U.S. v. Loe, 99-41372

• Decision Date: 15 August 2001
• Docket Number: N,No. 99-41372,99-41372
• Parties: (5th Cir. 2001) UNITED STATES OF AMERICA, Plaintiff-Appellant, v. HENRY BLUME LOE, Defendant-Appellee. UNITED STATES OF AMERICA, Plaintiff-Appellant, v. HENRY BLUME LOE, Defendant-Appellee. o. 99-41506
• Court: U.S. Court of Appeals — Fifth Circuit

Page 427

262 F.3d 427 (5th Cir. 2001)

UNITED STATES OF AMERICA, Plaintiff-Appellant, v. HENRY BLUME LOE, Defendant-Appellee.

UNITED STATES OF AMERICA, Plaintiff-Appellant, v. HENRY BLUME LOE, Defendant-Appellee.

No. 99-41372, No. 99-41506

UNITED STATES COURT OF APPEALS

For the Fifth Circuit

August 15, 2001

Appeals from the United States District Court for the Eastern District of Texas

[Copyrighted Material Omitted] Before REAVLEY, SMITH, and DeMOSS, Circuit Judges.

DeMOSS, Circuit Judge:

In April 1998, a multi-count, superseding indictment was returned against several individuals including Defendant Henry Blume Loe ("Blume Loe"). Among the various counts charged against Blume Loe were those for conspiracy to defraud the United States, submitting false statements, and tax fraud. After several weeks of trial, a jury convicted Blume Loe of all ten counts that were charged against him, but the district court ultimately granted a judgment of acquittal with respect to five of the counts.

On appeal, the government seeks a reversal of the district court's judgment of acquittal. Blume Loe cross-appeals, hoping to reverse his remaining convictions and sentences. For the following reasons, we affirm the convictions and sentences assessed against Blume Loe, but reverse the district court's judgment of acquittal.

I. BACKGROUND

In 1946, the Loe family started Loe's Highport, Inc. ("LHI"), a marina located on Lake Texoma on property leased from the United States Army Corps of Engineers ("COE"). At the times pertinent to these appeals, Cornelius Dewitte Loe, Jr. ("C.D. Loe"), and Babo Beazley Loe ("Babo Loe") operated LHI. Of their three sons, only Blume Loe worked at the marina. Neither Cornelius Dewitte Loe, III, nor William Loe played a significant role in the marina's operations, and neither was charged with any criminal activity in the indictment.

In 1996, the Federal Bureau of Investigation executed a search warrant on the marina facilities of LHI, which later culminated in the multi-count indictment against Blume Loe, C.D. Loe, Babo Loe, and others. Not all of the counts were pressed against all of the defendants. Thereafter, the district court partially granted a motion to sever, and a trial on some of the counts against some of the defendants occurred. That first trial pertained to Counts 17, 22-25, and 29-31 of the multi-count indictment and did not involve Blume Loe. The second trial concerned the remaining counts and included Blume Loe as a defendant. Approximately five weeks into the second trial, however, one of Blume Loe's attorneys became ill and was unable to proceed. As a result, the district court severed Blume Loe's case and continued the trial with the remaining defendants.

When the government finally proceeded with the third trial against Blume Loe, he faced ten criminal counts, generally grouped into three categories. First, Counts 1-5 charged Blume Loe with conspiracy to defraud the COE and related substantive acts of submitting false statements. Under the lease agreement with the COE, LHI owed rent based upon a percentage of the gross receipts of its business. LHI reported the rent to be paid on a COE form called the "Graduated Rent System Rental Computation Form." Count 1 alleged that Blume Loe entered into a conspiracy to defraud the COE by submitting false rental numbers, and Counts 2-5 complained of individual substantive acts of submitting false statements. Second, Counts 12-15 charged Blume Loe with making false statements on his personal income tax returns for the 1992-95 tax years. The government maintained that in the returns for those years, Blume Loe underreported his income and did not include as compensation thousands of dollars that he received from an off-the-books account of LHI. Third, Count 16 charged Blume Loe with failing to file a Form 8300, a document required to be filed with the Internal Revenue Service whenever a person receives $10,000 or more in cash or cash equivalents in a business transaction. Specifically, the government alleged that Blume Loe sold a boat to Gene DeBullet in or around November 1994 for $21,000 in cash and that Blume Loe failed to file a Form 8300 reporting that transaction.

The jury convicted Blume Loe on all counts, but the district court granted a judgment of acquittal with respect to Counts 1-5.¹ In general, the district court held that there was no evidence that Blume Loe had anything to do with completing or filing the rental reports with the COE or in supervising those persons who did. The government filed this appeal to seek review of that judgment. Blume Loe cross-appeals, maintaining that: 1) there was insufficient evidence to support his convictions for the other five counts; 2) the district court erred in calculating his sentence; 3) the district court made improper evidentiary rulings; and 4) the district court should have granted his motion for a mistrial based on prejudicial communications between the jurors and others.

