USSG § 2B1.1(b)(8)(A), on the basis of Sluder's statements regarding "humanitarian" projects. Considering the 18 U.S.C. § 3553(a) sentencing factors, the district court subsequently concluded that "protection of the public" and "deterrence" justified imposing a 300-month sentence on Treadwell. The court based its imprisonment calculations on 60 months' imprisonment for the conspiracy count, followed by four concurrent sentences of 240 months' imprisonment for each of the wire fraud counts.⁵

Sluder and Saturday were sentenced in a joint sentencing hearing on January 12, 2009. The district court calculated, for Sluder, an advisory Guidelines range of 324 to 405 months' imprisonment, and for Saturday, a range of 135 to 168 months' imprisonment. Both calculations included the same twenty-two point upward adjustment for losses from fraud between $20 million and $50 million that was imposed on Treadwell. However, in considering the 18 U.S.C. § 3553(a) factors, the district court concluded that the amount of loss had "a disproportionate effect" on Sluder's and Saturday's recommended Guidelines ranges. The court's sentencing variation for Sluder was "the equivalent" of a five-level downward departure. The variation for Saturday was "the equivalent" of a seven-level downward departure. Sluder was sentenced to 188 months' imprisonment followed by 3 years' supervised release and a mandatory restitution order of $44,872,152.38. Saturday was sentenced to 63 months' imprisonment, followed by 3 years' supervised release and a mandatory restitution order of $22,436,076.19.

All defendants timely appealed.

On appeal, Sluder and Saturday challenge their jury conviction, arguing that the jury instructions violated their Fifth Amendment due process rights because "intent to defraud" under 18 U.S.C. § 1343 requires an intent to cause an actual loss. Sluder and Saturday also appeal their sentences, arguing that: (1) the district court incorrectly calculated their Guidelines ranges by finding the amount of loss based on only a preponderance of the evidence and attributing to them the entire loss caused by the conspiracy; (2) the Ex Post Facto Clause prohibits the application of the Supreme Court's remedial holding in United States v. Booker, 543 U.S. 220, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005), to their pre-Booker conduct; and (3) their sentences cannot be upheld as "substantively reasonable" under 18 U.S.C. § 3553(a) without reliance on judge-found facts— such as the amount of loss caused by the fraud—in violation of their Sixth Amendment jury trial right. Treadwell joins Sluder and Saturday's Sixth Amendment argument, and also argues that: (1) it was error for the district court to impose a two-point upward adjustment for misrepresentations that he was acting on behalf of a charitable organization; and (2) his sentence is substantively unreasonable under 18 U.S.C. § 3553(a).

We have jurisdiction to review Sluder and Saturday's convictions under 28 U.S.C. § 1291 and jurisdiction to review all three defendants' sentences under 18 U.S.C. § 3742. We review each of the defendants' claims in turn.

II

We first consider Sluder and Saturday's challenge to their convictions. Sluder and Saturday argue that their Fifth Amendment due process rights...