U.S.A. v. Bond

• Decision Date: 03 November 2000
• Docket Number: No. 99-4113,99-4113
• Citation: 231 F.3d 1075
• Parties: (7th Cir. 2000) UNITED STATES OF AMERICA, Plaintiff-Appellee, v. JOHNNIE BOND, Defendant-Appellant
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1075

231 F.3d 1075 (7th Cir. 2000)

UNITED STATES OF AMERICA, Plaintiff-Appellee, v. JOHNNIE BOND, Defendant-Appellant.

No. 99-4113

In the United States Court of Appeals For the Seventh Circuit

Argued September 14, 2000

Decided November 3, 2000

Appeal from the United States District Court for the Eastern District of Wisconsin. No. 99 CR 73--Charles N. Clevert, Judge.

Before ROVNER, DIANE P. WOOD, and EVANS, Circuit Judges.

EVANS, Circuit Judge.

Before he was nabbed, Johnnie Bond made $4 million out of shady real estate deals in the inner city of Milwaukee, Wisconsin. Having been caught, and now convicted on two substantive violations of 18 U.S.C. sec. 2314 and one count of conspiracy to violate that provision, Bond appeals, contending that the evidence was insufficient to support his convictions.

Bond's appeal is from the denial of his motion for a judgment of acquittal. To prevail, he must establish that, judging the evidence in the light most favorable to the United States, no rational trier of fact could find the essential elements of a charged offense beyond a reasonable doubt. United States v. Hill, 187 F.3d 698 (7th Cir. 1999). This is a rigid standard, and we reverse "only when the record is devoid of any evidence, regardless of how it is weighed, from which a jury could find guilt beyond a reasonable doubt." United States v. Thompson, 106 F.3d 794, 798-99 (7th Cir. 1997). We recite the facts with that standard in mind.

Bond operated at least six companies in Milwaukee which were involved in residential real estate transactions. Between June of 1997 and March of 1999 he falsified documentation on more than 150 real estate transactions and in the process skimmed more than $4 million in loan proceeds. With federal agents closing in on him, in April 1999 Bond appeared in the office of the United States Attorney and gave a statement admitting his fraud. Apparently thinking better of his conversations with the prosecutor's office, Bond denied on the stand at his jury trial that he was guilty or that he had admitted fraud to the U.S. Attorney. He said he went to the U.S. Attorney's office to explain his conduct, not to confess guilt.

In any case, what the government determined upon investigation of Bond's conduct was that he induced owners of residential property in Milwaukee's inner city to sell properties to him by saying he would improve and then resell them to inner-city residents. Bond made sure he was not the purchaser of record. He recruited "investors" who allowed their names and credit to be used for mortgage loans to finance the purchases. The investors were not required to put any money down, and the profits from the resale, which in fact never occurred, were to be split between them and Bond. Bond promised each investor that he would receive about $6,000 when the deal closed.

Bond's companies were the ones who solicited the real estate mortgage loans to fund the purchases. The documentation which the companies forwarded to the lenders in support of the loans, not surprisingly, did not reflect the actual deal. For one thing, the purchase prices listed were vastly inflated. For example, Bond agreed to buy a property at 2229-31 North 47th Street for $35,000, but the lending company and the investor were told that the purchase price was $70,000. The lending company was also told that the investor was making a down payment of $15,677.37, which was supposedly on deposit in an account at Tri City National Bank in Milwaukee. Bond said he would bring the money to the closing in the form of a cashier's check. The lender, in this case an Illinois company, sent $56,000 to fund the deal. Bond took control of the proceeds in excess of the amounts due the seller by representing to the closing agent that the funds were for "rehab" work that one of his companies had performed. But of course the work was not performed.

Amazingly, the scheme was repeated 150 times. Bond skimmed money using construction invoices, invoices from other real estate businesses, and businesses such as True Management Group for which he obtained "management" fees. The mortgages exceeded $8 million; the amount of fraudulent down payments was more than $2 million.

Tri City's cashier's checks and account verifications were used for each transaction. The cashier's checks were brought to the closing as down payments. The verifications were used to show that the buyer had used an account balance to fund the cashier's check. In reality, the cashier's checks were issued without funds to back them up. Bond managed this sleight of hand because he was paying bribes to a bank employee. That employee and a vice-president of the bank were aware of the fraud.

Bond's fraud left lenders holding mortgages that far exceeded the value of the properties. Predictably, the mortgage notes went into default. And because the scheme left no money to cover repairs, the properties failed to meet Milwaukee code requirements.

After he was convicted and sentenced to 97 months in prison and ordered to make restitution in the amount of $1.9 million, Bond filed this appeal. He points out that the indictment alleges a scheme to defraud mortgage lenders, investors, and the City of Milwaukee and that the jury instructions contain similar language. His contention seems to be that because the victims are set out in the conjunctive, the scheme as alleged must necessarily include fraud on the City. But, he contends, there is insufficient evidence to support a finding that the City of Milwaukee was a victim of the fraud and therefore his conviction must be overturned. For several reasons (almost any one of which could stand alone), we find the argument unconvincing.

Bond was accused of violating the first paragraph of sec. 2314, which provides that

[w]hoever transports, transmits, or transfers in interstate or foreign commerce any goods, wares, merchandise, securities or money, of the value of $5,000 or more, knowing the same to have been stolen, converted or taken by fraud;

. . . .

Shall be fined not more than $10,000 or imprisoned not more than ten years, or both.

He was not charged under paragraph two, which applies, in part, to those "having devised or intending to devise any scheme or artifice to defraud . . . [.]"

The elements of a paragraph one offense are that the defendant caused money to be transported in interstate commerce; that the money exceeded $5,000; that the money was taken by fraud; and that the defendant knew the funds had been obtained by fraud. United States v. Gooch, 120 F.3d 78 (7th Cir. 1997); United States v. Jaderany, 221 F.3d 989 (7th Cir. 2000). There is no requirement for a scheme to defraud, though we have to admit that it is a mind-bending task to imagine a fraud without a scheme to defraud. What, after all, is a scheme to defraud? It is a plan for how to effectuate the fraud. Because "fraud" is not something that happens by accident, we can agree with the government when it argues that "fraud" and "scheme to defraud" pretty much mean the same thing in the statute.

We encountered a cousin of Bond's argument in United States v. Quintanilla, 2 F.3d 1469 (7th Cir. 1993), where, as here, the government set out a charge under paragraph one as involving a "scheme to defraud." Quintanilla claimed that he predicated his defense on refuting that there was a "scheme to defraud." Then some counts of his indictment were dismissed and the indictment was redacted. In the process of redaction, reference to a "scheme to defraud" was eliminated. We rejected...