U.S. v. Loayza

• Decision Date: 25 February 1997
• Docket Number: No. 95-5796,95-5796
• Citation: 107 F.3d 257
• Parties: 46 Fed. R. Evid. Serv. 745 UNITED STATES of America, Plaintiff-Appellee, v. Salomon S. LOAYZA, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 257

107 F.3d 257

46 Fed. R. Evid. Serv. 745

UNITED STATES of America, Plaintiff-Appellee, v. Salomon S. LOAYZA, Defendant-Appellant.

No. 95-5796.

United States Court of Appeals Fourth Circuit.

Argued Oct. 31, 1996.

Decided Feb. 25, 1997.

ARGUED: Oldric Joseph LaBell, Jr., Newport News, VA, for Defendant-Appellant. Alan Mark Salsbury, Assistant United States Attorney, Norfolk, VA, for Plaintiff-Appellee. ON BRIEF: Helen F. Fahey, United States Attorney, Norfolk, VA, for Plaintiff-Appellee.

Before WIDENER and HALL, Circuit Judges, and THORNBURG, United States District Judge for the Western District of North Carolina, sitting by designation.

Affirmed by published opinion. Judge THORNBURG wrote the majority opinion, in which Judge HALL joined. Judge WIDENER wrote a dissenting opinion.

OPINION

THORNBURG, District Judge:

Appellant, Salomon S. Loayza, assigns numerous errors to the court below in connection with his convictions for mail fraud in violation of 18 U.S.C. § 1341.

Loayza and co-defendant Robert Shirey owned or co-owned and operated several investment management companies. They devised a Ponzi-type scheme whereby individuals were persuaded to invest in these companies by representations that their funds would be invested in reputable mutual funds guaranteed to earn tax-free interest and dividends. ¹ The investors were also assured the original principal investment ultimately would be returned in full. The money actually was used to pay the personal and business expenses of appellant and Shirey. Periodically, funds from new "investments" were used to make "interest payments" to the earlier investors. The availability of investment funds was assured by the use of the mail. Eleven investors were defrauded for a total of $628,000.

I.

Appellant's first attack is on the bill of indictment. Prior to trial, he moved to dismiss the indictment as legally insufficient. The trial court denied the motion but ordered the government to file a bill of particulars.

Because appellant moved against the sufficiency of the indictment at trial, this court applies a de novo standard of review. United States v. Darby, 37 F.3d 1059, 1060 (4th Cir.1994), cert. denied, 514 U.S. 1097, 115 S.Ct. 1826, 131 L.Ed.2d 747 (1995). "[H]eightened scrutiny" is applied because the motion attacking the sufficiency was made prior to the verdict. Id., at 1063.

Appellant attacks the indictment primarily on the ground that the names and addresses of the victims were not included in each count. Counsel conceded at oral argument, however, that appellant was not prejudiced by the omission if the indictment is otherwise sufficient. He also claims it failed to give adequate notice of the charges because, while the counts refer to the amounts of the investment checks sent through the mail, the indictment does not state to whom they were payable, upon what banks drawn, the persons sending the check, the persons to whom sent, and the places of receipt.

In order to be legally sufficient, "[a]n indictment must contain the elements of the offense charged, fairly inform a defendant of the charge, and enable the defendant to plead double jeopardy as a defense in a future prosecution for the same offense." United States v. Daniels, 973 F.2d 272, 274 (4th Cir.1992), cert. denied, 506 U.S. 1086, 113 S.Ct. 1064, 122 L.Ed.2d 369 (1993). If the indictment does not contain every essential element of the offense, it is invalid; and, a bill of particulars cannot cure the defect. Darby, 37 F.3d at 1063; United States v. Price, 857 F.2d 234, 236 (4th Cir.1988) (citing Russell v. United States, 369 U.S. 749, 82 S.Ct. 1038, 8 L.Ed.2d 240 (1962)). In essence, then, the bill of indictment insures that a defendant does not face incarceration "except on presentment or indictment of a grand jury;" thus, if it is insufficient, a prosecutor cannot cure the defects. Darby, supra; United States v. Floresca, 38 F.3d 706 (4th Cir.1994).

The essential elements of mail fraud are "(1) the existence of a scheme to defraud, and (2) the mailing of a letter, etc., for the purposes of executing the scheme." United States v. United Medical and Surgical Supply Corp., 989 F.2d 1390, 1404 (4th Cir.1993). The indictment here alleged that from March 1989 through December 1993, the appellant devised a scheme to defraud persons by inducing investments in specified investment management companies which he owned or co-owned. It also alleged intentional fraudulent representations by appellant as to future investments, interest rates, the return of original principal, the diversion of funds, and the cover-up of the scheme by partial "interest" payments. Eleven unidentified investors were alleged to have been defrauded for a total of $628,000. The checks used in the scheme were identified by the amount and as having been received through the mail on specified dates because of appellant's representations. The essential elements of the charge thus are clearly specified.

