U.S. v. Brown, No. 98-30463

CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)
Writing for the CourtBefore SMITH, WIENER, and BARKSDALE; JERRY E. SMITH
Citation186 F.3d 661
Parties(5th Cir. 1999) UNITED STATES OF AMERICA, Plaintiff-Appellee, v. GREGORY DEAN BROWN, Defendant-Appellant. UNITED STATES OF AMERICA, Plaintiff-Appellee, v. LEONARD STEVEN STEVE GRAVES, Defendant-Appellant. o. 98-30584
Docket NumberNo. 98-30463,N
Decision Date24 August 1999

Page 661

186 F.3d 661 (5th Cir. 1999)
UNITED STATES OF AMERICA, Plaintiff-Appellee,
v.
GREGORY DEAN BROWN, Defendant-Appellant.
UNITED STATES OF AMERICA, Plaintiff-Appellee,
v.
LEONARD STEVEN STEVE GRAVES, Defendant-Appellant.
No. 98-30463, No. 98-30584
IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT
August 24, 1999

Page 662

Appeals from the United States District Court for the Western District of Louisiana

Before SMITH, WIENER, and BARKSDALE, Circuit Judges.

JERRY E. SMITH, Circuit Judge:

In this consolidated appeal, Leonard Graves appeals his money laundering convictions, a number of his fraud convictions, and his sentence. Gregory Brown appeals his sentence. We affirm Graves's fraud convictions, reverse his money laundering convictions, and vacate and remand his sentence. We affirm Brown's sentence.

I.

The fraud and money laundering charges of which Graves was convicted, and Brown's wire fraud conviction, relate to business dealings conducted at Steve Graves Chevrolet-Pontiac-Cadillac, Inc. ("SGC"), an auto dealership in Ruston, Louisiana. Graves was the dealer, president, and 41% owner of SGC, and Brown managed its body shop.

The 120-count indictment against Graves alleged six distinct types of fraud,1

Page 663

and for each fraud allegation there was a corresponding money laundering charge. Graves was convicted on counts stemming from three of the six types of fraud and was convicted of money laundering the funds derived from these frauds. Brown pleaded guilty to a type of fraud of which Graves was not convicted.

The first type of fraud involved SGC's charging car buyers more than the amount authorized by state law for document and license/title fees. SGC charged purchasers $59 in document fees, which is $9 more than Louisiana law permits; automobile dealerships are allowed to charge only $35 for processing paperwork and $15 for a notary fee. See LA. R.S. 6:956(E)(1), (2). For the license and title fees, which varied from vehicle to vehicle, SGC overcharged an average of $50 per automobile listed in the indictment.2 The eighteen instances of overcharging were charged against Graves as mail frauds, because the Louisiana Department of Motor Vehicles mailed the automobile titles. Graves was also charged with money laundering the proceeds of the excessive fees. The jury found Graves guilty on some of the counts and not guilty on others.

Graves was convicted of fraud based on SGC's financing the purchases of used cars with "cash for gas." In seven instances, SGC advanced to the purchaser all or part of the down payment required by the financing institutionunder the guise of giving the buyer some "cash for gas"and increased the purchase price of the car by a corresponding amount. This conduct constituted fraud, because the lending institution would not have extended credit to the purchaser absent his having some genuine equity interest in the automobile. The counts of which Graves was convicted were charged as mail frauds, because SGC mailed loan documentation to General Motors Acceptance Corporation ("GMAC"), the financing institution.3 The jury also found Graves guilty of money laundering the funds derived from cash for gas frauds.

The final form of fraud of which Graves was convicted also involved the financing of used cars. For ten cars financed by Union Federal Credit Union, SGC, on behalf of the buyer, forwarded to the credit union 25% of the sale price, which the credit union maintained in a savings account in the purchaser's name until the loan was paid off. The dealership increased the sale price of the vehicle by a corresponding amount. As with "cash for gas," this scheme had the effect of fraudulently inducing advances of credit, for the credit union believed that the 25% down payment represented genuine purchaser equity in the purchased automobiles. These counts were charged as bank frauds, and the jury returned a guilty verdict. It also found Graves guilty of money laundering the proceeds derived from the bank frauds. Graves does not appeal these bank fraud convictions, but he does appeal the corresponding money laundering convictions.

The government charged Brown and Graves with filing fraudulent warranty claims. The indictment alleged ten instances in which SGC recovered warranty

Page 664

money from General Motors for repairs to vehicles when, in fact, the repaired vehicles were not covered by warranties. The government charged the fraudulent warranties as wire frauds, because General Motors credited the cost of repairs via computer. The jury found Graves not guilty of the wire fraud and corresponding money laundering charges. Brown, however, pleaded guilty to one count of wire fraud based on submission of a fraudulent warranty claim.

