U.S. v. Jones, 90-1364

• Decision Date: 25 July 1991
• Docket Number: No. 90-1364,90-1364
• Citation: 938 F.2d 737
• Parties: -5583 UNITED STATES of America, Plaintiff-Appellee, v. Bridget C. JONES, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 737

938 F.2d 737

68 A.F.T.R.2d 91-5583

UNITED STATES of America, Plaintiff-Appellee, v. Bridget C. JONES, Defendant-Appellant.

No. 90-1364.

United States Court of Appeals Seventh Circuit.

Argued Oct. 30, 1990.

Decided July 25, 1991.

Patrick J. Chesley, Asst. U.S. Atty., Springfield, Ill., for plaintiff-appellee.

Jon G. Noll, Springfield, Ill., for defendant-appellant.

Before WOOD, Jr., COFFEY and KANNE, Circuit Judges.

KANNE, Circuit Judge.

A "loan procurement program" promoted to desperate or gullible persons generated over $11 million in procurement fees for Bridget and Richard Jones. No loans were ever procured and no taxes were ever paid on the fees received. Mrs. Jones was convicted of wire fraud, obstruction of justice and conspiracy. After failing to appear for sentencing, Mrs. Jones was apprehended and received a twenty-five year prison term. She appeals her convictions and sentence, raising a variety of arguments, and we affirm.

I.

Bridget C. Jones and her late husband, Richard L. Jones, operated what was termed an advance fee loan program. For a $4,000 fee paid up front, they promised to arrange a $100 million loan for the applicant. From the standpoint of Bridget and Richard Jones the program was quite successful. By April 15, 1986, (the date Richard died) the couple had accumulated more than $10 million from procurement fees received from approximately 4,000 clients who joined their programs. The money generated from this scheme was placed in more than 100 banks located throughout the United States. No taxes were paid on any of the fees received by Mrs. Jones and her husband. Not incidentally, no loans were ever arranged.

In early 1986, Bridget and Richard Jones learned that the government had been subpoenaing records from their bank accounts. This news prompted them to take steps to move the money in those accounts outside the United States. To accomplish this international transfer of funds Mrs. Jones and her husband sought the assistance of Joan McIntosh and a Swiss banker named Harry Wanke. McIntosh claimed to be in the business of protecting people's money from being taxed. A plan was developed whereby Richard Jones would write checks on all his bank accounts and make them payable to sham corporations. The checks would be given to McIntosh, who would deposit them in a bank account she controlled in Denver, commingling them with other funds in that account. From the Denver account McIntosh would then move the funds to New York where Wanke would deposit them with a bank having a correspondent relationship with Wanke's bank in Zurich, Switzerland. Wanke would then arrange for the funds to be wire-transferred from the New York bank to his Swiss bank. No reporting or disclosure of the actual ownership of the funds was to be made.

Bridget and Richard Jones had various bank accounts in Bloomington, Illinois, the base of their operations. Prior to his death and consistent with the plan to move the funds out of the country, Richard Jones depleted his bank accounts outside of Bloomington by writing multiple checks in amounts of less than $10,000 payable to dummy corporations. These checks totalled nearly $6 million. In late March and early April of 1986, Mrs. Jones and her husband sent $500,000 of the checks made payable to the sham corporations to McIntosh. On April 12, 1986, Bridget and Richard Jones, McIntosh, Wanke and others met in Chicago. Mrs. Jones and her husband decided that of the $500,000 sent to McIntosh, $200,000 would be used to test the system devised for getting the money to Switzerland. The balance of the $500,000 would be used to establish trusts.

Three days later Richard Jones died. A week later, a federal grand jury subpoena was served on Mrs. Jones directing her to produce records relating to the loan program. After receiving the subpoena Mrs. Jones directed that the subpoenaed records be removed from her house, microfilmed and then burned. Although she was given immunity for the act of producing the records of the loan program, Mrs. Jones stated that she had no intention of turning the records over to the grand jury.

During this time, the Internal Revenue Service made two jeopardy assessments against Richard Jones' estate. The first assessment in the sum of $3.8 million was made in middle or late April of 1986. The second assessment for $10.25 million was made in the middle of June of 1986. Bridget Jones received notifications of the levies and was heard repeatedly to say that she wanted to move the money outside the United States to avoid seizure.

