United States v. Beckman

• Citation: 787 F.3d 466
• Decision Date: 12 May 2015
• Docket Number: 13–2603.,13–1163,Nos. 13–1162,s. 13–1162
• Parties: UNITED STATES of America, Plaintiff–Appellee v. Jason Bo–Alan BECKMAN, also known as Bo Beckman, Defendant–Appellant. United States of America, Plaintiff–Appellee v. Gerald Joseph Durand, also known as Jerry Durand, Defendant–Appellant. United States of America, Plaintiff–Appellee v. Patrick Joseph Kiley, also known as Pat Kiley, Defendant–Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

787 F.3d 466

UNITED STATES of America, Plaintiff–Appellee

v.Jason Bo–Alan BECKMAN, also known as Bo Beckman, Defendant–Appellant.

United States of America, Plaintiff–Appellee

v.Gerald Joseph Durand, also known as Jerry Durand, Defendant–Appellant.

United States of America, Plaintiff–Appellee

v.Patrick Joseph Kiley, also known as Pat Kiley, Defendant–Appellant.

Nos. 13–1162

13–1163

13–2603.

United States Court of Appeals, Eighth Circuit.

Submitted: Oct. 8, 2014.

Filed: May 12, 2015.

Douglas Altman, argued, Minneapolis, MN, for appellant Jason Bo–Alan Beckman.

Brian N. Toder, argued, Minneapolis, MN, for appellant Gerald Joseph Durand.

Kevin C. Riach, argued (John W. Lindquist, on the brief), Minneapolis, MN, for appellant Patrick Joseph Kiley.

David J. MacLaughlin, AUSA, argued (Tracy Lynne Perzel, AUSA, on the brief), Minneapolis, MN, for appellee.

Before RILEY, Chief Judge, WOLLMAN and BYE, Circuit Judges.

Opinion

RILEY, Chief Judge.

Five players in a partial Ponzi scheme received over $193 million from unsuspecting investors. Trevor Cook and Christopher Pettengill pled guilty, and defendants Jason Bo–Alan Beckman, Gerald Durand, and Patrick Kiley proceeded to trial. After a twenty-nine day trial, a jury found the defendants guilty on all counts, including fraud, conspiracy, and money-laundering, and the district court¹ sentenced each to decades in prison. The defendants appeal their convictions and sentences. We affirm.²

I. BACKGROUND

A. Facts

“We present the facts in a light most favorable to the verdicts, drawing all reasonable inferences from the evidence that support the jury's verdicts.” United States v. Ramon–Rodriguez, 492 F.3d 930, 934 (8th Cir.2007). From July 2006 through September 2009, the defendants' partial Ponzi scheme³ received over $193 million from hundreds of investors. Only $49 million was returned to some investors, all of which came from new investors' money. Some investors lost their life savings. The five schemers profited in varying amounts: $12.2 million for Cook; $4.8 million for Beckman; $4.3 million for Pettengill; $1.9 million for Durand; and $432,000 for Kiley.

The schemers induced victims to invest in various entities they created, many named either with the initials “UBS” (UBS entities) or the word “Oxford” (Oxford entities). According to SEC accountant Scott Hlavacek, the schemers described a “currency program” to potential investors leading investors to believe “they would be investing in foreign currency trading, which was guaranteed and ... had a ... fixed rate every month.” Some of the money “was actually invested in foreign currencies,” but none of the money was “invested in a completely safe, secure, and guaranteed currency product,” as the defendants promised.

For example, Beckman's firm, “Oxford Global Advisors,” which was “one of the ... primary recipients of investor funds” in the scheme, stated in a solicitation brochure that its “Federal Funds Income Advantage” program had a current annual yield of 12% and promised “instant[ ] liquid[ity]” and “zero fluctuation of principal.” Each investor's account would be “segregated”—“not co-mingled [sic] with the general assets of the custodian, bank or dealer,” and funds would be invested in various foreign currencies and then traded for gain depending on favorable interest rates. Beckman told his victims they could not lose money in the currency program—the investment was “risk-free” and “completely safe”—and that it was a “fixed income product” “that delivers this safe 10 to 12 percent return on your money.” Beckman also falsely inflated his own credentials. For example, Beckman claimed to be “in the top-ranked tier of portfolio managers per a Morningstar comparative study,” a study and ranking that did not exist. One victim testified this false credential “factored into [her] decision to make this investment.”

Beckman claims it was only in April 2008 that he learned the investors' money in the currency program was not held in segregated accounts but was pooled together. Yet, Beckman still obtained another $24 million of investors' money for the currency program. For the period August 2006 to July 2009, Beckman's personal clients invested more than $47 million.

