784 Fed.Appx. 312 (6th Cir. 2019), 17-6263, United States v. Bates

Docket Nº:17-6263, 17-6273, 17-6284, 17-6288
Citation:784 Fed.Appx. 312
Opinion Judge:ROGERS, Circuit Judge.
Party Name:UNITED STATES of America, Plaintiff-Appellee, v. Charles Larry BATES, et al., Defendants-Appellants.
Attorney:Christopher Jackson Smith, U.S. Department of Justice, Criminal Division, Appellate Section, Washington, DC, David Norfleet Pritchard, Office of the U.S. Attorney, Memphis, TN, for Plaintiff-Appellee Mary C. Jermann-Robinson, Assistant Federal Public Defender, Federal Public Defender, Federal Def...
Judge Panel:BEFORE: ROGERS, DONALD, and THAPAR, Circuit Judges.
Case Date:July 31, 2019
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit
 
FREE EXCERPT

Page 312

784 Fed.Appx. 312 (6th Cir. 2019)

UNITED STATES of America, Plaintiff-Appellee,

v.

Charles Larry BATES, et al., Defendants-Appellants.

Nos. 17-6263, 17-6273, 17-6284, 17-6288

United States Court of Appeals, Sixth Circuit

July 31, 2019

UNPUBLISHED

Editorial Note:

Please Refer Federal Rule of Appellate Procedure Rule 32.1. See also U.S.Ct. of App. 6th Cir. Rule 32.1.

Page 313

[Copyrighted Material Omitted]

Page 314

[Copyrighted Material Omitted]

Page 315

[Copyrighted Material Omitted]

Page 316

[Copyrighted Material Omitted]

Page 317

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TENNESSEE

Christopher Jackson Smith, U.S. Department of Justice, Criminal Division, Appellate Section, Washington, DC, David Norfleet Pritchard, Office of the U.S. Attorney, Memphis, TN, for Plaintiff-Appellee

Mary C. Jermann-Robinson, Assistant Federal Public Defender, Federal Public Defender, Federal Defender, Memphis, TN, for Defendant-Appellant

BEFORE: ROGERS, DONALD, and THAPAR, Circuit Judges.

OPINION

ROGERS, Circuit Judge.

Larry Bates held himself out to the public as an apocalyptic economist committed to helping customers safeguard their wealth by purchasing precious metals from his company, First American Monetary Consultants. The reality was quite different. First American Monetary Consultants regularly failed to deliver gold and silver coins to its customers after they had mailed checks or wired money for their orders, and it ultimately defrauded hundreds of people to the tune of over twenty million dollars. After a joint jury trial, Larry Bates and three of his family members were convicted of mail fraud, wire fraud, and conspiracy to commit mail and wire fraud. In this consolidated appeal, the defendants challenge their convictions on multiple grounds, including sufficiency of the evidence and the allegedly improper denial of their motions for severance. Defendants also argue that their sentences were procedurally and substantively unreasonable, that they should not have been held joint and severally liable for forfeiture, and that the forfeiture amount was disproportionately excessive in violation of the Eighth Amendment. None of their arguments succeeds.

Page 318

I.

First American Monetary Consultants acted as a broker for precious metal transactions, purchasing gold and silver coins from wholesale suppliers and selling them to individuals looking for investment opportunities. Established in 1984, First American was initially incorporated in Colorado and subsequently became incorporated in Tennessee. Its founder, President, and CEO, Dr. Larry Bates, was a former member of the Tennessee House of Representatives with a doctorate in Christian education. Larry Bates and his wife, Barbara Bates, were First American’s sole shareholders.

First American began as a small consulting business consisting of Larry Bates and a secretary. It eventually expanded, in no small part due to the public outreach conducted by Larry Bates. Bates had turned his dissertation into a best-selling book entitled "The New Economic Disorder," and he capitalized on that success by becoming a frequent guest on Christian television shows and radio programs by the mid-2000s. First American also organized conferences throughout the country in which Larry Bates would speak to prospective customers. The pitch was always similar. Larry Bates would warn his audience about an imminent economic disaster, characterizing it as an "end time scenario" out of the Book of Revelation that would destroy the value of currency and threaten the savings of everyone invested in the stock market. First American offered a solution. With the assistance of its "economists," First American’s term for its sales staff, customers could invest in precious metals that would not lose value in an economic collapse. First American also sold other products to help its customers prepare for Armageddon, including Larry Bates’ books and freeze-dried food.

