U.S. v. Dowlin, 03-8038.

Citation408 F.3d 647
Decision Date17 May 2005
Docket NumberNo. 03-8055.,No. 03-8038.,03-8038.,03-8055.
PartiesUNITED STATES of America, Plaintiff-Appellee, v. Sandee D. DOWLIN and Walter G. Naylor, d/b/a Freship, Provider Corp., Dos Brisas Corporation, Defendants-Appellants.
CourtUnited States Courts of Appeals. United States Court of Appeals (10th Circuit)

James H. Barrett, Assistant Federal Public Defender, (Michael G. Katz, Federal Public Defender, with him on the brief) Office of the Federal Public Defender, Cheyenne, WY (with Ronald G. Pretty, Cheyenne, WY, on Supplemental Brief as to Application of Booker) for Defendant-Appellant Sandee D. Dowlin, and Maynard D. Grant, Grant & Newcomb LLC, Seattle, WA, for Defendant-Appellant Walter G. Naylor.

Lisa E. Leschuck, Assistant United States Attorney, (Matthew H. Mead, United States Attorney, with her on the briefs) Office of the United States Attorney, Cheyenne, WY, for Plaintiff-Appellee.

Before MURPHY, ANDERSON, and TYMKOVICH, Circuit Judges.

TYMKOVICH, Circuit Judge.

A Wyoming jury convicted Walter G. Naylor and Sandee D. Dowlin on numerous federal fraud charges. From the mid-1990's to 2002, the defendants promoted investments in which investors were promised enormous returns (in excess of 6,500%) over a short period of time (90 days) in exchange for relatively small investments.

Specifically, the jury convicted both Naylor and Dowlin of conspiracy to transport in interstate commerce money and securities taken by fraud, wire fraud, securities fraud, and mail fraud, in violation of 18 U.S.C. § 371; securities fraud and aiding and abetting, in violation of 15 U.S.C. §§ 77q(a)(1)-(3) and 77x, and 18 U.S.C. § 2; and wire fraud and aiding and abetting, in violation of 18 U.S.C. § 1343 and 18 U.S.C. § 2. In addition, the jury convicted Naylor of money laundering, in violation of 18 U.S.C. § 1957(a) and (b)(1); mail fraud, in violation of 18 U.S.C. § 1341; transportation in interstate commerce of money and securities taken by fraud, in violation of 18 U.S.C. § 2314; and an additional count of wire fraud, in violation of 18 U.S.C. § 1343.

On appeal, Naylor asserts a number of trial errors. He argues (1) that the government presented insufficient evidence to convict him on the conspiracy charge. He does not, however, claim there was insufficient evidence to sustain his other convictions. Naylor also claims the district court erred during the course of the trial by (2) improperly excluding certain state-of-mind evidence, (3) erroneously refusing to grant a continuance of the trial, and (4) giving improper jury instructions.1

Dowlin, in turn, argues that the government presented insufficient evidence to support her convictions. She also claims in supplemental briefing that her sentence is improper under United States v. Booker, ___ U.S. ___, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005).

We take jurisdiction pursuant to 28 U.S.C. § 1291 and 18 U.S.C. § 3742(a), consolidate the two appeals, and affirm the convictions. We also affirm Dowlin's sentence.

I. Background
A. The Investors and Investment Opportunities

At the time of his indictment, Naylor was a sixty-nine year-old resident of Cheyenne, Wyoming. For over 20 years he targeted local area ranchers, farmers, and others for participation in his investment schemes. In exchange for relatively small sums of money, Naylor promised huge returns over a short period of time.

During those years, Naylor promoted several exotic and complex investment "programs" involving large sums of money and vague deliverables. The trial focused on three specific investments: (1) the development of a patented "hyperbaric" storage container that would allow perishable items to be kept fresh for several weeks in transit from farm to market; (2) the redemption or sale of gold certificates that Naylor obtained from a Philippine organization, which were supposedly authentic and worth billions of dollars; and (3) the trade of "high-yield, mid-term" promissory notes.2

Naylor's investment solicitations followed a predictable pattern. He found most of the investors through networking in Colorado, Nebraska and Wyoming, and convinced them that he could provide an unprecedented opportunity to realize substantial returns. Investors typically filled out an "application form" and paid a refundable "application fee" or "loan" of $15,000, which Naylor was to use for expenses associated with bringing the projects to fruition. In exchange, Naylor promised $1.0 to 1.5 million, a return of over 6,500%, within months at the time of "funding."