At trial, a securities executive, Donald Bizub, who had a professional relationship with Beckman, testified that in August 2008 he had seen “an ad on an Oxford related page talking about a fixed income investment paying I believe it was 10 and a half percent guaranteed.” Bizub was concerned because “typically when you see ads like this, there's always an asterisk with a whole bunch of disclaimer at the bottom; and [he did not] see an asterisk or any disclaimer.” Bizub clicked a link on the website and sent an email with the subject line, “How's 10.5% fixed return sound,” and requested, “Please tell me more about this investment.” Beckman's colleague, Gene Walden, forwarded Bizub's email to Beckman, stating, “Just got this—he must have seen this in our e-newsletter on the web site.”

Beckman forwarded the email to Cook, writing, “Now the ship begins to sink. This is not good. I will needless to say take care of it, I just wanted you to know.” Cook wrote back to Beckman, “I am very sorry about this.... I think the good news is that ... we can blame it on a trainee sales rep who was fired ... say nothing he did was approved ... also say we have opinion letters from attorneys about the product.... So please see me if you would like any ammunition to respond.... Individually managed accounts is very im[p]ortant ... remember this bullet point.” Even after the ship began to sink, Beckman still solicited over $12 million in additional investor funds into non-segregated accounts.

Some of the victims learned of the currency program through Gerald Durand's radio shows, “Expand Your Wealth” and “Wealth Survival”—on which Beckman was a guest. Durand also solicited investors by advertising “educational workshop[s],” stating he and “UBS Diversified, which manages over 2 billion dollars in assets,” could advise how to “double your money in less than 5 years” and “earn 15% per year with no risk.” Durand testified at a hearing in a related civil case that Cook chose the name “UBS Diversified” “to confuse people.” For example, Beckman emailed to one of his investors that the “fixed income alternative” would yield “12% for 12 months and [was] backed by UBS (not someone we met on the street),” and the investor was led to believe “UBS” meant the Union Bank of Switzerland. Beckman's brochure included the genuine UBS logo on the last page, along with several other investment banks. Durand testified the schemers stopped using the fund name “UBS” after the Swiss bank sued them.

One investor victim testified that after listening to Durand's radio show, he attended six or seven seminars where “the emcee would kick things off ... and say that these are some of the most brilliant people that he knows in the financial industry ... and then ... he would have ... Jerry Durand come up and give a little spiel for 15 minutes, then [Jason] Beckman, then Trevor Cook, and they would all give their deal.... I thought these people were the best and the brightest. And I'm usually a very conservative type person and they really sold me.” The investor and his family lost over $370,500.

Durand, who was also “Managing Director” of Oxford Global Advisors, placed his name on a UBS Diversified version of the “Federal Funds Income Advantage” brochure, which promised “[i]nterest rates ... [c]redited at 12% annually” and stated, “The entire contents of this brochure is solely the responsibility of UBS Diversified.... For more information, please contact Gerald J. Durand.” Durand wrote an investor that UBS Diversified's customer funds were “insured by measures enacted by the Federal Government” and “held in segregated accounts,” and that Durand's “people” at the firm were licensed brokers. Based on Durand's representations that the investor's funds would be held in a segregated account and the principal could not be lost, the investor mortgaged his home, entrusted the proceeds and more to Durand, and lost several million dollars.

Kiley also had a radio show, “Follow the Money.” Kiley's radio show was broadcast on a Christian radio station, and Kiley described himself as a Christian man—“he always closed his broadcast with a prayer.” One of Kiley's early investors, Duke Thietje, stated this “ha[d] an impact on [his] investment decision” because [Thietje] was “a person of the Bible [him]self [and] wanted someone who was of personal integrity.” On the radio, Kiley gave a phone number that listeners could call for more information—Kiley would then talk with the caller and send brochures from “UBS,” claiming it was a “registered financial advisory firm.” While telling potential investors their funds would be kept in segregated accounts, Kiley personally deposited many investors' funds into the same account and also wrote checks to satisfy occasional withdrawal requests.

Kiley's radio show also suggested listeners consult his website, www.patkiley. com, where he lied about his own credentials, stating he was “an independent financial analyst for a multi billion dollar corporation” and “[h]is clients range from top international funds and banks to the everyday investor.” Kiley's website advertised “The Wealth Management Group” that “currently oversees several billions in assets” and “provides individual investors access to arbitrage,” known as “a risk-less transaction” with “individually segregated ” customer accounts that are “totally liquid. ” Kiley told Thietje “the funds would be traded in foreign currencies and it was a rather successful program, having stops and so on, so there would be little chance to really lose a large amount.” Thietje testified Kiley's representation of “complete safety” for his funds “was the most determining factor” in his decision to invest with Kiley. Thietje stated Kiley's representations led him to conclude his...