U.S. v. Drake

• Decision Date: 02 May 1991
• Docket Number: No. 90-3125,90-3125
• Citation: 932 F.2d 861
• Parties: 33 Fed. R. Evid. Serv. 64 UNITED STATES of America, Plaintiff-Appellee, v. Renee Roger DRAKE, Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 861

932 F.2d 861

33 Fed. R. Evid. Serv. 64

UNITED STATES of America, Plaintiff-Appellee, v. Renee Roger DRAKE, Defendant-Appellant.

No. 90-3125.

United States Court of Appeals Tenth Circuit.

May 2, 1991.

Mark S. Bove, Denver, Colo., for defendant-appellant.

Christina L. Morris, Asst. U.S. Atty. (Lee Thompson, U.S. Atty., with her on the brief), Kansas City, Kan., for plaintiff-appellee.

Before BALDOCK and BRORBY, Circuit Judges, and ANDERSON, District Judge ^*.

ALDON J. ANDERSON, District Judge.

In a joint trial, defendant-appellant Renee Roger Drake and one co-defendant, Calvin Dennis Reese, were tried before a jury on six counts of wire fraud under 18 U.S.C. Sec. 1343. Drake was accused of obtaining financing from a factor by fraudulent means. On February 5, 1990, the jury returned a verdict of guilty on all counts as to Drake. The trial court declared a mistrial as to co-defendant Reese because the jury was unable to reach a verdict on the charges against him. Drake appeals his convictions on two points: 1) the verdict of the jury was not supported by the evidence presented; and 2) the trial court improperly permitted prejudicial cross-examination of Drake regarding his educational background.

I.

Drake served as Vice President in charge of day-to-day operations of Agricultural Technology International Marketing, Inc. ("ATIM"). R.Vol. IV at 461. In 1984, the Bank of Louisburg gave ATIM a working capital loan and a loan secured by a real estate mortgage. R.Vol. II at 56-57. Co-defendant Reese, the President of the Bank of Louisburg, served as ATIM's loan officer. Id. at 26, 55. Subsequent to providing ATIM the loans, the Bank of Louisburg secured additional collateral in the form of a security interest in accounts receivable, after-acquired accounts receivable, and other items. Id. at 73-75.

In need of additional financing, Drake obtained further credit for ATIM from the William R. Payne Company. R.Vol. II at 113. The Payne Company lent ATIM money based on individual accounts receivable. Id. at 119. After being assured by co-defendant Reese that the Bank of Louisburg did not have a security interest in ATIM's accounts receivable, the Payne Company took a security interest in ATIM's accounts receivable then owned or thereafter acquired. Id. at 116-117, 118-119. The Payne Company made a corresponding UCC-1 filing which Drake signed. Id. at 122-125. The Payne Company limited the ATIM line of credit when it failed to receive several payments due on the account. Id. at 130.

Having been limited by the Payne Company, ATIM sought the financing that is the focus of the convictions now on appeal. In the fall of 1984, Drake spoke with John Cummings, Assistant Manager of United California Factors ("UCF"), regarding the option of "factoring." R.Vol. III at 253-54. Factoring is the direct sale of accounts receivable at a discount. UCF sent one of their application forms for factoring to Drake at ATIM. Id. at 257. On the form, Drake stated that the Bank of Louisburg was the only party holding a security interest in ATIM accounts receivable. Id. at 271. On the form, Drake failed to identify the Payne Company even as a creditor of ATIM. Id. After reviewing and checking the information provided by Drake, UCF decided to factor some ATIM accounts. Id. at 247, 282-83.

UCF provided ATIM a total of $56,186.53 in six payments made by wire transfer. R.Vol. III at 294. During the course of these payments, UCF discovered the Payne Company's UCC-1 filing covering ATIM's accounts receivable. Id. at 295. When questioned about this filing, Drake assured UCF that the Payne Company did not hold a security interest in ATIM's accounts. Id. at 298-99.

Drake was charged with six counts of wire fraud, representing the six payments by UCF. A jury convicted Drake on all six counts. Drake now appeals.

II.

Sufficiency of the Evidence.

At the close of the government's case and at the close of all the evidence, Drake moved for judgment of acquittal on the grounds that the evidence presented was not sufficient to support a conviction. The trial court denied both motions. We consider evidence sufficient to support a criminal conviction if, viewing all the evidence, both direct and circumstantial, in the light most favorable to the government, a reasonable trier of fact could find the essential elements of the crime beyond a reasonable doubt. United States v. Culpepper, 834 F.2d 879, 881 (10th Cir.1987), citing Jackson v. Virginia, 443 U.S. 307, 318-19, 99 S.Ct. 2781, 2788-89, 61 L.Ed.2d 560 (1979).

