United States v. Broughton

• Decision Date: 10 August 2012
• Docket Number: Nos. 10–15527,10–15536.,s. 10–15527
• Citation: 689 F.3d 1260,23 Fla. L. Weekly Fed. C 1385
• Parties: UNITED STATES of America, Plaintiff–Appellee, v. William Allen BROUGHTON, a.k.a. W. Allen Broughton, a.k.a. Allen Broughton, Defendant–Appellant. United States of America, Plaintiff–Appellee, v. Richard William Peterson, a.k.a. Richard Snyder, a.k.a. Dick Snyder, a.k.a. Bob James, Defendant–Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

689 F.3d 1260

23 Fla. L. Weekly Fed. C 1385

UNITED STATES of America, Plaintiff–Appellee,

v.William Allen BROUGHTON, a.k.a. W. Allen Broughton, a.k.a. Allen Broughton, Defendant–Appellant.

United States of America, Plaintiff–Appellee,

v.Richard William Peterson, a.k.a. Richard Snyder, a.k.a. Dick Snyder, a.k.a. Bob James, Defendant–Appellant.

Nos. 10–15527, 10–15536.

United States Court of Appeals,

Eleventh Circuit.

Aug. 10, 2012.

Judy K. Hunt, Rachelle DesVaux Bedke, Laurel Moore Lee, Robert E. O'Neill, Josephine W. Thomas, U.S. Attys., Tampa, FL, for Plaintiff–Appellee.

Bruce G. Howie (Court–Appointed), Bruce G. Howie, PA, Clearwater, FL, for Defendant–Appellant in No. 10–15527.

Thomas H. Ostrander (Court–Appointed), Bradenton, FL, for Defendant–Appellant in No. 10–15536.

Appeals from the United States District Court for the Middle District of Florida.

Before JORDAN and FAY, Circuit Judges, and HOOD,^* District Judge.

FAY, Circuit Judge:

This criminal case involves sophisticated financial structuring through the interplay of related corporate subsidiaries in the context of the insurance business. While such financial structuring is not inherently improper, here the two Appellants, William Allen Broughton (“Broughton”) and Richard William Peterson (“Peterson”), were convicted of conducting a modern-day financial shell game in which they falsified financial statements, exchanged paper ownership over non-extant fraudulent assets, and collected insurance premiums and monthly payments from unwitting innocents.¹ We now have before us Appellants' consolidated appeals.

Collectively, they state two bases for reversal: (1) Broughton contends that the Government's purported failure to file charges within the relevant statutes of limitations demands reversal; and (2) both Appellants claim that the district court erred in denying their motions for judgment of acquittal due to an insufficiency of evidence. Finding no error, we affirm Appellants' convictions.

I.

A Middle District of Florida grand jury returned the controlling indictment on January 17, 2006. The 27–page indictment contained two counts against ten defendants: Count I charged a conspiracy to commit (i) mail fraud, in violation of 18 U.S.C. § 1341, (ii) wire fraud, in violation of 18 U.S.C. § 1343, and (iii) insurance fraud, in violation of 18 U.S.C. § 1033(c)(1), all of which violated 18 U.S.C. § 371. Additionally, Count II charged a money-laundering conspiracy, in violation of 18 U.S.C. § 1956(h). In sum, the entirety of the indictment charged the defendants with engaging in a far-reaching conspiracy intended to benefit the individual members from the fraudulent capitalization of purported insurance companies and related businesses.

The only pre-trial motions relevant to the appeal before us involved motions to dismiss the indictment filed by Broughton and other defendants in which they claimed the indictment was untimely. They argued that the relevant statute of limitations had expired prior to January 17, 2006, because the district court had improperly granted a motion to suspend the statute of limitations pending the receipt of evidence located in foreign jurisdictions. ² The district court denied those motions.

Trial began on April 13, 2010. At the close of the Government's case, Broughton and Peterson moved for a judgment of acquittal on both counts of the indictment. The district court denied those motions, as well as the subsequent renewed motions. The trial finished on May 18, 2010, when the jury returned guilty verdicts as to Broughton and Peterson on both counts after 21 days of trial.

II.

As we must, we consider the factual background in the light most favorable to the Government. See United States v. Glen–Archila, 677 F.2d 809, 818 (11th Cir.1982). At trial, the Government provided evidence of the following.

For a little over two years beginning in 1996, the Internal Revenue Service conducted an undercover investigation into insurance fraud in the United States and overseas. In particular, the investigation was directed at individuals and corporations who marketed themselves as insurance providers on the basis of rented assets.³ Such companies sought to collect insurance premiums while never intending to pay out on any meritorious claims. As will be discussed below, the undercover agents learned of numerous companies, some of which were operated by Appellants, that engaged in a conspiracy to operate in such a fashion.

