U.S. v. Kinney and Kelly

• Decision Date: 01 August 1999
• Docket Number: -1501,Docket Nos. 99-1345
• Citation: 211 F.3d 13
• Parties: (2nd Cir. 2000) United States of America, Appellee, v. William Kinney and Kevin Kelly, also known as John Moore, also known as Jack Murphy, Defendants-Appellants
• Court: U.S. Court of Appeals — Second Circuit

Page 13

211 F.3d 13 (2nd Cir. 2000)

United States of America, Appellee, v. William Kinney and Kevin Kelly, also known as John Moore, also known as Jack Murphy, Defendants-Appellants.

Docket Nos. 99-1345, -1501

August Term, 1999

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Argued: February 3, 2000

Decided: April 28, 2000

Defendants were indicted for mail fraud based on their fundraising activities for a New York charity. After a jury found Defendants guilty, the United States District Court for the Eastern District of New York, Arthur D. Spatt, Judge, entered their convictions and imposed sentences of incarceration.

We affirm.

[Copyrighted Material Omitted]

Jonathan I. Edelstein, New York, NY (Abraham Abramovsky, of counsel), for Defendant-Appellant Kinney.

Gary Schoer, Syosset, NY, for Defendant-Appellant Kelly.

James Tatum, Jr., Assistant United States Attorney, Brooklyn, NY (Loretta E. Lynch, United States Attorney, David C. James and Jo Ann Navickas, Assistant United States Attorneys, of counsel), for Appellee.

Before: OAKES, CABRANES and SACK, Circuit Judges.

OAKES, Senior Circuit Judge:

William Kinney and Kevin Kelly ("defendants") were convicted of conspiracy and mail fraud based on their involvement with a fundraising effort for a law enforcement charity. The United States District Court for the Eastern District of New York, Arthur D. Spatt, Judge, entered the convictions pursuant to a jury verdict and imposed sentences of incarceration. Defendants appeal their convictions primarily on the ground that there was insufficient evidence to support the jury's verdict. Additionally, defendants appeal their sentences on several fronts. Because we find that defendants' convictions were adequately supported by the evidence and their sentences were properly calculated, we affirm.

BACKGROUND

Defendants worked for a company called American Interconnect Agency ("AIA"), a business which contracted with various charitable organizations to solicit funds on their behalf. Kinney was the vice president and founder of AIA, and Kelly was the office manager. In the fall of 1992, AIA contracted to raise funds for the Drug Enforcement Agency of New York ("DEANY"), a non-profit organization not connected to the federal Drug Enforcement Administration whose primary purpose was to educate police officers. The one-year contract provided that AIA would solicit potential contributors to DEANY within the state of New York and sell them advertising space in two journals that would be produced by AIA during the contract term and distributed widely to DEANY's 1200 members and all its contributors. Of the money raised by AIA, the first $40,000 was guaranteed to DEANY and AIA was to keep what remained after paying the costs of solicitation and journal production.

The contract was negotiated by Kinney and John Belizzi, the executive director of DEANY. During these negotiations, Belizzi specified that AIA could not make misrepresentations in its solicitations as to the purpose of the contributions or the identity of the solicitors. In particular, Belizzi emphasized to Kinney that AIA salespeople should not hold themselves out as police officers or as connected with the Drug Enforcement Administration of the United States Department of Justice. Belizzi also told Kinney that the salespeople should not tell potential contributors that funds raised would be used to educate children or to put more police officers on the street. Belizzi did not state to Kinney that the funds would be used to buy bulletproof vests or to supplement a death fund for police officers slain in the line of duty.

DEANY received the $40,000 guaranteed under the contract in May 1993. By the end of the contract year, however, AIA had not published either of the two journals as promised, although it had raised over $200,000 -- in addition to the $40,000 given to DEANY -- through its advertising solicitations. In November 1993, AIA's records were seized by the U.S. Postal Inspection Services and arrest warrants were issued for defendants, charging them with mail fraud. Defendants were ultimately indicted for mail fraud and conspiracy based on their alleged misrepresentations that (1) they would produce the journals; and (2) that contributors' money would go to drug education programs and death benefits for families of slain police officers.