In sentencing Graves, the court declined to group his fraud and money laundering convictions. Instead, it sentenced him solely on the basis of his money laundering offenses, which carry a tougher penalty than do fraud offenses. Compare U.S.S.G. 2F1.1 (imposing a base offense level of six for mail and wire fraud) with U.S.S.G. 2S1.1 (imposing a base offense level of 23 for money laundering). With an adjusted offense level of 30 and a criminal history category of I, the guidelines range was 97 to 121 months. The court departed downward by only one month, sentencing Graves to 96 months' incarceration. The court based the downward departure on its conclusion that Graves's conduct was outside the heartland of money laundering.

Based on Brown's plea of guilty to a charge of wire fraud, he was sentenced to an eighteen-month term of imprisonment and restitution of $75,104.18.4 The court increased Brown's offense level by six to account for a fraud loss greater than $70,000 but no more than $120,000. See U.S.S.G. 2F1.1(b)(1)(G). After Brown's sentencing, the court granted the government's "Motion to Correct Judgment and Commitment Order" asking the court to lower Brown's required restitution to victim insurance companies and individuals to $67,938.72. Brown contends that this "lower loss figure" calls for an increase of his base offense level of only five, not six, levels and that his sentence is thus unduly severe.

Graves appeals his convictions on fraud counts stemming from excessive document and license/title fees and "cash for gas" frauds. He also appeals all his money laundering convictions and his sentence. Brown appeals only his sentence, asserting that it should be reduced to reflect an error of fact discovered subsequent to sentencing.

II.

We first consider Graves's claim that there was insufficient evidence to support a number of his convictions. In evaluating a challenge to the sufficiency of the evidence, we view the evidence in the light most favorable to the verdict and uphold the verdict if, but only if, a rational juror could have found each element of the offense beyond a reasonable doubt. United States v. Giraldi, 86 F.3d 1368, 1371 (5th Cir. 1996). Our review is de novo. United States v. Restrepo, 994 F.2d 173, 182 (5th Cir. 1993). We consider "the countervailing evidence as well as the evidence that supports the verdict" in assessing sufficiency of the evidence. Giraldi, 86 F.3d at 1371. If "the evidence viewed in the light most favorable to the prosecution gives equal or nearly equal circumstantial support to a theory of guilt and a theory of innocence," a defendant is entitled to a judgment of acquittal. United States v. Schuchmann, 84 F.3d 752, 754 (5th Cir. 1996).

The evidence is sufficient to sustain Graves's convictions of fraud stemming from excessive fees and "cash for gas." There is, however, insufficient evidence to sustain his money laundering convictions.

A.

The alleged offenses involving Graves's charging excessive document and

Page 665

license/title fees were charged as mail fraud, a violation of 18 U.S.C. 1341. The government must prove beyond a reasonable doubt "(1) the existence of a scheme to defraud; (2) the use of the mails to execute the scheme; and (3) the specific intent on the part of the defendant[] to commit fraud." United States v. Salvatore, 110 F.3d 1131, 1136 (5th Cir.), cert. denied, 118 S. Ct. 441 (1997). Graves does not contest the sufficiency of the evidence on the first two elements but contends that there was insufficient evidence to support a finding that he specifically intended to commit fraud. There was no specific intent, he argues, because he did not know of the overcharges. The jury, properly instructed,5 concluded otherwise, and there was sufficient evidence to support its conclusion.

1.

SGC overcharged $9 per vehicle for document fees ($59 rather than the maximum $50). Graves asserts that the government presented no evidence that he knew of this overcharge; the evidence showed, he says, that he corrected the $9 overcharge as soon as he learned from a Louisiana Automobile Dealers Association newsletter that the $59 charge was too high.

To maintain his claim of insufficient evidence, Graves must discount the testimony of Jim Smith, who had managed SGC's Finance and Insurance Office for a number of months during the indictment period. Smith testified that the document fee was too high and that he had discussed that fact with Graves before Graves's discovery of the article indicating that the fee was too high. Graves asserts that the jury could not rationally have credited Smith's testimony over his own. According to Graves, Smith, who was fired for inadequacies in his paperwork, obviously did not know what he was talking about, because he testified counterfactually that the dealership charged $80-100 as a document fee. When the government tried to conform his testimony to the uniformly charged $59 fee, the court sustained Graves's attorney's objection to "leading."

Despite Graves's protests, Smith's testimony provided a sufficient evidentiary basis for the jury's conclusion that Graves knew of the document fee overcharge. While Smith's testimony may not...

