U.S. v. Davis

• Decision Date: 05 May 1992
• Docket Number: No. 91-8008,91-8008
• Citation: 965 F.2d 804
• Parties: UNITED STATES of America, Plaintiff/Appellee, v. Robert E. DAVIS, Defendant/Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 804

965 F.2d 804

UNITED STATES of America, Plaintiff/Appellee, v. Robert E. DAVIS, Defendant/Appellant.

No. 91-8008.

United States Court of Appeals Tenth Circuit.

May 5, 1992.

Charles W. Blau, (Denise Dumon, with him on the briefs), Dallas, Tex., for defendant-appellant.

Francis Leland Pico, Asst. U.S. Atty., (Richard A. Stacy, U.S. Atty. and David A. Kubichek, Asst. U.S. Atty., with him on the briefs), Cheyenne, Wyo., for plaintiff-appellee.

Before McKAY, Chief Judge, and LOGAN, Circuit Judge, and SAM, District Judge. ^*

SAM, District Judge.

I. INTRODUCTION

Robert E. Davis (Davis) was convicted by a jury of conspiracy to use interstate commerce to facilitate the bribery of a public official in violation of 18 U.S.C. §§ 371 and 1952, and of use of interstate commerce to facilitate the bribery of a public official in violation of the Travel Act, 18 U.S.C. § 1952. The trial court sentenced Davis to 27 months imprisonment on both counts, to be served concurrently. Davis appeals his convictions.

II. BACKGROUND

The evidence, viewed in the light most favorable to the government, may be summarized as follows:

In August of 1985, Davis began an insurance business called Lloyd's U.S. It was licensed as a "Lloyd's Plan" insurer which denotes an unincorporated association of individual underwriters who undertake to insure risk purchasing groups (RPGs) on a "surplus lines" basis. ¹ Davis' business was operating out of Dallas, Texas.

In the fall of 1986, Lloyd's U.S. was experiencing serious difficulties. Between August 7, 1986 and September 23, 1986, five states determined that they would no longer allow Lloyd's U.S. to conduct business within their boundaries. ² During the same time period, Lloyd's U.S. was under scrutiny in the state of Texas.

In August 1986, Gordon Taylor (Taylor), the Wyoming State Insurance Commissioner, contacted Davis to request that Lloyd's U.S. continue a medical malpractice policy for Casper, Wyoming's only neurosurgeon. In March of 1987, Taylor travelled with Kelly Davis, his deputy insurance commissioner, and others to Texas where he met with Davis to discuss the possibility of Davis expanding his business in Wyoming, particularly with respect to RPGs and medical malpractice risk retention groups.

In April 1987, Taylor was reappointed as insurance commissioner. Taylor's office was located in Cheyenne, which was 150 miles from his family and residence in Glenrock. Taylor lived in an apartment in Cheyenne during the week and would commute to Glenrock on the weekends. Because of the difficulty with this commute Taylor put his Glenrock house up for sale. However, at that time the housing market in Wyoming was experiencing severe difficulties.

In April 1987, Davis, his business partner Jim Howard (Howard), and Davis' employee Michael DePaemelaere (DePaemelaere) attended the quarterly convention of the National Association of Insurance Commissioners (NAIC) held in Lexington, Kentucky. Taylor was also in attendance. One evening during the convention, Davis, Howard and DePaemelaere met with Taylor and others for dinner. In the course of their conversation, they discussed the problems Taylor was having in selling the Glenrock house. DePaemelaere suggested that U.S. Fiduciary Trust Company, a company under Davis' direction that managed the RPGs, might be able to purchase the Glenrock house.

Within just a few days, Davis contacted Taylor by telephone and indicated he was interested in purchasing Taylor's house as an "investment." Taylor had listed the house at $100,000, but told Davis his asking price was $105,000. Taylor offered to secure another appraisal, which offer was declined. Davis knew at that time that the current housing market in Glenrock was depressed.

Davis discussed the proposed purchase with Howard who advised Davis that he could not legally purchase the house because Lloyd's U.S. could not carry real estate on its financial statement. Howard testified at trial that during the course of that conversation, Davis said "he was going to purchase that home because he needed help in Wyoming." Appendix to Brief for Appellant (Aplt.App.) at 867.

Davis made arrangements with Michael Patton (Patton)--a business associate of his--to purchase the Glenrock house. He told Patton that "he wanted to do [Taylor] a favor." Aplt.App. at 757. Davis also asked Patton to buy the Glenrock house without using Davis' name. Pursuant to Davis' instructions, Patton travelled to Wyoming to consummate the purchase. Taylor received a check for more than $60,000 from the transaction, which reflected his equity in the house. After Patton concluded the transaction he returned to Dallas where he met with Davis and told him, among other things, that he would likely lose thirty to forty thousand dollars on the Glenrock house. Patton testified to Davis' response "that he knew that he was going to lose 30 to $40,000 on the transaction." Aplt.App. at 769.

