U.S. v. Mills

• Decision Date: 08 March 1993
• Docket Number: No. 92-2041,92-2041
• Citation: 987 F.2d 1311
• Parties: UNITED STATES of America, Appellee, v. James MILLS, doing business as Great American Financial Corp., Inc., Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1311

987 F.2d 1311

UNITED STATES of America, Appellee, v. James MILLS, doing business as Great American Financial Corp., Inc., Appellant.

No. 92-2041.

United States Court of Appeals Eighth Circuit.

Submitted Nov. 12, 1992.

Decided March 8, 1993.

Lee Lawless, St. Louis, MO, argued (James C. Delworth, on the brief), for appellant.

Raymond William Gruender, St. Louis, MO (Stephen B. Higgins and Raymond W. Gruender, on the brief), for appellee.

Before FAGG, BEAM, and HANSEN, Circuit Judges.

HANSEN, Circuit Judge.

A jury convicted James F. Mills on six counts of wire fraud in violation of 18 U.S.C. § 1343. The district court ¹ sentenced him to an 80-month term of imprisonment on each count of conviction to be served concurrently. Mills appeals and raises two trial issues and three sentencing issues. We affirm.

I. Background

Mills, doing business as Great American Financial Corporation (GAFC), devised a scheme to seek out prospective borrowers from around the country who needed loans to finance multimillion-dollar commercial and real estate projects. After Mills contacted a potential borrower and expressed an interest in the borrower's project, he would send the borrower a "proposal to fund" letter. By sending these letters, Mills intended to convince the prospective borrower that GAFC would arrange the necessary financing. One condition of the loan was that the borrower was required to pay a "commitment fee." A commitment fee typically equalled one percent of the loan amount. Mills promised the borrower that he would either arrange the financing or return the commitment fee. Once Mills received the commitment fee, he or one of his agents would travel to the site of the borrower's project and conduct an inspection. Typically Mills charged several thousand dollars for conducting an inspection.

Unbeknownst to the borrowers, however, these site inspections were perfunctory and superficial. Mills never intended to arrange any financing for the borrowers. Instead, his only goal was to prey on desperate borrowers who were unable to attain financing from traditional lending sources.

Mills managed to convince 71 borrowers to hire GAFC over the course of several years. During this time, Mills received over $1,500,000 in commitment fees from these borrowers. When time passed and the borrowers did not receive their financing, however, they complained and demanded a refund. Mills ignored these complaints by fabricating excuses for why the financing had not materialized, falsely promising that the deal was still in progress, and refusing demands for refunds.

Once his fraudulent scheme started to unravel, Mills began to "steal from Peter to pay Paul." He would take some of the commitment fee money that other borrowers had paid to GAFC and send it to the borrowers who threatened legal action. Mills actually repaid approximately $750,000 in total to some of the borrowers but only in response to threatened legal action. As a result, Mills was able to cover up his fraudulent scheme for several years.

On May 1, 1991, Mills was indicted and charged with six counts of wire fraud in violation of 18 U.S.C. § 1343. After a 10-day trial, the jury found Mills guilty of all six counts. On May 1, 1992, the district court sentenced him to an 80-month term of imprisonment on each count to be served concurrently, two years of supervised release, and a $300 special assessment. Mills appeals.

II. Discussion

A. For Cause Jury Strikes

Mills argues that the district court erred in striking for cause two prospective jurors because the district court did not specifically find that these prospective jurors were biased. Mills contends that the strikes "effectively awarded the prosecution two additional peremptory challenges." We disagree.

"The district court has broad discretion in determining whether to strike jurors for cause, and we will reverse only where actual prejudice has been demonstrated." United States v. Huddleston, 810 F.2d 751, 753 (8th Cir.1987) (citing Rogers v. Rulo, 712 F.2d 363, 367 (8th Cir.1983), cert. denied, 464 U.S. 1046, 104 S.Ct. 719, 79 L.Ed.2d 181 (1984)). In this case, the two prospective jurors who were struck for cause demonstrated a predisposition toward disbelieving government witnesses who testify under a grant of immunity and toward discrediting evidence that the government attained through lawful wiretaps. The government intended to introduce these types of evidence during the trial. Moreover, Mills has not demonstrated and, in fact, does not even argue that he suffered actual prejudice as a result of this alleged error. After reviewing the transcript of the colloquy between the prosecutor and the two prospective jurors, we conclude that the district court did not abuse its discretion in striking them for cause.

