U.S. v. Dazey
| Decision Date | 13 April 2005 |
| Docket Number | No. 03-6208.,No. 03-6228.,No. 03-6187.,No. 03-6205.,03-6187.,03-6205.,03-6208.,03-6228. |
| Citation | 403 F.3d 1147 |
| Parties | UNITED STATES of America, Plaintiff-Appellee, v. Dennis Dean DAZEY, Roy Mathew, Diane Lenore Griffith, and Robert Gerald Craft, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Tenth Circuit |
David W. Lee, Comingdeer, Lee & Gooch, Oklahoma City, OK, for Defendant-Appellant Dennis Dean Dazey.
R. Scott Adams, Oklahoma City, OK, for Defendant-Appellant Roy Mathew.
Robert L. Wyatt, IV, Wyatt Law Office, Oklahoma City, OK, for Defendant-Appellant Diane Lenore Griffith.
Stephen Jones, Stephen Jones & Associates, Enid, OK, for Defendant-Appellant Robert Gerald Craft.
Susan Dickerson Cox, Assistant United States Attorney (Robert G. McCampbell, United States Attorney, with her on the brief) Oklahoma City, OK, for Plaintiff-Appellee.
Before KELLY, HOLLOWAY, and McCONNELL, Circuit Judges.
Robert Gerald Craft, Roy Mathew, Dennis Dean Dazey, and Diane Lenore Griffith were convicted of conspiracy to commit wire fraud. The defendants were also convicted of a number of substantive counts of wire fraud, securities fraud, and/or money laundering. On appeal, each defendant challenges the sufficiency of evidence for conviction, as well as raising several procedural and evidentiary issues. Mr. Mathew and Mr. Dazey also challenge their sentences. Appellants' convictions and Mr. Mathew's sentence are AFFIRMED. Mr. Dazey's sentence is AFFIRMED as to all arguments raised in his initial brief, but is VACATED in light of United States v. Booker, ___ U.S. ___, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005). The case is REMANDED to the district court for resentencing in accordance with that decision.
The four defendants were implicated in a fraudulent investment company called Wealth-Mart. Wealth-Mart styled itself as an investment fund with a highly lucrative international "bank debenture" investment program that traded in secret overseas markets in accordance with Christian and humanitarian investment principles. Wealth-Mart promised investors very high returns within a few months. In addition, because Wealth-Mart invested in instruments representing obligations of major world banks (known as "prime banks"), the investors' principal was guaranteed. During the late 1990's, Wealth-Mart solicited over 14 million dollars in investments. Not a penny of the funds investors entrusted to Wealth-Mart's care was invested overseas, and most of it was never returned.
Dr. Craft was Wealth-Mart's charismatic leader. He ran the company out of his "Craft & Sons" offices in Oklahoma City. Although Wealth-Mart was formed by co-defendant Mathew and others, Dr. Craft directed the program from its inception. The other employees at his Oklahoma City office were all subordinate to him. Dr. Craft controlled Wealth-Mart's bank accounts and directed that all invested funds go through him. He presided at daily staff meetings, which often included investors. Although Dr. Craft directed the financial and organizational aspects of the business at these meetings, the meetings were more often motivational and inspirational events, including prayer and gospel singing. Dr. Craft spoke at seminars that he organized to promote the Wealth-Mart program. Investors were impressed with Dr. Craft's speaking style, his religious background and approach, and his apparent ability to acquire very substantial wealth.
Mr. Mathew, a certified public accountant, served both as Wealth-Mart's financial manager and as Dr. Craft's personal accountant. He also created Wealth-Mart's founding documents. He was introduced to investors as the CPA for the program. At daily meetings, Mr. Mathew frequently addressed the assembled staff and investors, describing the operation of the program and the expected return on investment. Mr. Mathew helped set up a tribal bank that Dr. Craft used to deposit investors' funds and to pay his and the company's expenses. Mr. Mathew also recruited several investors into the program and helped create letters and documents to assuage concerned investors who began complaining when promised returns failed to materialize.
Mr. Dazey was the international financier. Investors understood that Mr. Dazey was the trader, or the liaison to the actual traders, who had the responsibility of placing investments overseas in the lucrative bank debenture market. At Wealth-Mart seminars, Mr. Dazey was introduced as an expert with long experience in international finance. Seminar attendees were treated to lectures by Mr. Dazey on the high returns that could be generated by investing in various bank instruments in secret foreign markets. Mr. Dazey was a long-time friend and associate of Dr. Craft, and they purportedly had been involved in "international trade" together since the early 1990's.