After Richard Jones' death, Bridget Jones assumed sole control over the operations of the advance fee loan program. She also pursued the scheme to move the untaxed money outside the United States to prevent its seizure by the Internal Revenue Service. On May 7, 1986, Mrs. Jones met with McIntosh in Denver, Colorado, and gave McIntosh an additional $239,000. Mrs. Jones directed her to funnel $100,000 to the overseas bank accounts and to retain $139,000 as an escape fund for Mrs. Jones and her family.

Seven days later on May 14, 1986, Mrs. Jones met with Rupert Henry and Robin Baily in Miami, Florida. The purpose of this meeting was to arrange the transfer of approximately $290,000 out of the country to bank accounts in Panama.

On May 21, 1986, Mrs. Jones divided the remaining checks written to the dummy corporations into two groups. Mrs. Jones directed that one group of checks totalling $2,841,172.10 be given to Rupert Henry for deposit in the Panamanian bank accounts. The second group of checks, totalling $3,024,627.48 was given to McIntosh for deposit in the Swiss bank accounts.

The advance fee loan program continued to generate fees. On May 27, 1986, Mrs. Jones received an additional $1 million from the loan program brought in subsequent to her husband's death. Of this income to Mrs. Jones, approximately $800,000 was in the form of checks. Mrs. Jones directed that the checks be converted to cash without the filing of any Currency Transaction Reports with her name on them. However, the transfer of the cash to Panama could not be arranged and Mrs. Jones decided to move the cash outside the United States through McIntosh and Wanke. At Mrs. Jones' direction, $500,000 in cash was given directly to Wanke in New York. Wanke agreed not to disclose Mrs. Jones' identity on any Currency Transaction Reports. Wanke received the $500,000 in cash in New York and was arrested.

Mrs. Jones was charged with one count of conspiracy in violation of 18 U.S.C. Sec. 371; four counts of wire fraud in violation of 18 U.S.C. Sec. 1343; and one count of obstruction of justice in violation of 18 U.S.C. Sec. 1503.

After trial, the jury found Mrs. Jones guilty on all six counts. The district judge set the case for sentencing and agreed to release Mrs. Jones pending sentencing. Mrs. Jones fled and remained at-large for over two and one-half years. After being apprehended and returned for sentencing, the district judge sentenced her to twenty-five years imprisonment.

Mrs. Jones alleges many errors on appeal. The only claims that merit discussion are: that the wire fraud counts did not state an offense because the government did not allege a scheme intended to deprive the victims of money or property; that the conspiracy count did not state an offense because Mrs. Jones could not have been convicted of the substantive offense of failure to file certain reports; that she was denied her constitutional right to proceed pro se at trial; that her sentence was unduly harsh; and that it was error for the magistrate to conduct jury selection. We now address these claims.

II.

Bridget Jones asserts that the scheme alleged in the indictment did not constitute a scheme to deprive the Treasury Department of money or property as required by McNally v. United States, 483 U.S. 350, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987). ¹ We noted in United States v. Gimbel, 830 F.2d 621, 627 (7th Cir.1987) that the standards set forth for mail fraud schemes under McNally are applicable to wire fraud schemes as well. We have considered a number of cases reviewing whether the scheme alleged fell within the "intangible rights" theory invalidated by McNally. But we do not look solely at the indictment when making this determination on this direct appeal. "When the jury must have found a deprivation of property, we affirm on direct appeal even though the indictment was cast in terms of intangible rights." Toulabi v. United States, 875 F.2d 122, 123 (7th Cir.1989). Our concern, as we noted in Gimbel, 830 F.2d at 627, is whether the jury was required to find that the scheme resulted in the government being deprived of money or property. As we noted in United States v. Wellman, 830 F.2d 1453, 1462 (7th Cir.1987), "we must look to the substantive allegations of the indictment and the jury instructions to determine whether the conduct alleged and necessarily found to have occurred by the jury constituted an offense."

We considered a situation somewhat similar to the one facing Jones in Gimbel. There the government alleged that the defendant used a scheme "to impede the Treasury Department from collecting Currency Transaction Reports and other 'data to be used to determine the correct source and amount of income in the determination and assessment of ... income taxes.' " Gimbel, 830 F.2d at 623 (citation omitted). We found that because the jury "was not required to find that the scheme resulted in the government being deprived of money or property," the indictment failed to state an offense under the mail fraud statute. Id. at 627.

In United States v. Bucey, 876 F.2d 1297 (7th Cir.), cert. denied, --- U.S. ----, 110 S.Ct. 565, 107 L.Ed.2d 560 (1989), we found that allegations charging the defendant with devising a scheme "to defraud the United States of money and property, that is, income taxes" satisfied the "money or property" requirement of McNally. This resolved a...