II. DISCUSSION

A. Counts 1-5

The government maintains that the district court erred in granting Blume Loe's motion, pursuant to Rule 29, for a judgment of acquittal on Counts 1-5. When reviewing such a decision, we give no deference to the district court's ruling. United States v. Baytank (Houston), Inc., 934 F.2d 599, 616 (5th Cir. 1991). Instead, we review de novo a district court's grant of a judgment of acquittal, applying the same standard as the district court. United States v. Sanchez, 961 F.2d 1169, 1179 (5th Cir. 1992). That standard asks whether a reasonable jury could conclude that the relevant evidence, direct or circumstantial, established all of the essential elements of the crime beyond a reasonable doubt when viewed in the light most favorable to the verdict. See United States v. Scott, 159 F.3d 916, 920 (5th Cir. 1998). The standard does not require that the evidence exclude every reasonable hypothesis of innocence or be wholly inconsistent with every conclusion except that of guilt, provided a reasonable trier of fact could find that the evidence establishes guilt beyond a reasonable doubt. Baytank, 934 F.2d at 616. "'A jury is free to choose among reasonable constructions of the evidence.'" Id. (quoting United States v. Bell, 678 F.2d 547, 549 (5th Cir. Unit B 1982) (en banc)). And it retains the sole authority to weigh any conflicting evidence and to evaluate the credibility of the witnesses. United States v. Millsaps, 157 F.2d 989, 994 (5th Cir. 1998).

As previously noted, Count 1 alleged that Blume Loe, his mother Babo Loe, and others entered into a conspiracy to defraud the COE by submitting false rental numbers, in violation of 18 U.S.C. § 371, and Counts 2-5 complained of individual substantive acts of submitting false statements, in violation of 18 U.S.C. § 1001.² The crux of those five charges pertained to the conspiracy charge as the individual substantive act counts were predicated on Pinkerton v. United States, 328 U.S. 640 (1946).³ To establish a violation of 18 U.S.C. § 371, the government must establish beyond a reasonable doubt: 1) that two or more people agreed to pursue an unlawful objective; 2) that the defendant voluntarily agreed to join the conspiracy; and 3) that one or more members of the conspiracy committed an overt act in furtherance of the conspiracy. United States v. Dien Duc Huynh, 246 F.3d 734, 745 (5th Cir. 2001).

Here, the district court generally observed that "[t]here is no evidence that Henry Blume Loe had anything to do with completing or filing the rental reports with the Corps of Engineers or supervised those persons who did." It further recited the substance of various aspects of the government's evidence: 1) testimony and written job descriptions indicating that Blume Loe had an important role and major duties at LHI; 2) testimony stating that Blume Loe was brought in to run the business; 3) testimony observing Blume Loe's attendance in Babo Loe's office discussing marina business; 4) and testimony from Marie Ward, a coconspirator of Babo Loe's, that Blume Loe returned from a meeting with the COE and stated certain possibly incriminating statements. Despite the standard of review afforded motions for judgments of acquittal, the district court found the evidence insufficient. Ultimately, the district court seemed persuaded by the fact that there was no direct evidence of Blume Loe's participation in accounting functions and by the fact that, regardless of any title held by Blume Loe, the bulk of the evidence showed that Babo Loe ran the marina.

Babo Loe's management of LHI, however, does not mean that Blume Loe did not or could not have entered into a conspiracy as to the underreporting of boat sales. Admittedly, none of the evidence presented to the jury directly linked Blume Loe with the COE reports. The government's case clearly rested on circumstantial evidence. We, however, do not differentiate between direct and circumstantial evidence when reviewing a grant of a judgment of acquittal. See Scott, 159 F.3d at 920. The key issue then is whether the circumstantial evidence established all of the essential elements of the crime beyond a reasonable doubt, and we must draw all reasonable inferences from that evidence in favor of the verdict.

Doing so, we find that the evidence cited by the district court, and the evidence it did not mention, sufficient to convict Blume Loe of a § 371 violation. A reasonable inference from the testimony about Blume Loe being the "heir apparent" of the marina business and from the job descriptions and other evidence indicating Blume Loe's level of responsibility at the marina is that he knew about the underreporting of boat sales.⁴ It is not unreasonable to infer that a son presumed to be the next head of the corporation would probably know what is going on with the affairs of that business, especially in light of his frequent meetings with the parent that supposedly ran the business. Furthermore, the jury could...