B. Admission of Evidence

Mills next argues that the district court improperly permitted the government to use certain newspaper articles seized from his business files and certain business records to cross-examine him during the trial. The articles described advance fee or up-front fee loan scams and warned the general public about them. One article had been sent to Mills by a broker who previously worked with him. Mills contends that the articles and the business records were more prejudicial than probative, contained inadmissible hearsay, and constituted improper prior bad acts evidence. "We review a district court's decision to admit evidence under the abuse of discretion standard." United States v. Saffeels, 982 F.2d 1199, 1207 (8th Cir.1992) (citing United States v. Mays, 822 F.2d 793, 797 (8th Cir.1987)).

After reviewing the transcript, we conclude that the district court did not abuse its discretion in permitting the government to use this evidence in cross-examining Mills. First, the evidence was relevant to prove that he intended to defraud the borrowers. Intent is an element of 18 U.S.C. § 1343. Throughout the trial, Mills denied that he had any intent to defraud. He also denied that his operation resembled that of the fraudulent schemes described in the newspaper articles seized from and admittedly kept in his business files. Because of these denials, we conclude that Mills invited the government on cross-examination to attempt to refute or to discredit him on this point. See United States v. Jacoby, 955 F.2d 1527, 1540 (11th Cir.1992) (internal citation omitted). We also conclude that the articles and the business records were direct evidence bearing on the intent element of the crime charged in this case.

Second, Federal Rules of Evidence 403 would not exclude the use of this evidence. Rule 403 excludes relevant evidence if its probative value is substantially outweighed by the danger of unfair prejudice. In this case, we conclude that the use of this evidence did not unfairly prejudice Mills, because it was Mills, while testifying during the trial, who initially read a portion of one of the newspaper articles into evidence. The government, therefore, was properly permitted to use the article to cross-examine Mills.

Third, the materials do not constitute inadmissible hearsay. The government did not offer the evidence to prove the truth of the matter asserted in the articles. See Fed.R.Evid. 801(c). Therefore, the district court properly permitted the government to use the evidence for the limited purpose of proving that Mills intended to defraud the borrowers.

Finally, Mills' argument that the material should have been excluded under Fed.R.Evid. 404(b) is misplaced. ² Rule 404(b) pertains to other acts committed by the defendant. In this case, the newspaper articles seized from Mills' business files did not describe prior acts committed by Mills. Instead, the articles described advance fee loan scams conducted by other confidence scheme artists around the country. Therefore, Rule 404(b) is by its terms inapplicable in this context.

C. Sentencing Guideline 2F1.1--Loss Calculation

Mills contends that the government at the time of sentencing did not prove either by clear and convincing evidence or by a preponderance of the evidence that Mills defrauded 71 victims out of more than $1,500,000. He argues, therefore, that the district court erred in finding that the amount of loss totalled $1,545,350. We disagree.

The government must prove the facts relied upon by the district court at the time of sentencing by a preponderance of the evidence. See United States v. Galloway, 976 F.2d 414, 428 (8th Cir.1992) (en banc) and United States v. Wise, 976 F.2d 393, 400 (8th Cir.1992) (en banc). Additionally, the district court is not required to determine the amount of loss with precision, but rather must make a reasonable estimate of the loss based on the available evidence. See U.S.S.G. § 2F1.1, comment. (n. 8) (Nov. 1991) (this estimate may be based on the approximate number of victims and an estimate of the average loss to each victim). After reviewing the record, we conclude that the government proved the losses to the 71 victims by a preponderance of the evidence. We also conclude that the district court did not clearly err in finding that the total amount of loss was $1,545,350. See United States v. Earles, 955 F.2d 1175, 1180 (8th Cir.1992) (the calculation of the amount of loss under U.S.S.G. § 2F1.1 is a factual question to be reviewed under the clearly erroneous standard).

Mills also contends that the district court incorrectly applied the sentencing guidelines in calculating the amount of loss pursuant to U.S.S.G. § 2F1.1 (Nov. 1991). The district court found the loss to total more than $1,500,000, but less than $2,500,000. This finding translated into a 12-level increase, which when added to a base offense level of six, resulted in an offense level of 18. See U.S.S.G. § 2F1.1(b)(1)(M) (Nov. 1991). This loss calculation was based on the total amount of commitment fees paid to Mills by the 71 victims of this fraudulent scheme. Mills contends that because he returned...