U.S. v. Alexander

• Decision Date: 09 March 1998
• Docket Number: No. 96-4188,96-4188
• Citation: 1998 WL 35152,135 F.3d 470
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Kenneth S. ALEXANDER, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 470

135 F.3d 470

UNITED STATES of America, Plaintiff-Appellee, v. Kenneth S. ALEXANDER, Defendant-Appellant.

No. 96-4188.

United States Court of Appeals, Seventh Circuit.

Argued June 6, 1997.

Decided Jan. 30, 1998.

Rehearing and Suggestion for Rehearing En Banc Denied March 9, 1998.

Cheryl Bell (argued), Office of the United States Attorney, Criminal Appellate Division, Chicago, IL, for Plaintiff-Appellee.

Scott J. Frankel (argued), Frankel & Cohen, Chicago, IL, for Defendant-Appellant.

Before CUMMINGS, RIPPLE, and ROVNER, Circuit Judges.

ILANA DIAMOND ROVNER, Circuit Judge.

Kenneth Alexander was convicted by a jury on eleven counts of bankruptcy fraud and two counts of mail fraud, and the district court sentenced him to a prison term of 32 months. Four of the bankruptcy counts were brought under 18 U.S.C. § 157 and involved various frauds committed by Alexander in connection with a bankruptcy petition filing business that he operated. The remaining seven counts of bankruptcy fraud were brought pursuant to 18 U.S.C. § 152, and those counts addressed three personal bankruptcy petitions filed by Alexander between September 1994 and June 1995. The first mail fraud count, moreover, charged Alexander with making a false insurance claim relating to his bankruptcy petition filing business, and the second mail fraud count charged him with making false representations on a mortgage application. Alexander advances three arguments in challenging those convictions here. First, he contends that the thirteen counts were improperly joined under Fed.R.Crim.P. 8(a). Alternatively, he asserts that the district court erred in denying his motion for a severance pursuant to Fed.R.Crim.P. 14. Finally, he contends that the government's evidence on the false insurance claim was insufficient to establish a violation of the mail fraud statute. We reject each of these arguments below and thus affirm Alexander's convictions.

I.

The first four counts of the government's superseding indictment were addressed to Alexander's bankruptcy petition filing business. That business was known as "DuPage Paralegal Services" and was operated out of Alexander's home in Addison, Illinois. In return for a designated fee, Alexander would offer to initiate a bankruptcy proceeding on a client's behalf and then to monitor that proceeding for the client as it progressed. And because such services generally require some legal expertise, Alexander would induce prospective clients to utilize his service by representing that he was an attorney or a law school graduate. He also would inform prospective clients that he had an office staffed with attorneys who would monitor the petitions and appear in court whenever necessary. The government alleged in the indictment and established at trial that those representations were false. Alexander was not an attorney, he had never attended law school, and he had no attorneys working for his business.

The government also asserted that Alexander gave false advice to his clients about the effect of filing a bankruptcy petition under Chapter 13 of the Bankruptcy Code. Alexander apparently advised clients that such petitions would eliminate their debts without requiring that they make any payments to existing creditors. That advice was erroneous, however, because under Chapter 13, the debtor is required to submit a plan to repay creditors within fifteen days of the date of the filing. The debtor's debts are not discharged until the payments called for by the approved plan have been made. And because Alexander failed to submit the required repayment plans after filing Chapter 13 petitions for his clients, their bankruptcy petitions were routinely dismissed after the fifteen-day period had passed. By that point, however, Alexander would no longer be accepting his clients' telephone calls.

At the same time that he was defrauding his clients, Alexander also was defrauding the bankruptcy court itself. The government maintained that the bankruptcy petitions and other documents he filed with the bankruptcy court were replete with false statements. For example, Alexander would state on the bankruptcy petitions he filed for paying clients that the petitions were being filed pro se. He also would represent on the debtor's statement of financial affairs that the debtor had not paid anyone to assist him in filing the petition.

The remaining seven counts of bankruptcy fraud addressed a series of three bankruptcy petitions Alexander filed on his own behalf between September 1994 and June 1995. Each of those petitions was ultimately dismissed, but during the time that each was pending, Alexander received the benefit of the automatic stay, which prevented his mortgage company and other creditors from foreclosing on his property. The government alleged that Alexander's personal bankruptcy petitions also included a series of false representations designed to conceal the existence of the debtor's bankruptcy petition filing business. For instance, Alexander's petitions failed to reveal the existence of DuPage Paralegal Services, and the later petitions also failed to reveal the existence of the earlier, dismissed petitions.

