U.S. v. Hoffecker

Decision Date16 June 2008
Docket NumberNo. 06-3190.,06-3190.
Citation530 F.3d 137
PartiesUNITED STATES of America v. Charles Paul HOFFECKER also known as Chip Hoffecker Charles Paul Hoffecker, Appellant.
CourtU.S. Court of Appeals — Third Circuit

Christopher J. Christie, United States Attorney, Sabrina G. Comizzoli (argued), Assistant U.S. Attorney, George S. Leone, Chief Appeals Division, Office of the United States Attorney, Newark, NJ, for Appellee.

Susan Dmitrovsky (argued), Sale & Kuhne, Law Office of Benedict P. Kuehne, Miami, FL, for Appellant.

Before: FISHER, GREENBERG, and ROTH, Circuit Judges.

OPINION OF THE COURT

GREENBERG, Circuit Judge.

I. INTRODUCTION

Following his indictment on the charges a jury convicted Charles Paul Hoffecker of one count of conspiracy to commit mail and wire fraud in violation of 18 U.S.C. § 371 and three counts of mail fraud in violation of 18 U.S.C. § 1341. Based on these convictions, the District Court sentenced Hoffecker to a total custodial term of 210 months to be followed by three years of supervised release. Hoffecker appeals making the following claims: (1) the District Court erred in admitting the testimony of his former attorney; (2) the prosecution was time-barred; (3) the prosecutor engaged in prejudicial misconduct; (4) the District Court erred in its instructions to the jury; (5) a Government witness committed perjury; (6) the District Court erred in excluding expert witnesses; (7) the District Court erred in admitting evidence of a civil injunction entered against him; (8) the District Court erred in excluding his out-of-court statements; (9) the prosecutor made improper comments during closing argument; and (10) the District Court erred in calculating his sentencing guideline range and his sentence is unreasonable. After our examination of all of these issues we have concluded that those concerning the testimony of his former attorney and the statute of limitations are the most significant and potentially of the greatest precedential importance. In the end, however, we reject all of Hoffecker's contentions and will affirm the amended judgment of conviction and sentence in this case entered July 24, 2006.

II. FACTS AND PROCEDURAL HISTORY

After a conviction predicated on a jury verdict, we set forth the evidence in the light most favorable to the Government.1 United States v. Wood, 486 F.3d 781, 783 (3d Cir.2007). In November 1995, Hoffecker and his co-defendant Charles Edward Myers formed Amitex Investment Services Limited, Inc. ("Amitex"), a Bahamian corporation headquartered in Nassau, purportedly to sell physical commodities on a financed basis. It appears that Hoffecker contemplated that Amitex's customers who were actually its victims would be United States residents and, in fact, they were. Hoffecker owned 65% of Amitex, Myers owned 30%, and a third party, Walid El-Houri, owned the remaining 5%. Myers oversaw Amitex's daily operations while Hoffecker operated Amitex through daily phone contact and routine visits.

Hoffecker then incorporated Global Investment Corporation ("Global") in Florida in December 1995 but relocated Global to Georgia in November 1996. Global was one of approximately ten "boiler-rooms" in which telemarketers sold the Amitex Leveraged Physical Commodity Investment Program ("LPCIP") to individual customers. Hoffecker owned and controlled Global, referred to himself as its "administrator," and took substantial amounts of money from Global in cash. His activities with respect to Global were extensive as he visited its offices, created promotional documents for its customers, hired its employees, presided over officewide meetings and conference calls, brokered deals on its behalf, authorized its materials to be provided to third parties, and conducted sales presentations to the telemarketers.

Hoffecker instructed Global's telemarketers to represent to customers that the LPCIP would purchase actual tangible commodities on a customer's behalf, such as precious metals, gasoline, and heating oil, and store them outside the United States. The telemarketers also represented that the customers would pay for their purchases in part by using "loans" and "loan financing" that Amitex provided. Nevertheless, the LPCIP solicited a 20% down payment from its customers with the agreement that Amitex would advance the remaining 80% of the purchase price as a loan at 12% annual interest. Of course, inasmuch as Amitex did not purchase the commodities it hardly assumed a burden when it engaged itself to make these "loans."

