Diamonds Plus, Inc. v. Kolber, 91-2167

• Decision Date: 06 April 1992
• Docket Number: No. 91-2167,91-2167
• Citation: 960 F.2d 765
• Parties: RICO Bus.Disp.Guide 7984 DIAMONDS PLUS, INC., Appellee, v. Larry KOLBER; The Mike James Mortgage Company; Michael J. James; Frank T. Holland; Frank T. Holland & Company, Appellants.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 765

960 F.2d 765

RICO Bus.Disp.Guide 7984

DIAMONDS PLUS, INC., Appellee, v. Larry KOLBER; The Mike James Mortgage Company; Michael J. James;

Frank T. Holland; Frank T. Holland & Company, Appellants.

No. 91-2167.

United States Court of Appeals,

Eighth Circuit.

Submitted Jan. 8, 1992.

Decided April 6, 1992.

Frank T. Holland, pro se.

Denzil Keith Blackman, Jonesboro, Ark., for appellee.

Before JOHN R. GIBSON, Circuit Judge, FLOYD R. GIBSON, Senior Circuit Judge, and WOLLMAN, Circuit Judge.

FLOYD R. GIBSON, Senior Circuit Judge.

Frank Holland and Frank T. Holland & Company (collectively referred to as "Holland") ¹ appeal the district court's ² finding of liability under the civil provisions of the Racketeer Influenced and Corrupt Organizations Act (RICO). We affirm.

I. BACKGROUND

Frank Shaver and his wife, Paula, are the owners and officers of Diamonds Plus, Incorporated. Diamonds Plus sells jewelry at two retail locations in Arkansas, and Paula conducts most of the business for Diamonds Plus. While travelling in December 1987, Frank saw an advertisement for financial services in a copy of U.S.A. Today. The advertisement advised that "immediate financing" could be obtained "through the offices of Frank T. Holland" and provided a telephone number for Holland's office in Houston, Texas. Frank called the number and spoke briefly with Holland. Because he was less familiar with the details of Diamonds Plus' financial situation, Frank suggested that Paula call Holland at a later time. Paula called Holland on December 29, 1987 and provided him with some preliminary information about the Shavers' business. She called Holland again two or three weeks later; at that time, Holland told her that time was of the essence and in order to get the process started she had to come to Houston for a meeting. On January 24, 1988, Paula and Diamonds Plus' assistant manager, Selenia Chunn, went to Houston. They met Holland in a hotel restaurant; Holland was accompanied at the meeting by Quimet Peterson, whom Holland introduced as the individual who would actually procure the loan. Paula gave Holland the paperwork he had requested and paid him a "consultation fee" of one thousand dollars. Peterson and, to a lesser extent, Holland, explained what Diamonds Plus had to do to obtain the financing it sought. At the conclusion of the meeting, Holland instructed Paula to call him upon her return to Arkansas and arrange for an on-site inspection of Diamonds Plus. None of the representatives of Diamonds Plus saw or spoke with Peterson again.

Upon her return home, Paula called Holland to arrange the inspection and sent him a $2,250 fee. The inspection was performed by Larry Kolber; the Shavers picked Kolber up at the Memphis airport, showed him the two retail locations, spoke with him, and took him back to the airport. During their conversations, Kolber expressed excitement over the prospect of working with the Shavers and pleasure over the fact that Holland had sent him to inspect Diamonds Plus. He also identified what things had to be done and what documents had to be provided in order for Diamonds Plus to obtain a loan. The documents Kolber identified were to be sent to him in New Orleans.

Paula and Kolber spoke many times during the following two months. Kolber indicated the best prospect for Diamonds Plus to obtain financing might involve a second mortgage on the Shavers' home. He indicated that such a financing arrangement could be worked out through the Mike James Mortgage Company, which was located in Florida. Kolber instructed Paula to send certain documents to Mike James and $3,000 to Holland to secure the mortgage. As early as the beginning of March, 1988, Paula was told by both Kolber and Holland that Diamonds Plus had been approved for financing.

Diamonds Plus never received the loan proceeds. Repeated attempts by the Shavers to contact Kolber and James failed, although Holland did return the $3,000 Paula sent him in March. Diamonds Plus filed suit against Holland, Kolber, James, and Mike James Mortgage Company under the civil provisions of RICO, 18 U.S.C. § 1964(c) (1988). James and Mike James Mortgage Co. were served but did not appear at trial, and Kolber was never served. Immediately prior to trial, the district court reconsidered its earlier decision that the deposition of one of Holland's employees, Leo Stakemiller, was admissable; upon reconsideration, the court concluded the deposition was inadmissible because Holland had not received proper notice of the deposition and, for that reason, had not attended Stakemiller's deposition. Holland also requested the court reconsider its decision denying summary judgment in his favor, but the court did not discuss this motion prior to trial. After trial, the district court found in favor of Diamonds Plus, ³ and Holland appeals.