At trial, the government presented testimony from people who had been solicited by AIA and contributed money to DEANY in exchange for advertising space in the promised journals. These witnesses testified that the AIA salesmen had told them that their donations would go to drug education for children, that the salesmen identified themselves as law or drug enforcement officers, and that they were told that their advertising would appear in the next journal. Because AIA had not published a journal by November 1993 when its records were seized, none of these witnesses ever received the expected advertising. The government also introduced testimony from two AIA salesmen who said that they consistently made misrepresentations as to their identities and as to how the solicited funds would be used, and that they did so based on "pitch sheets" prepared by Kinney.

Additional testimony was presented from people involved in preparing to publish the journals. Kinney's secretary testified that she sorted advertising copy as it came in from contributors and put it in a box in Kinney's office, where it was found in the November 1993 seizure. A graphic designer testified that he communicated with Kinney about the journal, but never received any advertising or editorial copy from him.

Kinney testified on his own behalf that he had collected advertising and editorial copy for the DEANY journal and taken steps to have the journal published. He claimed that he had sent editorial copy to the graphic designer, but mistakenly used the wrong address so that it never was received. Kinney also testified that he instructed his salesmen not to represent themselves as police officers or tell contributors that their money would go to drug education. Kelly did not testify.

After the jury returned a guilty verdict on all counts in October 1998, the district court held hearings on sentencing. Based on the hearings, the district court calculated defendants' sentences as follows: In addition to the base offense level, each defendant's offense level was increased for the amount of loss produced by the fraud, the fact that the scheme involved more than minimal planning and/or more than one victim, and the fact that defendants misrepresented that they were acting on behalf of a charitable organization. The district court also enhanced Kinney's sentence on obstruction of justice grounds because he perjured himself at trial, and enhanced Kelly's sentence because of his role as a manager.

Kinney's and Kelly's convictions and sentences were entered by judgment on July 14, 1999 and June 10, 1999 respectively. This appeal followed.

DISCUSSION

Defendants appeal the sufficiency of the evidence supporting their convictions for mail fraud, arguing that they did not make false or material misrepresentations and that they lacked the requisite fraudulent intent for the crime. Defendants also contest the propriety of their sentences on several fronts, the most significant being that it was erroneous to apply a two-level enhancement for misrepresenting that they were acting on behalf of a charitable organization. We will discuss each of these arguments in turn.

I. Sufficiency of the Evidence

As we recently reiterated in United States v. Salameh, 152 F.3d 88, 151 (2d Cir. 1998), a defendant challenging the sufficiency of the evidence leading to his conviction "bears a heavy burden." Id. (quoting United States v. Masotto, 73 F.3d 1233, 1241 (2d Cir. 1996)). We must sustain the conviction if "after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt." Jackson v. Virginia, 443 U.S. 307, 319 (1979). In analyzing the evidence, we "credit[] all inferences and credibility assessments that the jury might have drawn in favor of the government and view[] the evidence as a whole rather than piecemeal." United States v. Aulicino, 44 F.3d 1102, 1114 (2d Cir. 1995) (internal citations omitted). As the Supreme Court stated in Jackson, this approach "gives full play to the responsibility of the trier of fact fairly to resolve conflicts in the testimony, to weigh the evidence, and to draw reasonable inferences from basic facts to ultimate facts." 443 U.S. at 319.

The crime of mail fraud, which served as the basis for defendants' conviction, has three elements: "(1) use of the mails to further (2) a scheme to defraud with (3) money or property as the object of the scheme." United States v. Gole, 158 F.3d 166, 167 (2d Cir. 1998). It is the second element that defendants contend was not supported by sufficient evidence in this case -- namely, that the misrepresentations alleged in the indictment amounted to a scheme to defraud. Defendants claim that the government did not prove that the alleged misrepresentations were false, material, or demonstrated the requisite intent to defraud required under United States v. Dinome, 86 F.3d 277, 283 (2d Cir. 1996) ("fraudulent intent is essential to a scheme to defraud." (internal quotation omitted)).

We find no merit in defendants' contentions. At the heart of the government's case was the charge that defendants misrepresented the fact that AIA would print contributors' advertising in two journals. Defendants do not argue that this misrepresentation was not material, but rather that the government failed to prove that they did not intend to publish the journals. To support their argument, they cite the case of United States v. D'Amato, 39 F.3d 1249, 1261 n.8 (2d Cir. 1994), for the proposition that fraudulent...