United States v. Bennett

• Decision Date: 09 October 2014
• Docket Number: Nos. 12–3754,13–1109,13–2038.,s. 12–3754
• Citation: 765 F.3d 887
• Parties: UNITED STATES of America, Plaintiff–Appellee v. Jeffrey Cole BENNETT, Defendant–Appellant. United States of America, Plaintiff–Appellee v. Jennifer Rose Hogeland, Defendant–Appellant. United States of America, Plaintiff–Appellee v. Clayton Craig Hogeland, Defendant–Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

765 F.3d 887

UNITED STATES of America, Plaintiff–Appellee

v.Jeffrey Cole BENNETT, Defendant–Appellant.

United States of America, Plaintiff–Appellee

v.Jennifer Rose Hogeland, Defendant–Appellant.

United States of America, Plaintiff–Appellee

v.Clayton Craig Hogeland, Defendant–Appellant.

Nos. 12–3754, 13–1109, 13–2038.

United States Court of Appeals, Eighth Circuit.

Submitted: June 10, 2014.

Filed: Aug. 29, 2014.

Rehearing and Rehearing En Banc Denied Oct. 9, 2014.^*

Timothy Christopher Rank, AUSA, Minneapolis, MN, for appellee.

Nadia Wood, Saint Paul, MN, David Gerdtz, Minneapolis, MN, for appellant, Jennifer Hogeland.

John C. Brink, Minneapolis, MN, for appellant, Clayton Hogeland.

Before LOKEN, BEAM, and GRUENDER, Circuit Judges.

GRUENDER, Circuit Judge.

A jury found Jeffrey Bennett (“Bennett”), Jennifer Hogeland (“Jennifer”), and Clayton Hogeland (“Clayton”) guilty on several counts stemming from two fraudulent schemes. The district court ¹ sentenced them to ninety-five months', fifteen months', and 200 months' imprisonment, respectively. Bennett and Clayton appeal both their convictions and sentences. Jennifer appeals her convictions. Clayton died while this appeal was pending. For the reasons described below, we vacate Clayton's convictions and remand his case to the district court with instructions to dismiss the indictment as it relates to him. However, we affirm Bennett's convictions and sentence, as well as Jennifer's convictions.

I. Background

Clayton served as general manager of Advantage Transportation, Inc. (“Advantage”), a large Minnesota-based trucking-logistics company. As general manager, Clayton had “free reign” to manage the company's operations, including contracting with outside vendors and approving invoices for payment. At Clayton's recommendation, in May 2003, Advantage hired Bennett to oversee its Memphis, Tennessee office.

Soon thereafter, Clayton and Bennett hatched a scheme to defraud Advantage. Bennett created four corporations: American Logistics Advisors, Inc. (“ALA”); Transportation Marketing Concepts, Inc. (“TMC”); LTLDevelopment.com, Inc. (“LTL”); and Air Catering Solutions and Marketing, Inc. (“ACS”). Between 2003 and 2005, the corporations submitted numerous invoices to Advantage purportedly for various goods or services provided to Advantage. Clayton approved the invoices, after which checks were generated from Advantage to the corporate entities. The checks were then mailed or, on rare occasions, sent by common carrier to the recipients. While Advantage's accounting staff knew that these payments were being made, they were unaware that the corporations were owned by Bennett. Despite receiving the payments from Advantage, Bennett's corporations never actually provided the goods or services for which they had billed Advantage. Bank records for ALA, TMC, and LTL showed that the only payments the corporations had received were from Advantage and that they did not pay ordinary business expenses such as rent or utilities. The only business-expense payments revealed by ACS's bank records were payroll checks to two employees. Instead, Bennett's corporations wrote numerous checks to Jennifer, most of which she deposited into her bank account. Nearly all of the companies' remaining funds were withdrawn by Bennett. In all, Bennett received $393,091 through the fraudulent scheme.

Beginning in 2003, Clayton also operated a separate fraudulent scheme with Carl Frey, an American Airlines employee who was responsible for finding trucking companies to deliver freight for the airline. The two agreed that Frey would steer American Airlines trucking business to Advantage,and, in exchange, Clayton would authorize payments from Advantage to Frey personally. In all, Frey received nearly $90,000. Neither American Airlines nor Advantage were aware of this scheme.

Clayton resigned from Advantage in the spring of 2005, and Bennett left in September 2006. Neither Jennifer nor Clayton informed their tax preparers about the funds obtained through these fraudulent schemes, and thus their illicit income was not included on their joint federal income-tax returns for 2003, 2004, and 2005.

After the fraudulent schemes were discovered, a grand jury returned an indictment against Bennett, Clayton, and Jennifer. The indictment charged Bennett and Clayton with mail fraud, in violation of 18 U.S.C. § 1341; conspiracy to commit mail fraud, in violation of 18 U.S.C. § 371; and conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956(h). The indictment also charged Bennett, Clayton, and Jennifer with income-tax evasion, in violation of 26 U.S.C. § 7201. After a joint trial, a jury found Bennett, Clayton, and Jennifer guilty on all counts. Bennett and Clayton appeal both their convictions and their sentences. Jennifer appeals only her convictions.