On May 5, 1987, DePaemelaere filed articles of incorporation in the state of Wyoming for United States Fiduciary Company, an entity that would manage Davis' RPGs. Beginning on May 7, 1987, Davis caused nine separate RPGs to file notices of intent to do business with the Wyoming Department of Insurance.

In mid-1987, the Wyoming Department of Insurance, under the direction of Kelly Davis, formed a committee to draft regulations implementing the Wyoming Risk Retention Act of 1987 (Wyo.Stat. § 26-36-101 et seq. (1977 & Supp.1991)). The committee consisted of Kelly Davis and two other representatives of the Wyoming Insurance Department; Manny Puebla, representing a risk retention group specializing in medical malpractice coverage; and Michael DePaemelaere, Drew Bagot (another Davis employee) and two of Davis' attorneys.

Taylor requested that Kelly Davis draft proposed legislation to permit the operation of "Lloyd's Plan" insurers in Wyoming, which legislation Taylor would sponsor during the 1988 legislative session. Before Kelly Davis attempted to draft such legislation he was contacted by appellant Bob Davis, who asked if he could have his lawyers draft the legislation. Kelly Davis responded affirmatively. Kelly Davis reviewed Bob Davis' proposed drafts of the legislation and deemed them unsatisfactory. Ultimately, Bob Davis' proposed legislation was never introduced at the legislative session.

On July 13, 1990, Davis was named in a seven count information along with Taylor and Roy E. Thigpen III and charged with conspiracy to violate the Travel Act. Following a severance, the information was dismissed and Davis was charged in a two-count indictment with conspiracy to violate the Travel Act (Count I) and violation of the Travel Act (Count II). Following a jury trial, Davis was convicted on both counts and sentenced to 27 months imprisonment on each count, which sentences were to be served concurrently.

III. DISCUSSION

Davis challenges his convictions on the following grounds: (1) the trial court erred in denying Davis' motion for acquittal based on misinterpretion of law and sufficiency of the evidence; (2) the trial court improperly allowed irrelevant and/or highly prejudicial evidence despite Federal Rules of Evidence 402, 403, and 404(b) objections; (3) the trial court improperly allowed the government to build its case on a theory not alleged in the indictment; (4) the instructions to the jury improperly framed the issues and misled the jury; and (5) sentencing on Count I under the United States sentencing guidelines was improper.

1. Denial of Motion for Acquittal

Davis challenges the court's denial of the motion for acquittal on both legal and factual bases. We review the legal challenges under a de novo standard. United States v. Backas, 901 F.2d 1528, 1530 (10th Cir.), cert. denied, --- U.S. ----, 111 S.Ct. 190, 112 L.Ed.2d 152 (1990). However, the Court's review of the sufficiency of the evidence to uphold the conviction is conducted in the light most favorable to the government. United States v. Peveto, 881 F.2d 844, 860 (10th Cir.), cert. denied, 493 U.S. 943, 110 S.Ct. 348, 107 L.Ed.2d 336 (1989). If the jury's verdict of guilty is supported by substantial evidence, then the denial of a motion for acquittal will not be disturbed. Id.

a. Legal Challenges

Davis was convicted under Count I for conspiracy to violate the Travel Act, 18 U.S.C. § 371, and under Count II for actual violation of the Travel Act, 18 U.S.C. § 1952. The Travel Act proscribes the use of interstate facilities in furtherance of illegal activity. The elements necessary for a successful prosecution under the Travel Act are: (1) travel or use of facilities in interstate commerce; (2) with intent to promote manage, establish, carry on or facilitate the promotion, management, establishment, or carrying on of a prohibited activity--e.g., bribery; and (3) subsequent attempt to commit or actual commission of the proscribed activity. 18 U.S.C. § 1952 (1982).

Davis complains that the government was required to prove that he had committed the complete act of bribery before it could obtain a conviction on Count II, and that the government's failure to prove the existence of an agreement was grounds for acquittal. ³ According to Davis, Wyoming's law against bribery and, therefore, the Travel Act requires proof of the existence of an agreement between the briber and the alleged bribee.

Davis' argument is unpersuasive. Davis was convicted on Count II for violating the Travel Act, which prohibits persons from using an interstate facility to "facilitate the promotion, management, establishment, or carrying on, of any unlawful activity." 18 U.S.C. § 1952 (1982). The Travel Act, by its express language, does not require the actual commission of the underlying state offense for conviction, but rather the use of interstate facilities in furtherance of the commission of the underlying state offense. United States v. Hines, 696 F.2d 722, 725 (10th Cir.1982).

In Hines, we examined the ...