However, the facts relevant to the appeal now before us extend beyond the confines of the undercover investigation. Therefore, we divide our discussion of the evidence at trial into two parts. First, we focus on the relationship between Appellants and the other co-conspirators leading up to and subsequent to the undercover investigation. Then, we turn to the fruits of the undercover operation itself.

A.

At the center of the conspiracy to bilk innocent investors and would-be insureds were three people: Michael Ernest Zapetis, Sr. (“Zapetis”); his wife, Karen Carazo Zapetis (“Carazo”); and an individual named Richard Joseph Solomon (“Solomon”). In fact, Appellants' own actions and those of their four other indicted co-conspirators emanated like ripples in a pond from the fraud of Zapetis, Carazo, and Solomon.⁴ We therefore begin our discussion with them.

Whether through purposeful direction or fortuitous criminality, the genesis of the fraud at issue was rooted in the overseas creation of fraudulent assets. Solomon, a self-employed business consultant, traveled to Panama in the early 1990s. There, he met with individuals operating a Panamanian cooperative acting as a credit union, Cooperative de Ahorro y Credito Gatun (“Gatun”). Solomon became a member of Gatun by depositing a small sum of money. Subsequently, he and those individuals, purportedly operating in an International Trust Division of Gatun, caused Gatun to issue hundreds of millions of dollars in CDs allegedly secured by billions of dollars of gold doré,⁵ even though Solomon never confirmed the existence of that gold doré. No such gold doré in fact demonstrably existed. Even if it had existed, under Panama law issuance of such CDs would have still been illegal.

Soon after, Gatun was ordered in 1994 by the overseeing Panamanian agency to cease and desist issuing such CDs. Gatun, at Solomon's urging, did not cease issuing fraudulent CDs. Ultimately, on or about February 23, 1996, the overseeing agency intervened in Gatun's business and took control of its operations, referring the many inquiries into the CDs that had been issued by Gatun to the relevant police and governmental authorities. Eventually, on June 22, 1997, the overseeing agency liquidated Gatun.

Meanwhile, the next step in the parties' business dealings involved the creation of companies to claim those fraudulent assets on their own balance sheets. Longtime residents of Miami, Zapetis and Carazo began acquiring off-shore companies in the early 1990s, naming those companies in a manner to suggest that they were involved in the insurance business. For example, Zapetis and Carazo formed and operated companies under names like American Indemnity Company, Ltd. (“American Indemnity”), Star Insurance Company (“Star Insurance”), and Global Insurance Company(“Global Insurance”), which were incorporated in St. Christopher and Nevis in the West Indies. They also formed certain Costa Rican subsidiary companies, like Capitales Uno de America, S.A. (“Cap Uno”).⁶ To manage those companies, Zapetis and Carazo had another offshore company, Consorcio de Seguros Polaris, S.A. (“Consorcio”), which provided administrative services to the various companies in which Zapetis and Carazo had an interest. Additionally, Zapetis and Carazo owned and operated a company in Miami, Florida, which was known as First International Finance Corporation (“First International”), for which Zapetis and Carazo claimed to work as consultants.

To make it appear that their companies were capitalized, Zapetis and Carazo rented the Gatun CDs from Solomon. They paid Solomon rental fees for the use of the purported Gatun CDs, which they then listed on their own companies' financial statements, claiming ownership when in fact no such ownership existed. To conceal their fraud, Zapetis and Carazo obtained an audited financial statement of at least one company, American Indemnity, on the strength of the Gatun CDs. Even though that original audit opinion, dated December 15, 1995, was later withdrawn in May 1996 when the auditor learned that the Gatun CDs may have been in fact illiquid or nonexistent, Zapetis and Carazo nonetheless continued to market American Indemnity. Indeed, it was on this foundation of fraudulent capitalization that Zapetis and Carazo marketed their own companies to others for sale.

Zapetis and Carazo began selling some of those companies, as well as renting out the very same assets—the Gatun CDs—that they had rented from Solomon. ⁷ For instance, Zapetis and Carazo sold interests in American Indemnity and its other companies, representing that they were subsidiaries of legitimate insurance companies with assets that could be rented for purposes of capitalization. In exchange for such sales and rentals, Zapetis and Carazo received preferred stock from the purchasing insurance companies, as well as a monthly rental payment greater than that which they paid to Solomon for the same purported assets, which they characterized as a “dividend.” In the event one of the purchasing companies failed to make its monthly rental payment, the purchaser was stripped of its ownership of the alleged subsidiary as well as its ostensible ability to claim the Gatun CDs as assets on its own consolidated financial statements.

Appellant Peterson was one such purchaser of a fraudulent insurance subsidiary. He owned a cooperative known as the California Restaurant Specialty Cooperative (“CRSC”), located in San Francisco, California.⁸ In the late fall of 1996...