United States v. Speer, 040111 FED6, 08-4564

Docket Nº:08-4215, 08-4564
Opinion Judge:HELENE N. WHITE, Circuit Judge.
Party Name:UNITED STATES OF AMERICA, Plaintiff-Appellee, v. RANDOLPH H. SPEER, Defendant-Appellant.
Judge Panel:BEFORE: GIBBONS and WHITE, Circuit Judges, and MALONEY, District Judge.
Case Date:April 01, 2011
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit
 
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UNITED STATES OF AMERICA, Plaintiff-Appellee,

v.

RANDOLPH H. SPEER, Defendant-Appellant.

Nos. 08-4215, 08-4564

United States Court of Appeals, Sixth Circuit

April 1, 2011

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF OHIO

BEFORE: GIBBONS and WHITE, Circuit Judges, and MALONEY, [*] District Judge.

OPINION

HELENE N. WHITE, Circuit Judge.

Defendant Randolph H. Speer was convicted of one count of conspiracy to commit securities and wire fraud, 18 U.S.C. § 371, three counts of securities fraud, 15 U.S.C. §§ 77q(a) & 77x& 2, one count of wire fraud, 18 U.S.C. §§ 1343 & 2, one count of conspiracy to commit money laundering, 18 U.S.C. § 1956, and five counts of concealment money laundering, 18 U.S.C. § 1956(a)(1)(B)(i). Speer appeals his convictions and sentence. We affirm in part and reverse in part.

I.

The facts surrounding this case are described in detail in United States v. Faulkenberry, 614 F.3d 573 (6th Cir. 2010), an appeal by one of Speer's co-defendants. We include them here only as necessary to review Speer's arguments.

National Century Financial Enterprises (NCFE) purchased healthcare providers' accounts receivable at a discount and pooled those receivables to secure bonds that it sold to institutional investors to raise capital for the purchase of the receivables. NCFE also collected program fees from the healthcare providers. The investors earned interest and were repaid through collections on the receivables. Providers, meanwhile, were paid almost immediately for services, rather than having to wait for insurers to process and pay claims. This business model was, in theory, a sound one.

NCFE operated primarily through two subsidiaries, NPF VI and NPF XII. These entities issued the actual bonds. Another NCFE subsidiary, National Premier Financial Services (NPFS), was responsible for performing the day-to-day services necessary to purchase the receivables, administer the accounts, and manage the collection of the receivables. A Master Indenture Agreement detailed the legal obligations among the bond issuers, NPFS, and the banks that served as trustees of the NPF programs' accounts. NPFS was responsible for determining which receivables were eligible for purchase and the trustee banks were required to monitor the programs on behalf of the bond-holders. The notes issued to bond-holders contained written terms that restricted the use of the funds invested to the purchase of eligible receivables. The notes also detailed credit enhancements, including overcollateralization, credit reserves, and other means of ensuring that the principal owed on the notes would be secure.1

Although its business model was outwardly strong, the actual practices of NCFE varied drastically from what investors were promised. Rather than being used only to fund the purchase of eligible receivables, much of the funding brought in from the sale of bonds was used to advance money to healthcare providers without the purchase of receivables. Several of these providers had no realistic ability to repay the advances and lacked adequate receivables to support the amounts advanced. The improper advances, some of which were made to companies in which NCFE principals held ownership stakes, severely depleted the cash reserves that NPF VI and NPF XII were required to maintain to protect bond-holders. To cover the losses, NCFE issued more notes. NCFE executives also falsified data presented to investors. Additionally, NCFE moved funds between various accounts within and across NPF VI and NPF XII to meet minimum funding requirements on reporting dates. The reporting dates for the two programs were staggered so that the same funds could be counted separately by each program to meet investor requirements.

