U.S. v. Oberhauser, No. 01-1812.

• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)
• Writing for the Court: Fagg
• Citation: 284 F.3d 827
• Parties: UNITED STATES of America, Appellant, v. Louis B. OBERHAUSER, Appellee.
• Docket Number: No. 01-1812.
• Decision Date: 04 April 2002

284 F.3d 827 UNITED STATES of America, Appellant,
v.
Louis B. OBERHAUSER, Appellee. No. 01-1812. United States Court of Appeals, Eighth Circuit. Submitted: February 12, 2002. Filed: April 4, 2002.

Page 828

COPYRIGHT MATERIAL OMITTED

Page 829

Lizabeth A. McKibben, Assistant U.S. Attorney, Minneapolis, MN, argued, for appellant.

William J. Mauzy, Minneapolis, MN, argued, for appellee.

Before McMILLIAN, FAGG, and RILEY, Circuit Judges.

FAGG, Circuit Judge.

Richard Gravatt, Joe King, Richard King, Murray Evans, Frank Taylor, and Scott Wallis were charged in an eighty-nine count indictment with conspiracy, wire fraud, mail fraud, money laundering, and conducting a continuing financial crime enterprise. The charges arose from their operation of a Treasury bill-leasing "ponzi" scheme through a corporation called K-7. Investors in the scheme lost over $11 million. Louis B. Oberhauser, the group's lawyer, held some of the invested funds in an attorney trust account designated for K-7 investment money, and a superseding indictment added him as a defendant. All the defendants except for Gravatt and Oberhauser pleaded guilty. At a joint trial, Gravatt was convicted on 68 counts and sentenced to 262 months in prison. The jury acquitted Oberhauser of 64 of 66 counts, but convicted him on two counts of money laundering under 18 U.S.C. § 1956(a)(1)(A)(i). The district court granted Oberhauser's motion for acquittal, and conditionally granted his alternative motion for a new trial. The Government appeals.

We must reinstate the jury's verdict "if, drawing all reasonable inferences in favor of the verdict, `there is an interpretation of the evidence that would allow a reasonable minded jury to find the defendant[] guilty beyond a reasonable doubt.'" United States v. Ervasti, 201 F.3d 1029, 1036 (8th Cir.2000) (quoting United States v. Vig, 167 F.3d 443, 447 (8th Cir.1999)). To convict Oberhauser of money laundering under 18 U.S.C. § 1956(a)(1)(A)(i), the Government was required to prove that Oberhauser, "engaged in financial transactions with the knowing use of the proceeds of illegal activities" and with the "intent to promote the carrying on" of unlawful activity. United States v. Jolivet, 224 F.3d 902, 909 (8th Cir.2000). The criminalized act under § 1956(a)(1)(A)(i) is the reinvestment of illegal proceeds rather than the concealment of those proceeds. Id.

The Government relies on the following trial evidence as proof of Oberhauser's guilt. Oberhauser's first contact with anyone involved in K-7 was in the spring of 1995 when Gravatt and Steven Cudlipp hired Oberhauser, a real estate and corporate attorney, to facilitate the purchase of a $2.8 million property. The realtor, who worked in the same building as Oberhauser, introduced Gravatt to Oberhauser. Unbeknowst to the realtor and Oberhauser, Gravatt had served time in prison for fraud. On behalf of his clients, Oberhauser incorporated Carlingford Management Services, which was to own the property. The Carlingford Foundation deposited $250,000 in earnest money, but after numerous delays, the earnest money was forfeited when Gravatt and Cudlipp did not pay the balance due. Gravatt explained to Oberhauser that he had a falling out with Cudlipp. In January 1996, Gravatt established a high finance company (the predecessor to K-7)

Page 830

for the purpose of performing trading programs organized by Gravatt. Oberhauser was retained on the company's behalf.

Gravatt's trading program was a "roll program" in which the company would supposedly trade $100 million in treasuries making a small percentage on every trade, which through a multiplication factor would yield a large income. Gravatt said the Treasury bills could not be leased until the company had $5.5 million in investment money. According to cash investment sheets provided to investors, the $5.5 million total investment would be used to lease $100,000,000 in Treasury bills, and trades on those bills would yield $2,000,000 per trade and $900,000 per trade to investors, with a weekly amount to investors of $3,600,000. Rental fees of $13,750,000 and a set up fee of $3,000,000 would be paid. For a participant investing $50,000 towards the $5.5 million, the total treasury amount would be $909,091, the yield per trade would be $18,182, the yield per trade to investor would be $8182, the weekly amount to the investor would be $28,459, and the net amount to the investor would be $1,166,818. At trial, the Government's expert witness testified the program's claims amounted to a preposterous 2000% return. To make the program attractive to employees and investors, profits from the trading program were to go to the charity ChildHelp.

On February 8, 1996 Oberhauser sent Joe King a retainer letter acknowledging Oberhauser's firm had been retained to consult with King about matters relating to the company and the distribution of funds. Oberhauser stated he would "accept wire transfers of funds into a designated depository account on [the company's] behalf, and [would] disburse the[] funds ... per written direction of Joe W. King or other parties properly authorized." Gravatt introduced Oberhauser to Taylor as the escrow attorney who was to receive the funds from the investors and hold them until he could "authenticate, verify and validate the treasuries," then release them for trading. Oberhauser drafted an escrow agreement, letter of authorization to act on the investor's behalf, and agreement of procedures. In April 1996, after Oberhauser helped incorporate K-7, Gravatt promised Oberhauser 1% of any deal if he helped arrange a standby letter of credit in the amounts of $9, 18, or 27 million. Oberhauser introduced K-7 to a bank in an effort to secure financing for them. In the spring of 1996, Scott Wallis joined K-7 as a consultant and was paid a weekly salary to bring investors to K-7. Wallis was...