U.S. v. Green
| Decision Date | 15 June 1992 |
| Docket Number | No. 91-3573,91-3573 |
| Citation | 964 F.2d 365 |
| Parties | UNITED STATES of America, Plaintiff-Appellee, v. Douglas D. GREEN, a/k/a Doug Green, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Robert J. Boitmann, Asst. U.S. Atty., Peter G. Strasser, Walter J. Rothschild, and Harry Rosenberg, U.S. Attys., New Orleans, La., for plaintiff-appellee.
Appeal from the United States District Court for the Eastern District of Louisiana.
Before WISDOM, REYNALDO G. GARZA and JONES, Circuit Judges.
Appellant Douglas D. Green (Green) challenges his convictions for mail fraud, conspiracy to commit mail fraud and money laundering and the sentences imposed. For the following reasons, we AFFIRM Green's convictions and sentences.
Appellant Green was elected to the position of Commissioner of Insurance for the State of Louisiana in October of 1987. He took office in March of 1988. The facts of his election campaign and his conduct while in office bear witness to the unfortunately continuing truth of the words spoken by Euripides almost 2,500 years ago.
In the fall of 1986, John and Naaman Eicher (the Eichers), principals of Champion Insurance Company (Champion), became dissatisfied with the performance of the then Commissioner of Insurance of the State of Louisiana, Sherman Bernard (Bernard). In an effort to unseat Bernard and find favor in the office of the Commissioner, the Eichers handpicked Green, a former employee of John Eicher at Key Underwriters, to run for the post. 2 The Eichers offered to match Green's then current income and to provide substantial funding for Green's campaign. 3
Funding for Green's campaign arrived in the form of "loans" from William Hall (Hall) ($100,000), Harry Mey (Mey) ($25,000) and M.L.C. Services Inc. (MLC) ($25,000), a company owned by Carey Guidry. 4 Testimony revealed each of the "loans" corresponded exactly to amounts "loaned" to Hall, Mey and M.L.C. (collectively the "intermediaries") by United Financial Services (United), a company owned by the Eichers. Notes for the "loans" were simultaneously created between the intermediaries and the Green campaign and the intermediaries and United. United informed the intermediaries that it would not seek repayment of the notes unless the Green campaign repaid the intermediaries. Although fundraisers were held on behalf of Green following his election, no payments of principal or interest were ever made to the intermediaries. At the same time, however, some of the money raised was used to hire private investigators utilized in an attempt to gather information for the purpose of firing Max Mosley, the Chief Insurance Examiner and a target of the Eichers. Green was entirely aware of these financing arrangements; he had been present at meetings during which these financing arrangements were planned.
In addition to the financing provided by the Eichers, Green was paid $2,000 per month to "run for office" and was provided with a fashion consultant. The Eichers also arranged for Green's brother to be his driver, the Eichers paying the salary, and arranged for Green's brother to live in an apartment paid for by the Eichers.
Upon Green's assumption of duties as Commissioner of Insurance, a backlog of In addition to the lulling letters, Green assisted the Eichers and Champion by interfering with an audit of Champion designed to remove the watchlisting of Champion by A.M. Best (Best), a national insurance rating company. Green appointed Malcolm Ward (Ward) to conduct the examination of Champion. When Ward attempted to expand the audit of Champion, Green intervened and limited it. Green guided the Department of Insurance in its urging of Best to withdraw the watchlisting of Champion. This action occurred via correspondence from the Department of Insurance drafted by Patti Eicher, John Eicher's wife.
unpaid claims began to build up at Champion and complaints at the Insurance Commission mounted. James Fernandez (Fernandez), a supervisor in the Department of Insurance, repeatedly raised the issue of Champion's problems with Green, asking Green to take action against Champion. Green's response to Fernandez' overtures was to remove Fernandez from the investigation of the claims involving Champion. Green personally assumed control and responsibility for the investigation together with his close friend Tom Bentley. 5 Although intense pleas from Fernandez continued, 6 Green did nothing about Champion's mounting problems. In spite of Green's nonaction, official inquiry forms ("lulling letters") were sent by the Department of Insurance to each of Champion's complainants indicating that the Department of Insurance was investigating their complaints. Champion claimants testified the lulling letters contributed to their decisions not to seek legal action against Champion
Green's actions on behalf of the Eichers extended into other areas as well. He misled the Insurance Commissioner of Alabama, at the time conducting its own investigation of Champion, by indicating that Champion was in good condition despite knowledge of innumerable complaints against it. When Alabama insurance auditors sought to audit other companies controlled by the Eichers, Green, upon being informed by Naaman Eicher that one particular Eicher company, United Southern Underwriters, could not withstand auditing, prevented the auditing of that company. 7 When Alabama eventually announced it would issue its own report of the examination as opposed to a joint report with Louisiana. The differences between the two reports was staggering, Louisiana reporting Champion to be solvent by $15 million and Alabama reporting it insolvent by $25 million.
Green personally licensed the Capital Insurance Company (Capital), a Communion company owned by the Eichers. The licensing permitted Capital to write multiple lines of insurance in Louisiana despite the fact that Capital could not sell insurance where it was originally licensed and thus failed to fulfill the requirements of Louisiana law. The $15 million solvency of Champion shown by the Louisiana report was due in part to a reinsurance contract Champion had with Capital. Under this contract, Capital supposedly accepted retroactive responsibility for certain claims against Champion. Testimony revealed, however, that if actually effectuated, this contract would require Capital to pay out $1.21 for every dollar of premium it received. Appellant was aware of the Eichers' plan to permit Champion to fail and to begin to write insurance in Louisiana through Capital.
Green's argument regarding his conviction on the mail fraud counts is two-fold. First, he contends that because the lulling letters, sent to induce complaining Champion claimants into inaction, were sent by staff at the Department of Insurance and not by Green himself, there can be no reasonable conclusion other than Green did not have the specific intent to defraud required for conviction. Related to this, he points to evidence that the letters were sent as a matter of course and had similarly been sent by the previous Insurance Commissioner's administration. Secondly, Green contends the letters tended to expose the fraudulent scheme to keep Champion in business despite its troubled times and that thus the letters cannot, as a matter of law, constitute mail fraud.
To prove a case of mail fraud, the government must show that Green engaged in a scheme to defraud and used the mails to further this scheme. United States v. Church, 888 F.2d 20, 23 (5th Cir.1989). A defendant need not actually be involved in the mailings directly; it is sufficient to show that "an individual does an act with the knowledge that the use of the mails will follow in the ordinary course of business." United States v. Shaid, 730 F.2d 225, 229 (5th Cir.), cert. denied, 469 U.S. 844, 105 S.Ct. 151, 83 L.Ed.2d 89 (1984). Nothing more is needed to show the defendant "caused" the mails to be used. Id. The evidence clearly established that Green knew the lulling letters would be sent out by his office. Thus, Green's argument that others did the actual mailing of the lulling letters and that he therefore does not have the requisite intent is without merit.
As to the evidence that the same types of letters had been sent by the previous administration, the Supreme Court has held that even routine letters, innocent in themselves, may form the basis of a mail fraud conviction. Schmuck v. United States, 489 U.S. 705, 109 S.Ct. 1443, 1448-49, 103 L.Ed.2d 734 (1989). The Court in Schmuck specifically rejected an argument virtually identical to the one put forth by Green. We need look no further in rejecting this aspect of Green's appeal.
As to the argument that the letters tended to expose Green's wrongdoing and thus cannot form the basis of mail fraud, Schmuck is again directly on point. As the Court observed:
We also reject Schmuck's contention that mailings that someday may contribute...
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