United States v. Lopez

• Decision Date: 29 August 2017
• Docket Number: No. 16-2269.,16-2269.
• Citation: 870 F.3d 573
• Parties: UNITED STATES of America, Plaintiff–Appellee, v. Jaime C. LOPEZ, Defendant–Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

870 F.3d 573

UNITED STATES of America, Plaintiff–Appellee,

v.Jaime C. LOPEZ, Defendant–Appellant.

No. 16-2269.

United States Court of Appeals, Seventh Circuit.

Argued June 1, 2017

Decided August 29, 2017

Rehearing and Rehearing En Banc^* Denied October 17, 2017^**

James M. Warden, Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Indianapolis, IN, for Plaintiff–Appellee.

Sarah O'Rourke Schrup, Attorney, NORTHWESTERN UNIVERSITY SCHOOL OF LAW, Chicago, IL, for Defendant–Appellant.

Before Bauer, Posner, and Hamilton, Circuit Judges.

Bauer, Circuit Judge.

A jury convicted Jaime Lopez of fifteen counts of wire fraud, four counts of money laundering, and one count of securities fraud in connection with his participation in a fraudulent investment scheme. Lopez challenges his conviction based on various evidentiary rulings that he argues deprived him of a fair trial. We affirm.

I. BACKGROUND

In 2009, Lopez, a self-described financial advisor, began creating financial investment business entities and soliciting startup capital from family and friends. These entities were named JCL Interest Plus, JCL Capital Inc., JCL & Company, and JCL Direct. Between December 2009 and January 2011, Lopez received approximately $450,000 total from Thomas Holsworth, Jerry Wilson, Colleen Wilson, and Danny Cole. Aside from Lopez's father-in-law, these were the only four individuals who invested with Lopez.

Lopez directed those four individuals to transfer their retirement funds from their personal accounts into self-directed individual retirement accounts administered by a company called Entrust IRA, later known as Midland IRA. Lopez told them that he would then move the funds from the Midland IRAs into one or more of the JCL entities for further investment. Each of the individuals executed promissory notes, providing for various rates of return at various maturity dates. Through personal conversations, brochures, and his company's website, Lopez told his investors that he intended to secure their returns through investments in companies such as Coca–Cola, ExxonMobil, Wells Fargo, Visa, American Express, and Procter & Gamble. The documents the investors signed, however, did not specify particular investments that would be made and reserved Lopez's discretion to invest where he saw fit.

Each of the investors transferred their funds to Midland IRA, per Lopez's instruction, and Lopez then deposited the funds into various bank accounts that he controlled under the names of the various JCL entities. None of that money, however, was ever invested in any of the companies Lopez listed in his advertising materials. Lopez used $45,000 of Danny Cole's money to open an E*Trade stock-trading account, but eventually lost all of that money. The remainder of the investors' capital either remained in the JCL bank accounts or was placed into an account under the name 413 Solutions, Inc.—Lopez's wife's management consulting business, which she ran out of their family home.

Lopez used a significant portion of these funds to pay for personal expenses including $70,574 in home mortgage payments; $41,208 on automobiles; and $45,870 on landscaping for his home. Some of those payments were made with checks from the JCL entities' accounts, while some of them were paid out of the 413 Solutions, Inc. account. It was Lopez's theory at trial that these amounts were business expenses for his wife's company and that the funds in the 413 Solutions, Inc. account were investments made with a return expected at a later date. The government's theory was that Lopez was simply using the investors' capital to pay for his lifestyle.

Between mid–2011 and early 2012, Lopez unilaterally changed the terms of each investors' promissory note. At trial, each of the investors testified that they were not aware of these changes, did not give Lopez permission to make them, and did not sign any documents authorizing them. In each case, Lopez made the investment term longer and the rate of return lower than what the investors agreed to in the original notes.

In early 2013, after confronting Lopez about the use of his investments, Danny Cole complained to the Indiana Secretary of State Securities Division, and the Internal Revenue Service eventually began investigating Lopez's businesses. On January 13, 2016, the government filed a superseding indictment charging Lopez with fifteen counts of wire fraud, in violation of 18 U.S.C. § 1343 ; four counts of money laundering, in violation of 18 U.S.C. § 1957 ; and one count of securities fraud, in violation of 15 U.S.C. §§ 78j(b) and 77ff(a). On March 14, 2016, a jury found Lopez guilty on all counts. He timely appealed.