The first mail fraud count, meanwhile, involved an allegedly fraudulent insurance claim for business losses that Alexander submitted to the State Farm Insurance Company. Alexander's claim stemmed from an automobile accident in which he had been involved in December 1994. In notifying State Farm of the accident, Alexander indicated that his laptop computer had fallen from the passenger seat and been damaged, causing him to lose a number of documents needed for his clients' bankruptcy cases. Alexander ultimately claimed that documents relating to sixty-six cases had been lost and that their value was $11,900. In processing Alexander's claim, State Farm asked a third party (S.B. Baker and Associates) to obtain a copy of the automobile accident report, and after doing so, S.B. Baker mailed the report to State Farm. The insurance company initially paid for the cost of repairing Alexander's laptop computer but requested additional documentation on the lost documents claim. In response to that request, Alexander submitted contracts for the word processing services that allegedly were required to enable him to recreate the lost documents. It turned out that those contracts had been forged, however, and that no word processing services had been performed. State Farm eventually paid over $2,000 on the lost documents claim, bringing the total payout on the computer and lost documents to the policy limit of $5,000.

The second and final mail fraud offense involved a mortgage loan application submitted by Alexander in July 1993 in connection with the purchase of his three-flat residence in Addison, Illinois. It is out of that residence that Alexander conducted his bankruptcy petition filing business. On his mortgage application, Alexander falsely represented that he had $98,000 in an investment account with Charles Schwab, and he submitted a receipt to the mortgage company which indicated that a deposit of 16,000 shares of stock had been made to the Schwab account. Alexander also represented on the mortgage application that he had filed tax returns for the preceding two years and that he had paid his taxes in full. He even created the allegedly-filed tax returns and submitted them to the mortgage company along with a fabricated letter from the IRS confirming that his taxes had been paid in full. The government proved at trial, however, that neither Alexander nor his business had filed tax returns in the relevant years and that the IRS had never sent Alexander any confirmatory letter. Relying on the accuracy of the materials submitted to it, the mortgage company approved a $168,000 loan for the purchase of Alexander's Addison residence.

II.

A.

We first consider Alexander's contention that the government's evidence on count V was insufficient to establish mail fraud. Specifically, Alexander asserts that the government failed to prove that the alleged mailing occurred or, alternatively, that the mailing was reasonably foreseeable and in furtherance of the alleged scheme to defraud. Alexander bears a heavy burden in challenging the sufficiency of the evidence, as we review the record in the light most favorable to the government and will sustain the conviction so long as any reasonable trier of fact could have concluded that the essential elements of mail fraud were shown. See Jackson v. Virginia, 443 U.S. 307, 316, 99 S.Ct. 2781, 2787, 61 L.Ed.2d 560 (1979); United States v. Morris, 80 F.3d 1151, 1160 (7th Cir.), cert. denied, --- U.S. ----, 117 S.Ct. 181, 136 L.Ed.2d 120 (1996).

In order to establish a violation of the mail fraud statute, the government was required to prove that Alexander engaged in a scheme to defraud and that the mails were used for the purpose of executing or attempting to execute that scheme. See Schmuck v. United States, 489 U.S. 705, 721, 109 S.Ct. 1443, 1453, 103 L.Ed.2d 734 (1989); United States v. Ross, 77 F.3d 1525, 1542 (7th Cir.1996). It is not necessary that Alexander himself utilized the mails. It is instead sufficient if he caused the mails to be used, which he would do by acting " 'with the knowledge that the use of the mails will follow in the ordinary course of business, or where such use can reasonably be foreseen.' " United States v. Walters, 997 F.2d 1219, 1223 (7th Cir.1993) (quoting United States v. Kuzniar, 881 F.2d 466, 472 (7th Cir.1989)); see also United States v. Koen, 982 F.2d 1101, 1107 (7th Cir.1992).

The mailing on which the government relies here was not made by Alexander, but by a third party (S.B. Baker & Associates), who at State Farm's request, obtained and mailed to the insurance company a copy of the police report addressed to the automobile accident in which Alexander's laptop computer had been damaged. Alexander insists that the government produced no...