The LPCIP was an elaborate and highly successful scam. Customers made down payments and were charged interest for the nonexistent fictional "loans" to purchase commodities that neither Amitex nor anyone else acting on its behalf bought or stored. Hoffecker enriched himself from the scam by siphoning off millions of dollars from Bahamian bank accounts that he had set up to conceal the fraud from United States law enforcement authorities.

Amitex's brochures and promotional materials falsely represented that Amitex was a legitimate operation, touting promises regarding its acquisition and storage of physical commodities, company history, account executives, office locations, and departments. A Global brochure extolled the investment's "tangibility," and represented that "the commodity [purchased would be] physically delivered to a lender for safekeeping." App. vol. 25 at 35, 159. The brochure listed, with photographs, the types of commodities offered, including gold, silver, platinum, heating oil, unleaded gasoline, and foreign currencies.

Hoffecker instructed his telemarketers to emphasize to potential clients that the investment in physical commodities was safe and secure because it had "tangibility and liquidity," app. vol. 14 at 18, 31; vol. 25 at 159, and the commodities were "actually something you can hold and touch," app. vol. 17 at 86. Global's telemarketers and Global's account agreement represented that the commodities themselves secured the Amitex loans and were being held by Amitex as collateral in insured storage facilities outside the United States.

In addition, Amitex sent investors a brochure touting its "third party storage" facility. App. vol. 14 at 31; vol. 17 at 67. It also advised customers that there was a storage fee, but that this fee currently was not being charged. This aspect of the fraud was significant as one customer thought of the fee waiver as a "great perk." App. vol. 26 at 44.

In reality, neither Amitex nor Global purchased or stored physical commodities. In fact, Amitex did not have the physical capability to store the physical commodities, and a Government expert testified that the promise to "hold" and "store" several of these commodities physically could not be fulfilled. In this regard, as an example of Amitex's inability to store the commodities, heating oil and unleaded gasoline degrade and/or become contaminated over a period of months, becoming unsalable.

Hoffecker falsely created the image that Global and Amitex were thriving worldwide entities. Amitex's brochures touted Walid El-Houri as the original founder of Amitex and claimed that Amitex had a 25-year history and had generated "several billion dollars" from its global ventures, including worldwide oil and other commodity transactions. App. vol. 25 at 164; vol. 17 at 60-69. Hoffecker instructed his telemarketers to emphasize Amitex's "billions" of dollars of business to demonstrate that Amitex was a large company which its clients could trust. App. vol. 17 at 62-63.

These representations were false. El-Houri was not an original founder of Amitex; rather, he was briefly a 5% owner who ceased his involvement with Hoffecker and Amitex only a few months after its inception. El-Houri's attempt to extract himself from Amitex culminated in Amitex's agreement on March 5, 1996, at El-Houri's insistence to destroy all marketing brochures and public relations documents portraying him as a major principal in Amitex. This agreement was, however, as worthless as all of Amitex's other undertakings as it continued to send its customers brochures throughout 1996 and 1997 touting El-Houri as the original founder of Amitex.

Of course, Amitex did not generate "several billion dollars" over its supposed 25-year history. Amitex opened for business in November 1995 and did no significant business prior to issuing the brochure touting its 25-year history. Contrary to representations contained in its brochures, Amitex was not engaged in any global business ventures involving worldwide oil transactions, international business transactions, or financing of major global projects. Moreover, though Amitex brochures and envelopes represented that it had offices in the Bahamas, London, Munich, and Monaco,2 its only office was in the Bahamas.

Amitex's and Global's written materials and telemarketers referenced various departments within the companies, such as Amitex's "New Accounts Department," "Customer Service Department," "Traders," and "Compliance Department." App. vol. 14 at 72, 160; vol. 21 at 34-36, 93-94. These departments, however, did not exist. Amitex's staff consisted of approximately five Bahamian office workers, whom Hoffecker described as "back office" types who performed clerical and administrative tasks. Supp. app. at 22. Thus, contrary to the brochures' representations, Hoffecker's staff did not have "extensive international business expertise," "worldwide contacts," or "a network of professional men and women who have the uncompromising commitment, integrity and motivation to achieve success." App. vol. 21 at 73-74.

Global similarly represented that it had a "Trading Department," "Compliance Department," and "Compliance Director." App. vol. 24 at 109, 111, 122. In reality, Global did not have a Trading Department and its so-called Compliance Department consisted of one person, the Compliance Director, Francine Leone, who was a secretary who...

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