Each of Larry Bates’ immediate family members worked for First American. Barbara Bates served as the Vice President and was responsible for maintaining the company’s financial records. The couple has two sons, Charles Edward Bates ("Chuck Bates") and Robert Bates ("Bob Bates"). Chuck Bates was a Senior Monetary Consultant and Larry Bates’ second-in-command, whose responsibilities included selling precious metals to customers, hiring and training new salesmen, and calculating sales commissions. Bob Bates also served as a Senior Monetary Consultant, but his role was limited to that of a salesman. Kinsey Bates (formerly Kinsey Brown) was hired in 2009 and became Larry Bates’ personal assistant in 2010. She was responsible for handling customer calls, picking up First American’s mail from the post office, sorting mail, and delivering mail to Larry Bates. Kinsey married Bob Bates in October of 2012.

All of the defendants worked in First American’s Memphis office. Chuck and Bob Bates had offices in a locked hallway behind the receptionist’s desk, where the First American economists worked as well. At the end of the hallway there was another locked door that opened into an executive suite where Larry, Barbara, and Kinsey Bates worked. Kinsey Bates stayed with a First American employee named Sherry Barnett in the "outside area" of the executive suite, while Larry and Barbara Bates had separate offices within it. The executive suite also contained a locked shipping room with two safes, and only Larry, Bob, and Chuck Bates knew the combinations. Larry, Barbara, Chuck, Bob, and Kinsey Bates were each able to access the executive suite, and other economists could only do so when accompanied by a member of the Bates family or another authorized employee. If an economist had a message or customer order to provide to Larry Bates, then the standard practice

Page 319

was to "slip it under the door where it was retrieved by somebody in the executive suite."

In addition to running First American, Larry Bates served as the CEO and majority shareholder of Information Radio Network ("IRN"), a Tennessee corporation and First American’s affiliate. Larry Bates used IRN as an additional source of advertising for First American. A couple of the other Bates family members were also involved in managing IRN. Barbara Bates was a director, and Chuck Bates worked as an officer and news director for the company. Larry Bates also produced a radio show through IRN called "News and Views," and Chuck Bates assisted as a co-host.

The process for ordering precious metals through First American would work as follows. Customers typically contacted First American after hearing Larry Bates speak on a TV show, on a radio program, or at a First American conference. First American would respond by mailing an information packet and assigning an economist to advise the customer on how to invest in gold and silver coins. After the customer placed an order, First American would fill out a transaction form and instruct the customer to either send a check through U.S. mail or pay through a wire transfer. Larry Bates was in charge of purchasing the requested coins from a wholesale supplier. First American would then send order confirmations through U.S. mail advising customers that they should expect to wait twenty-five to forty-five business days for their coins to be delivered.

Although customers were initially drawn to First American based on Larry Bates’ reputation as a Christian, many of them became disillusioned after experiencing delivery delays of months or years. The volume of customer complaints increased from 2009 to 2013, as the orders for hundreds of customers remained partially or completely unfulfilled. Customers attempted to obtain their coins by contacting First American employees— including each of the defendants— through phone calls, letters, emails, and voicemail messages. One customer became desperate enough that she traveled to First American’s Memphis office to pick up her coins in person. Another accused Larry Bates of operating a "Ponzi scheme." Others hired attorneys and threated to contact the attorney general about First American’s bad business practices.

Eventually, the criticism took a toll on the company. Customers had filed an increasing number of complaints with the Better Business Bureau and the Tennessee Department of Consumer Affairs between 2008 and 2013, prompting the Better Business Bureau to downgrade First Americans rating from an "A plus" in 2008 to a "D plus" in 2010. The downgrade caused First American to lose its accreditation with the Better Business Bureau, and its rating dropped to an "F" in 2013. Multiple First American employees resigned during that same period due in part to the stress of handling a high volume of customer complaints. Larry Bates lost the support...

To continue reading

FREE SIGN UP