Ms. Griffith was Wealth-Mart's leading sales and customer service representative. She persuaded many people to invest in Dr. Craft's program, including some personal friends and members of her own family. Ms. Griffith managed relations with these investors as they began complaining about not receiving the promised returns. She assisted with planning and logistics at Wealth-Mart seminars. She also provided various administrative services in support of Wealth-Mart's day-to-day operations.
Wealth-Mart's international investment program was completely bogus. There is no such thing as a "prime bank." The prime bank financial instruments that Wealth-Mart purported to invest in do not exist. The secretive, exclusive market in which such instruments are traded, accessible only to the world's financial elite and Wealth-Mart's select customers, is also purely imaginary. As a government expert witness from the Federal Reserve explained at trial, prime bank investment schemes like Wealth-Mart's are a common variety of Ponzi schemes. The usual script for a prime bank fraud has the promoter promising very high returns with no risk. The promoter solicits investment in fictitious instruments with complex-sounding nomenclature, which purport to represent debt obligations of major world banks. The promoter often claims that the instruments are guaranteed by public institutions such as the Federal Reserve, the World Bank, or the International Monetary Fund. Promoters tend to emphasize the exclusive and secret nature of the program and sometimes require investors to sign nondisclosure agreements.
The Wealth-Mart program followed this template to the letter. By late summer of 1997, Dr. Craft, Mr. Mathew, Ms. Griffith, and others began enticing investors into the program. The sales force described Wealth-Mart as a bank debenture trading program that would provide enormous returns with no risk. Wealth-Mart's marketing materials hyped the lucrative European intra-bank market and explained that the market was so secret that those with access to the market might deny its existence and that the investors' own brokers or bankers likely had not heard of it. Wealth-Mart Investors were required to sign nondisclosure agreements.
The Wealth-Mart sales pitch routinely exploited investors' religious convictions. Dr. Craft was portrayed as a devout Christian and humanitarian, while Mr. Dazey and Mr. Mathew were said to be active ministers. Some investors entrusted funds to Wealth-Mart based on its principals' religious bona fides and were attracted to the program in part because they were told their money would be used to advance charitable causes.
Wealth-Mart put on three investment seminars at a luxurious ranch in Colorado. The defendants chartered airplanes and buses to transport themselves and investors to the seminars. Dr. Craft presided at the seminars, made speeches, mingled with the potential investors, and in general attempted to create the aura of an elite gathering of international financial insiders. Dr. Craft presented Mr. Dazey to the audience, under the alias "Wooly West," as Wealth-Mart's international trader. Wooly West addressed the seminar participants on international financial topics and touted his financial connections. He dropped names like Nixon and Rockefeller as being among his former clients. Many seminar invitees were impressed and decided to place investments, or increase their existing positions, with Wealth-Mart.
The money rolled in. In less than two years, Wealth-Mart acquired at least 14 million dollars. To receive the investors' money, Wealth-Mart set up a bank called First Lenape Nation Bank. First Lenape appeared to be a functioning tribal bank. In reality, it was just a shell, and investors' money was commingled and passed upstream to two accounts at established Oklahoma banks. These accounts were all controlled by Dr. Craft. A few investors sent their money directly to an account at Nations Bank controlled by Mr. Dazey.
None of the money was invested overseas. Dr. Craft spent much of it on personal expenses for himself and his family, including cash payments to family and associates, fancy cars for himself and his family, and a house for his son. Dr. Craft also used investor funds to acquire interests in real estate, oil and gas leases, a restaurant, an emu ranch, and a movie production company. Wealth-Mart burned additional investor money on lavish travel such as chartering private airplanes and a Caribbean cruise for Wealth-Mart employees and their families. Approximately two million dollars of investors' money went to Mr. Dazey's account, which he used to pay debts and expenditures arising from other business ventures.
Inevitably, investors began complaining when hefty checks representing the results of Wooly West's savvy trading failed to arrive in the mail. Mr. Mathew and Ms. Griffith devised a "re-entry" plan to stall for time. They asked investors...
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