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81 practice notes
  • U.S. v. Richards, Docket No. 98-7676
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • 10 Febrero 2000
    ...1372 (5th Cir. 1996). We consider "the countervailing evidence as well as the evidence that supports the verdict." United States v. Brown, 186 F.3d 661, 664 (5th Cir. 1999)(quoting Giraldi, 86 F.3d at "It is not necessary that the evidence exclude every reasonable hypothesis of innocence or......
  • United States v. Reed, CRIMINAL ACTION NO. 15-100 SECTION "L"
    • United States
    • United States District Courts. 5th Circuit. United States District Court (Eastern District of Louisiana)
    • 28 Noviembre 2016
    ...Thus, the alleged wire fraud represents the unlawful activity as required by the money laundering statute. See United States v. Brown, 186 F.3d 661, 667 n.10 (5th Cir. 1999) ("[T]he money laundering statute defines 'specified unlawful activity' to include mail and wire fraud."); see also Un......
  • United States v. Stanford, No. 15–30127.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • 18 Mayo 2016
    ...carrying on of a specified unlawful activity.” United States v. Trejo, 610 F.3d 308, 314 (5th Cir.2010) (citing United States v. Brown, 186 F.3d 661, 670 (5th Cir.1999) ). “It is not enough to show that a money launderer's actions resulted in promoting the carrying on of specified unlawful ......
  • U.S. v. Silvestri, No. 03-12820.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (11th Circuit)
    • 23 Mayo 2005
    ...of the testimony. See Lyons, 53 F.3d at 1202; United States v. Calderon, 127 F.3d 1314, 1325 (11th Cir.1997), United States v. Brown, 186 F.3d 661, 666, n. 8 (5th Cir.1999); United States v. Guerrero, 169 F.3d 933, 939 (5th The trial record further indicates that Silvestri had plenty of rea......
  • Request a trial to view additional results
79 cases
  • U.S. v. Richards, Docket No. 98-7676
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • 10 Febrero 2000
    ...Cir. 1996). We consider "the countervailing evidence as well as the evidence that supports the verdict." United States v. Brown, 186 F.3d 661, 664 (5th Cir. 1999)(quoting Giraldi, 86 F.3d at "It is not necessary that the evidence exclude every reasonable hypothesis of innocen......
  • United States v. Reed, CRIMINAL ACTION NO. 15-100 SECTION "L"
    • United States
    • United States District Courts. 5th Circuit. United States District Court (Eastern District of Louisiana)
    • 28 Noviembre 2016
    ...Thus, the alleged wire fraud represents the unlawful activity as required by the money laundering statute. See United States v. Brown, 186 F.3d 661, 667 n.10 (5th Cir. 1999) ("[T]he money laundering statute defines 'specified unlawful activity' to include mail and wire fraud."); s......
  • United States v. Stanford, No. 15–30127.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • 18 Mayo 2016
    ...carrying on of a specified unlawful activity.” United States v. Trejo, 610 F.3d 308, 314 (5th Cir.2010) (citing United States v. Brown, 186 F.3d 661, 670 (5th Cir.1999) ). “It is not enough to show that a money launderer's actions resulted in promoting the carrying on of specified unlawful ......
  • U.S. v. Silvestri, No. 03-12820.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (11th Circuit)
    • 23 Mayo 2005
    ...of the testimony. See Lyons, 53 F.3d at 1202; United States v. Calderon, 127 F.3d 1314, 1325 (11th Cir.1997), United States v. Brown, 186 F.3d 661, 666, n. 8 (5th Cir.1999); United States v. Guerrero, 169 F.3d 933, 939 (5th The trial record further indicates that Silvestri had plenty of rea......
  • Request a trial to view additional results
2 books & journal articles
  • MAIL AND WIRE FRAUD
    • United States
    • American Criminal Law Review Nbr. 58-3, July 2021
    • 1 Julio 2021
    ...were never purchased), overruled on other grounds by United States v. Cotton, 535 U.S. 625 (2002). 87. See, e.g., United States v. Brown, 186 F.3d 661, 665–67 (5th Cir. 1999) (aff‌irming mail fraud conviction based on auto dealership fraud scheme); United States v. Hubbard, 96 F.3d 1223, 12......
  • MONEY LAUNDERING
    • United States
    • American Criminal Law Review Nbr. 58-3, July 2021
    • 1 Julio 2021
    ...(4th Cir. 1994) (criticizing Perez approach for sentencing purposes). 130. 18 U.S.C. § 1956(a)(1)–(3). 131. See United States v. Brown, 186 F.3d 661, 670 (5th. Cir. 1999) (“[T]he intent to promote criminal activity may be inferred from the particular type of transaction.”). 132. See United ......

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