The crime of wire fraud consists of two essential elements. The prosecution must prove: 1) a scheme or artifice to defraud or obtain money by false pretenses, representations, or promises; and 2) use of interstate wire communications to facilitate that scheme. United States v. Brien, 617 F.2d 299, 307 (1st Cir.1980), cert. denied 446 U.S. 919, 100 S.Ct. 1854, 64 L.Ed.2d 273 (1980). Drake asserts that the evidence failed to demonstrate the first element, a scheme to defraud.

Drake bases his argument on the definition of "scheme to defraud by false representations" under 18 U.S.C. Sec. 1343. The cases define a scheme to defraud as "one reasonably calculated to deceive persons of ordinary prudence and comprehension." ¹ See, e.g., United States v. White, 673 F.2d 299, 302 (10th Cir.1982); United States v. Washita Constr. Co., 789 F.2d 809, 817 (10th Cir.1986). Drake argues that his misrepresentations could not have deceived a financier of ordinary prudence because of the Payne Company's UCC-1 filing. Drake asserts that a reasonable financier would not have agreed to provide any money before checking for, and then on, the UCC-1 financing statement. For this reason, contends Drake, a reasonable financier would not be deceived into thinking no security interest existed by Drake's misrepresentation. Drake urges that, therefore, no scheme to defraud existed because his actions were not calculated to deceive "persons of ordinary prudence." Drake, however, misreads this portion of the definition of a scheme to defraud. Interestingly, ample evidence exists to support a finding that a reasonable factor could have been deceived by Drake's misrepresentations. Because we find Drake's basic legal position untenable, however, we need not examine that evidence.

The focus of the language defining a scheme to defraud is on the violator, not the victim. The definition provides the fact-finder with a standard for determining from the accused's actions whether the accused possessed the requisite mens rea from his actions. See Gusow v. United States, 347 F.2d 755, 756 (10th Cir.1965). In our review of the cases employing this definition, we find that courts use the definition to determine whether an accused's actions were "calculated to deceive." See, e.g., id. (using definition and noting "[d]irect proof of willful intent is not necessary"); White, 673 F.2d at 302 (focusing on mental state of accused). We do not find any cases using the definition to determine whether the accused targeted the proper victim. We find no precedent supporting Drake's position that a scheme to defraud is a violation only if it would deceive a reasonably prudent person. But cf. Lindsey v. United States, 332 F.2d 688, 690 (9th Cir.1964) (sufficient that defendant sought to induce action by misrepresentation and actual reliance by intended victim is immaterial). To accept Drake's argument would require us to hold that a party who fully intends to deceive a victim may avoid criminal liability by designing a scheme sufficiently unusual that the law would deem it unbelievable by a reasonably prudent person. We do not find this position persuasive.

As for Drake's general assertion that the evidence does not support a finding of a scheme to defraud, we disagree. Viewed in the light most favorable to the government, the evidence shows that Drake stated on the application form, "[a]ll debt through bank of Louisburg" when Drake knew ATIM had obtained financing from the Payne Company on ATIM accounts receivable. When UCF discovered that the Payne Company had made a UCC-1 filing covering ATIM's accounts receivable, Drake assured UCF that Payne Company had no actual security interest in ATIM assets. Drake told UCF that there would be no difficulty in getting the Payne Company to withdraw its UCC-1 filing. The evidence presented at trial was sufficient to sustain a jury finding that a scheme to defraud by false representations existed within the meaning of 18 U.S.C. Sec. 1343.

III.

Cross-Examination of Appellant Drake.

At trial, a portion of Drake's defense centered on his claim that he was unaware of the Payne Company's security interest in after-acquired accounts receivable. Drake asserted that he believed ATIM had granted a security interest only in then existing accounts receivable. In support of this position, Drake testified that he had no formal training in business management. Drake noted that his background was as a business consultant with an emphasis on psychological applications and considerations in business management. Possibly in support of this argument, Mr. Drake was asked during direct examination, "Mr. Drake, basically, what is your background and education?" Drake answered, "Majored in psychology and the usual things that go along with a major." R.Vol. IV at 458. On cross-examination, Drake testified that he had a degree in psychology.

The assistant U.S. Attorney impeached Drake on this point through the use of prior inconsistent statements. Id. at 537- 39. Drake explained the inconsistencies by testifying, "No, I do not have a diploma that says I have 120 graduate hours. I have a completed major, and I did practice clinical psychology. It was at the University of Illinois and Roosevelt University.... I would have completed it probably around 53 to '54." Id. at 540.

The Assistant U.S. Attorney proceeded to cross-examine Drake on several other matters. Several hours...