II. DISCUSSION

Lopez raises four issues on appeal, each of which, he argues, constitutes grounds for a new trial. First, he argues that the district court erred in allowing a government witness to testify that payments Lopez made to his investors were "lulling payments." Second, Lopez contends that the government's references to Bernie Madoff in its closing argument denied him a fair trial. Third, he argues that the court erred in denying his request to label his witness, Michael Aldering, an "expert" in front of the jury. Finally, Lopez contends that the court improperly prevented him from introducing extrinsic evidence of a prior inconsistent statement by a government witness. We address each argument in turn.

A. Use of the Term "Lulling Payments"

The government called IRS Agent Janet DeLancey to testify as a summary witness regarding the investigative efforts to trace money through Lopez's accounts. At various points in her testimony, over Lopez's objection, Agent DeLancey used the term "lulling payments" to refer to money that Lopez periodically paid back to his investors. According to Agent DeLancey, Lopez led the investors to believe that these payments were derived from interest earned on investments he made with their money when, in fact, he simply used other investors' principal funds to make those payments.

Lopez argues that Agent DeLancey's testimony regarding "lulling payments" allowed her to draw conclusions and express opinions about Lopez's intent that fell outside the permissible scope of her testimony as a summary witness. We review a district court's decision to admit or exclude evidence for an abuse of discretion. United States v. Causey , 748 F.3d 310, 315–316 (7th Cir. 2014) (citation omitted).

Contrary to Lopez's contention, Agent DeLancey did not offer any improper opinions or conclusions with her use of the term "lulling payments." She first used the term in response to a direct-examination question on how Lopez used the funds he received from investors:

A portion of those funds, a significant portion, was also used to make payments back to [the investors' accounts at] Midland, what I refer to as those are lulling payments, because the records show instead of using the funds, investing them in a third party as he represented to Mr. Cole and Mr. Holsworth and the Wilsons, those funds actually would go into like the JCL account. And they would sit there, and then they would just be used to pay back to Midland to make the interest payments.

At this point, Lopez objected to the use of the term "lulling payments" and was overruled. Throughout the remainder of the direct examination, Agent DeLancey continued to reference "lulling payments" as she summarized the bank account exhibits that the government entered into evidence.

At no time, however, did she offer any testimony or opinion as to why Lopez made those payments. She did not, and was not asked to, testify as to the intent behind those payments or the effect they might have had on the investors. She simply used the term to describe payments that appeared to be derived from interest on investments, when, in fact, they were derived from other investors' capital. This was information that she gathered from her review of the documents she was called to summarize, and is appropriate testimony for a summary witness to offer. See United States v. Pree , 408 F.3d 855, 869 (7th Cir. 2005) ("It is well established that the nature of a summary witness' testimony requires that he draw conclusions from the evidence presented at trial." (citation, quotation marks, and alteration omitted)).

In addition, Lopez's argument loses some of its force in light of the fact that his counsel cross-examined Agent DeLancey on her characterization of the payments as "lulling payments." He contends that the court denied him a full opportunity to address this issue on cross, but we are not persuaded by that argument after reviewing the transcript. In his brief, Lopez states that he sought to establish that the "lulling payments" to which Agent DeLancey referred were payments he was required to make by the terms of the investor agreements, but that the court did not allow him to do so. The following exchange belies that contention:

Q: Now, in your testimony, you referred to payments to the lenders as lulling payments; is that right?

A: Yes.

Q: But the terms of this agreement actually require Mr. Lopez to make payments on a monthly basis to Ms. Wilson of $210; is that right?

A: Yes.

Q: So when you refer to some of these as lulling payments, you're actually referring to payments that Mr. Lopez made to lenders per these written contracts?

A: Right. When I refer to them as lulling payments, I'm referring to the fact that those are just the investor's funds that are being used to pay back—to make the payments that he's required to make as interest payments, but—

Q: But they are payments that Mr. Lopez was required to make to the lender by these contracts?

A: Yes, that JCL Direct is required to make, yes.

Q: So he was adhering to the terms of this contract when he was making those payments to Mrs. Wilson?

A: Yes.

Lopez contends that subsequent government objections caused confusion and cut short his ability to make his point to the jury. But, as the above exchange demonstrates, it is simply not true that Lopez's counsel was...