Eventually, the scheme became unsustainable. At the end of September 2002, one of the trustee banks blocked a transfer between NPF VI and NPF XII, triggering an event of default. In November 2002, NCFE filed for bankruptcy, resulting in investor losses of approximately $2.4 billion. On November 12, 2002, the FBI raided NCFE's headquarters, seizing its files and documents. The ensuing investigation revealed substantial financial irregularities.

In 2006, the government secured indictments against seven of NCFE's executives on charges of conspiracy, securities fraud, wire fraud, mail fraud, and money laundering.2 Five of the seven executives, including Speer, were jointly tried. After a six-week trial and two days of deliberation, Speer was convicted of one count of conspiracy to commit securities and wire fraud, three counts of securities fraud, one count of wire fraud, one count of conspiracy to commit money laundering, and five counts of concealment money laundering. Speer moved for a judgment of acquittal pursuant to Federal Rule of Criminal Procedure 29 at the close of the government's case-in-chief and again at the close of trial. The district court denied both motions, as well as Speer's renewed motion made following his convictions, stating:

The trial in this case lasted for six weeks. The twenty-two volume trial transcript shows that Defendants had considerable opportunities to, and in fact did, attack the Government's evidence against them by putting on their own defenses and by extensively cross-examining the Government's witnesses and challenging its documentary evidence. The record also shows that the evidence against Defendants was substantial. Six former National Century employees testified and three of these-Jon Beacham, Sherry Gibson, and Jessica Bily-were senior executives with intimate knowledge of the company's operations and how it perpetrated investor fraud. Each of these executives admitted to engaging in criminal conduct and they all implicated Defendants in the criminal conspiracy. Besides National Century insiders, the Government put on witness testimony from the investors whose money, unbeknownst to them, was improperly used to make unsecured loans to healthcare providers. The Government also called to the stand representatives of the healthcare providers, who confirmed that they asked for, and received, hundreds of millions of dollars in National Century loans that the providers had little ability to pay back.

Speer appeals, claiming that the evidence was insufficient to support his convictions and the district court erred in denying his motion to suppress evidence seized during the warrant-authorized search of NCFE's headquarters.3

II.

Speer claims that the district court erred when it denied his motion for acquittal based on insufficient evidence. We review de novo a district court's denial of a motion for acquittal challenging the sufficiency of the evidence. United States v. Mabry, 518 F.3d 442, 447 (6th Cir. 2008). In reviewing challenges regarding the sufficiency of the evidence . . ., we are limited to ascertaining whether . . . any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt." United States v. Carmichael, 232 F.3d 510, 519 (6th Cir. 2000) (citations and internal quotations omitted). We "must view all evidence and resolve all reasonable inferences in favor of the government." United States v. Hughes, 505 F.3d 578, 592 (6th Cir. 2007) (citing Jackson v. Virginia, 443 U.S. 307, 319 (1979)). In doing so, however, we do not independently weigh the evidence or substitute our judgment for that of the jury. Id. Thus, "[a] defendant bringing such a challenge bears a 'very heavy burden.'" United States v. Daniel, 329 F.3d 480, 485 (6th Cir. 2003) (citations omitted).

A.

Speer first challenges his conviction of conspiracy to commit securities and wire fraud in violation of 18 U.S.C. § 371. The government must show three elements to prove a conspiracy: "(1) the existence of an agreement to violate the law; (2) knowledge and intent to join the conspiracy; and (3) an overt act constituting actual participation in the conspiracy." Hughes, 505 F.3d at 593. "A tacit or material understanding among the parties to a conspiracy is sufficient to establish the agreement[, and a] conspiracy may be inferred from circumstantial evidence which may reasonably be interpreted as participation in a common plan." Id. (citations omitted); see also United States v. Conatser, 514 F.3d 508, 518 (6th Cir. 2008) ("No proof of a formal agreement is required to establish a conspiracy to violate federal law; 'a tacit or mutual understanding among the parties will suffice.'. . . Just as the conspiracy may be inferred from circumstantial evidence, a defendant's knowledge of and participation in a conspiracy also may be inferred from his conduct and established by circumstantial...

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