Moreover, in order to obtain a conviction for mail fraud, the indictment must

"furnish the accused with such a description of the charge against him as well enable him to make his defence ...". [I]ndictments which do not identify specific mail fraud victims by name [are sufficient].

United States v. Mizyed, 927 F.2d 979, 981 (7th Cir.), cert. denied, 500 U.S. 937, 111 S.Ct. 2065, 114 L.Ed.2d 470 (1991) (citations omitted); accord, United States v. Hatch, 926 F.2d 387 (5th Cir.), cert. denied, 500 U.S. 943, 111 S.Ct. 2239, 114 L.Ed.2d 481 (1991) (an indictment for mail fraud is sufficient despite the failure to identify the victim); accord, United States v. Arlen, 947 F.2d 139, 145 (5th Cir.1991), cert. denied, 503 U.S. 939, 112 S.Ct. 1480, 117 L.Ed.2d 623 (1992) (discussing a violation of 21 U.S.C. § 333) ("[t]he prosecution must prove beyond a reasonable doubt that a defendant intended to defraud or mislead someone, but the indictment need not specify the intended victim; the focus is on defendant's intent, not the victim's identity"). The indictment here was sufficiently specific. The time period, the scheme, the purported investment companies, the "cover-up" of the diversion of funds, and the use of the mail to carry out the scheme are all alleged. Id. The identity of the fraud victims is not an essential element of the crime.

Nonetheless, the appellant is entitled to assurance that the indictment and prosecution were in fact for the same violations. In other words, upon what basis may it be determined that the grand jury returned a bill of indictment charging mail fraud of the same investors used by the prosecution to prove his case. Darby, supra; Floresca, supra.

The indictment's preamble to Count One contains a detailed description of the scheme used by appellant to defraud investors, including the fact that appellant both solicited checks directly from the victims and also induced them to "liquidate their legitimate investment holdings and transfer the funds to the defendant and his companies." J.A. at 13. The indictment also states that eleven investors were defrauded of a total of approximately $628,000. Id., at 14. Count One goes on to allege that on September 11, 1990, appellant received from the mail a check in the amount of $10,000 "which was mailed by an investor." Id. Each of the remaining counts incorporates the preamble text to Count One. Count Two alleges that on April 8, 1992, the appellant received in the mail a check in the amount of $10,000 which had also been mailed by an investor. Id., at 15. Likewise, Count Three specifies the receipt on June 4, 1991, of a check in the amount of $10,000 mailed by an investor. Id., at 15-16. The specification of the dates on which these checks were received by appellant, the amounts thereof, and the mailing thereof by investors assures that the grand jury, in returning charges on these counts, had in mind the investors who ultimately testified against appellant.

Such assurance is also certain as to Counts Four and Five. Those counts as well incorporate the preamble text to Count One. Count Four charges that on December 18, 1991, the appellant caused "to be delivered by mail according to the direction thereon, a check in the amount of $20,000.00, which was mailed by Keystone Fund to an investor solicited on the basis of the false and fraudulent statements and representations described" in the preamble text. J.A. at 16. When read together with paragraph 2 in Count One, it is clear that appellant induced the victim in Count Four to liquidate a legitimate investment in the Keystone Fund in order to place the investment with his companies and that he used the mail to do so. Count Five charges the same conduct, on a different date, involving a check in the amount of $5,000, again mailed by Keystone Fund to an investor for investment with appellant. As noted above, the specification of the dates, the amounts of the checks, and the identification of the legitimate investment company from which the checks were sent assures that the grand jury presented an indictment based on the investors who testified at trial.

While it is possible, as appellant argued, that he received large numbers of checks from various investors, the indictment's identification of the dates, the check amounts and their receipt from investors or investment companies was sufficient to place him on notice of the charges. Appellant,

understandably, wants the government to disclose its theory of the case and the supporting evidentiary facts. "That is not and never has been required at the indictment stage.... The ready remedy of a motion for a bill of particulars[under Fed.R.Crim.P. 7(f) ] is available to add specifics beyond those required for the indictment to pass constitutional muster...." Here, the indictment "taken as a whole ... adequately apprised [appellant] of the charges so that [he] might prepare a defense."

Arlen, 947 F.2d at 145 n. 7 (citations omitted). Thus, the indictment...