Investors parted with their money in a variety of ways. Some gave Naylor personal checks or cash, while others wired money to one of his or Dowlin's accounts. One investor permitted Naylor to use the investor's credit card for travel and living expenses, including lodging and food service at luxury hotels around the world. Another investor, an elderly nursing home resident, allowed Naylor to fill out personal checks, which Naylor cashed and used for traveling expenses.

B. The Gold Certificates

Naylor's representations as to how he intended to realize the promised exorbitant returns were inconsistent. However, much of the evidence at trial centered on two gold certificates, supposedly worth billions of dollars at "maturity."

1. The 1,000-metric ton certificate

The first certificate was purportedly redeemable for 1,000 metric tons of gold (the "1,000-metric ton certificate"). Naylor claimed the International Foundation for Community Development (Philippines), Inc. (the "Foundation") obtained the certificate, valued at approximately $9 billion, from the estate of the late Philippine President Ferdinand Marcos. According to Naylor, the certificate had been issued in 1983 and would mature in 2003, at which time it could be redeemed at the Union Bank of Switzerland ("UBS"). Evidence introduced by Naylor suggested that the Overseas Investment Bank, Ltd. originally issued the certificate, Lincoln Bank and Trust Co. subsequently reissued the certificate after the Overseas Bank dissolved, and the gold underlying the certificate was deposited at UBS after Lincoln Bank dissolved.3

Naylor testified that the Foundation assigned the certificate to him so he could raise funds for a variety of humanitarian projects. According to Naylor, he intended to redeem, sell or draw a line of credit on the certificate and use the resulting billions of dollars to either (1) provide investors with their promised returns, or (2) invest in another trading program, which itself would yield the promised returns. Naylor would keep a sizeable commission on the funds he received.

Naylor's testimony is cryptic, at best, on how he actually would obtain money secured by the certificate. In the late 1990's, he retained Edmond Miles of Great Britain as a "project consultant" to assist in obtaining funding for the 1,000-metric ton certificate. Miles testified at trial via video deposition that neither his efforts to obtain funding in exchange for the certificate, nor any of the other ventures on which he worked with Naylor, ever bore fruit. In addition, Miles testified that the certificate would not be vouched for by UBS, and that any representations about the certificate for the purpose of inducing an investment would be improper. Miles nonetheless testified that he thought Naylor honestly believed in the bona fides of the certificate.

2. The 3,500-metric ton certificate

The second gold certificate was supposedly redeemable for 3,500 metric tons of gold (the "3,500-metric ton certificate"). Naylor claimed he also obtained it from the Foundation. At some point in the mid-1990's, however, Naylor apparently entrusted the original certificate to Arne Lundh, a London businessman. Naylor testified that Lundh had prior experience trading in gold certificates and was assisting in obtaining money collateralized by the certificate. Unfortunately, according to Naylor, Lundh stole the original certificate. Naylor sued him in London in the late 1990's. A London barrister named Bitu Bhalla represented Naylor in the British action and testified by video deposition at Naylor's criminal trial. A British court issued an order requiring Lundh to return the certificate.

C. The Role of Sandee Dowlin

Sandee Dowlin served as Naylor's executive assistant. In 1993, she met Naylor at a Village Inn restaurant in Cheyenne, Wyoming, where she worked as a waitress. Their relationship started as a personal one. Thereafter, Dowlin began helping Naylor promote his investment programs. Naylor acted as the President and Chief Financial Officer of Dos Brisas, one of his several investment vehicles, and Dowlin served as Secretary-Treasurer. While Naylor traveled, Dowlin kept track of office matters. Sometimes Dowlin accompanied Naylor to meetings with investors, where they both discussed the humanitarian building projects they intended to finance, including construction of sod houses and a daycare center in the Philippines, and a baseball diamond in Wyoming. Naylor represented falsely to investors that Dowlin had been an accountant for years at KPMG. She similarly represented to investors that she was a certified public accountant, when she was not.

Although investors never saw their investments materialize, Naylor and Dowlin obtained more than $1,000,000 by promising that huge returns were just around the corner. Naylor and Dowlin used these funds for their personal benefit, obtaining, among other things, a 1999 Lincoln Navigator, a 1999 GMC Suburban, and a house.

D. The Investigation

Eventually, a federal investigation uncovered the defendants' scheme. In October 2000, agents from the Federal Bureau of Investigation executed a search warrant for Naylor's and Dowlin's residence, where the agents discovered and seized copies of gold certificates and other documents. The agents found what Naylor claimed was an original gold certificate worth billions of...

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