II. DISCUSSION

A. Summary Judgment

Holland contends the district court should not have relied on Stakemiller's deposition in ruling on the motion for summary judgment because the deposition was inadmissible at trial. However, a deposition need not be admissable at trial in order to be properly considered in opposition to a motion for summary judgment. The Federal Rules specifically allow depositions to be used in opposition to motions for summary judgment, Fed.R.Civ.Pro. 56(e), and "[a] deposition is at least as good as an affidavit and should be usable whenever an affidavit would be permissible, even though the conditions of the rule on use of a deposition at trial are not satisfied." Wright & Miller, Federal Practice and Procedure § 2142 (1970) (footnote omitted); see also Hoover v. Switlik Parachute Co., 663 F.2d 964, 966-67 (9th Cir.1981). We have examined Stakemiller's deposition and find it raises sufficient questions of material fact to prevent entry of summary judgment in Holland's favor.

Holland concedes that, under certain circumstances, a deposition that is inadmissable at trial might qualify as an affidavit for purposes of supporting or opposing a motion for summary judgment. He contends, however, that Stakemiller's deposition fails to qualify as an affidavit because it was not signed and notarized. We decline to address this issue because it was raised for the first time on appeal; we generally do not discuss issues that are not raised initially before the district court, Jones v. Lockhart, 851 F.2d 1115, 1116 (8th Cir.1988) (per curiam), and Holland's argument at this late stage in the proceedings has not been made with the "reasonable promptness" required by the Federal Rules. Fed.R.Civ.Pro. 32(d)(4).

B. Sufficiency of the Evidence

RICO provides a civil cause of action to those who are injured by activities violative of 18 U.S.C. § 1962 (1988). 18 U.S.C. § 1964(c) (1988) provides for "threefold damages and costs, including a reasonable attorney's fee." Section 1962(c) prohibits any person "associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity...." A pattern of racketeering activity requires two or more violations of certain specified state or federal crimes, id. § 1961(5), including wire fraud and mail fraud. Id. § 1961(1).

Holland contends there was insufficient evidence to support the court's findings that he acted with intent to defraud as required by the statutes governing mail and wire fraud, ⁴ that he engaged in a patter of racketeering activity, or that an enterprise within the meaning of RICO existed. We review the district court's findings for clear error. E.g., Patterson v. Masem, 774 F.2d 251, 256 (8th Cir.1985).

1. Intent to Defraud

Diamonds Plus alleged that Holland had committed the predicate acts of wire and mail fraud. Holland does not dispute he used the mail and the telephone to conduct his activities, but contends he lacked the requisite intent to defraud because he possessed a good faith belief that he could provide financing to his prospective customers.

"The crime of mail fraud is broad in scope and its fraudulent aspect is measured by a nontechnical standard, condemning conduct which fails to conform to standards of moral uprightness, fundamental honesty, and fair play." Atlas Pile Driving Co. v. DiCon Financial Co., 886 F.2d 986, 991 (8th Cir.1989). No single fact need demonstrate the defendant's intent; rather, intent to defraud can be discerned by examining the totality of the circumstances surrounding the defendant's activities. Id. Intent to defraud need not be evinced by the defendant's avowed intent to bilk members of the public; it can also be demonstrated when the defendant recklessly disregards whether his representations are true. E.g., United States v. Henderson, 446 F.2d 960, 966 (8th Cir.), cert. denied, 404 U.S. 991, 92 S.Ct. 536, 30 L.Ed.2d 543 (1971).

The district court found that Holland placed advertisements in numerous newspapers, including two national newspapers: U.S.A. Today and The Wall Street Journal. These advertisements represented that Holland was able to provide immediate commercial financing. However, Holland had no prior experience in providing financing of any kind, had no sources for such financing at the time he placed the ad, and was never able to provide financing to any of the people responding to his ads. In fact, U.S.A. Today stopped printing Holland's ad because the newspaper had received too many complaints about Holland, yet Holland continued to advertise in other publications after U.S.A. Today notified him of the complaints.

Holland contends he had a good faith belief he could obtain financing because Peterson told him he had access to various private and commercial lenders. However, Peterson never disclosed the identity of these lenders, and there is no indication that such lenders actually existed. Under these circumstances, the district court was entitled to...