II. DiscussionA. Clayton's Appeal

As noted above, Clayton died while this appeal was pending. Thus, the criminal proceedings against Clayton abated ab initio. See Crooker v. United States, 325 F.2d 318, 319–20 (8th Cir.1963). Consistent with our practice in such situations, we vacate his convictions and remand his case to the district court with instructions to dismiss the indictment as it pertains to him. See United States v. Howe, 591 F.2d 454, 459 (8th Cir.1979).

B. Bennett's Appeal1. Statute of Limitations

Bennett argues that the district court erred by denying his motion to dismiss the mail-fraud and mail-fraud-conspiracy counts on the ground that they are barred by the statute of limitations. We review the district court's denial of a motion to dismiss an indictment based on the statute of limitations de novo. United States v. Mueller, 661 F.3d 338, 344 (8th Cir.2011). The five-year statute of limitations prescribed by 18 U.S.C. § 3282 governs both counts.

The indictment alleged that on March 17, 2005, Bennett received a check from Clayton disbursing a fraudulent payment made by Advantage to ACS. Thus, the check must have been mailed, at the latest, on March 16, 2005. The indictment was filed on March 17, 2010. Bennett argues that the limitations period ended on March 16, 2010, five years after the check was mailed to Bennett.

First, the statute of limitations did not bar the mail-fraud charge. In general, a criminal statute of limitations begins to run “when each element of that offense has occurred.” United States v. Gonzalez, 495 F.3d 577, 580 (8th Cir.2007) (quoting United States v. Yashar, 166 F.3d 873, 875 (7th Cir.1999)). The elements of a mail-fraud offense under 18 U.S.C. § 1341 are: “(1) a scheme to defraud by means of material false representations or promises, (2) intent to defraud, (3) reasonable foreseeability that the mail would be used, and (4) that the mail was used in furtherance of some essential step in the scheme.” United States v. Cole, 721 F.3d 1016, 1021 (8th Cir.2013) (quoting United States v. Louper–Morris, 672 F.3d 539, 555 (8th Cir.2012)). The fourth element can be satisfied by placing an item in the mail, sending or causing an item to be sent by common carrier, taking or receiving an item from the mail or a common carrier, or knowingly causing an item to be delivered by mail or common carrier. 18 U.S.C. § 1341. Thus, under our general rule, the date on which the statute of limitations begins to run “depend[s] on the specific use of the mails charged in the indictment.” United States v. Crossley, 224 F.3d 847, 859 (6th Cir.2000); see also United States v. Pharis, 298 F.3d 228, 234 n. 3 (3d Cir.2002). The indictment here alleged that Bennett used the mail by receiving a check from Clayton on March 17, 2005, within five years of the date on which the indictment was filed. Thus, the statute of limitations did not bar the mail-fraud count against Bennett.²

However, Bennett argues that our decision in United States v. Pemberton, 121 F.3d 1157 (8th Cir.1997), prescribes that the statute of limitations for mail fraud begins to run only on the date the item was deposited into the mail. In Pemberton, we stated that “[f]or mail fraud, the relevant date [for the running of the statute of limitations] is the date of mailing.” Id. at 1163. Bennett construes the phrase “date of mailing” to mean the date on which the sender deposited the item into the mail, even if the defendant violated § 1341 by using the mail in some other way, such as by receiving the item. Thus, Bennett argues, the statute of limitations began to run on the date the check was mailed to him; that is, on March 16, 2005—more than five years before the indictment against Bennett was filed.

Bennett misreads Pemberton because he decontextualizes our reference to “the date of mailing” from the issue presented in that case. In Pemberton, the defendants fraudulently induced an Indian tribe to enter into a series of contracts with them. Id. at 1160–61. They argued that the statute of limitations barred their mail-fraud charge because they had fraudulently induced the tribe to enter the contracts more than five years before the indictment against them was filed. Id. at 1162–63. However, within the limitations period, the defendants had used the mail to disburse the funds obtained under the contracts. Id. at 1162. We rejected the defendants' argument and clarified that a mail-fraud offense is not completed—and the statute of limitations does not begin to run—until the date on which the defendant uses the mail in furtherance of his fraudulent scheme (that is, “the date of mailing” in that case). See id. at 1163–64. The limitations period does not begin simply because a fraudulent scheme has been hatched or the fruits of that scheme have been obtained. See United States v. Eisen, 974 F.2d 246, 263 (2d Cir.1992) (cited by Pemberton, rejecting argument “that the mail fraud claims date from the time the fraud was conceived”). Because the Pemberton defendants had used the mail in furtherance of the fraud within the limitations period, the statute of limitations did not bar...