U.S. v. Oberhauser, CRIM 99-20(7) DWF/AJB.

• Decision Date: 04 April 2001
• Docket Number: No. CRIM 99-20(7) DWF/AJB.,CRIM 99-20(7) DWF/AJB.
• Citation: 142 F.Supp.2d 1118
• Parties: UNITED STATES of America, Plaintiff, v. Louis B. OBERHAUSER, Defendant.
• Court: U.S. District Court — District of Minnesota

142 F.Supp.2d 1118

UNITED STATES of America, Plaintiff, v. Louis B. OBERHAUSER, Defendant.

No. CRIM 99-20(7) DWF/AJB.

United States District Court, D. Minnesota.

April 4, 2001.

COPYRIGHT MATERIAL OMITTED

Lizabeth A. McKibben, Assistant United States Attorney, Minneapolis, MN, counsel for Plaintiff.

William J. Mauzy, Mauzy Law Office, Minneapolis, MN, counsel for Defendant.

ORDER AND MEMORANDUM

FRANK, District Judge.

The above-entitled matter is before the Court on Defendant Louis B. Oberhauser's motion for judgment of acquittal, pursuant to Rule 29(c) of the Federal Rules of Criminal Procedure, or, alternatively, for a new trial pursuant to Rule 33 of the Federal Rules of Criminal Procedure. The motions are opposed in all respects by the United States. Based upon the extensive written submissions and presentations of counsel, and the Court having reviewed the file in this matter and being otherwise duly advised in the premises, the Court hereby enters the following:

ORDER

1. Defendant Louis B. Oberhauser's motion for judgment of acquittal on Count 53 (money laundering in violation of 18 U.S.C. § 1956(a)(1)(A)(i)) (Doc. No. 333) is hereby GRANTED for the reasons set forth in the attached memorandum. The Court respectfully directs that judgment of acquittal with respect to Count 53 be entered consistent with the Court's ruling.

2. Defendant Louis B. Oberhauser's motion for judgment of acquittal on Count 59 (money laundering in violation of 1956(a)(1)(A)(i)) (Doc. No. 333) is hereby GRANTED for the reasons set forth in the attached memorandum. The Court respectfully directs that judgment of acquittal with respect to Count 59 be entered consistent with the Court's ruling.

3. Pursuant to Rule 29(d) of the Federal Rules of Criminal Procedure, Defendant Louis B. Oberhauser's motion for a new trial (Doc. No. 334) is CONDITIONALLY GRANTED in the event that the judgment of acquittal is vacated or otherwise reversed on appeal.

LET JUDGMENT BE ENTERED ACCORDINGLY.

MEMORANDUM

I. Introduction

The Defendant, Louis B. Oberhauser, was indicted for 66 federal crimes in a second superseding indictment by a United States Grand Jury. Defendant Oberhauser was tried with Co-Defendant Richard C. Gravatt in a trial lasting from September 8 to October 11, 2000. Pursuant to a jury verdict issued on October 18, 2000, Defendant Oberhauser was found guilty of two of the sixty-six charges, Counts 53 and 59.

Count 53 charged money laundering in violation of Title 18 U.S.C. § 1956(a)(1)(A)(i) involving a $160,000 wire transfer from the Group Resources, Inc. account at Sun Trust Bank into the Oberhauser & Neveaux Norwest Bank IOLTA trust account on August 28, 1996. Count 59 charged money laundering in violation of Title 18 U.S.C. § 1956(a)(1)(A)(i) involving a $160,000 wire transfer from the Oberhauser & Neveaux IOLTA trust account to ChildHelp on November 25, 1996. The Defendant was acquitted of all other counts in the indictment, including Count 1 (conspiracy to commit money laundering); Counts 2-15 (wire fraud); Counts 16-23 (mail fraud); Counts 24-29 (money laundering relating to the purchase of the Firststar Building); Counts 50-52, 54-58, 60-61 (money laundering); Count 62 (conspiracy to commit money laundering); Counts 63-69 (wire fraud relating to investor Achilles Buser); Counts 70-81 (money laundering); and Counts 82-86 (money laundering).

Being mindful of the dedicated jury that sat through six weeks of testimony and argument, and then deliberated for four days on a total of eighty-nine counts between two defendants, it is this Court's considered view that there is insufficient evidence to support the guilty verdict with respect to Counts 53 and 59 against Defendant Oberhauser.

II. Factual Background

Eight individuals were indicted in relation to the underlying circumstances of the above-entitled matter. Originally, the indictment charged Defendants Murray Evans, Richard Gravatt, Joe King, Richard King, Frank Taylor, and Scott Wallis. All parties were arrested except Richard Gravatt, who fled. A separate indictment also charged Defendants Joe King and Richard King in a related cash rental scheme. That case was tried before a jury and the undersigned in September 1999, resulting in convictions against both Defendants. Defendants Murray Evans and Scott Wallis pled guilty in the instant case, and Defendants John Dow and Frank Taylor pled guilty to related Informations charging tax evasion.

The indictment in the above-entitled matter was then superseded, adding Defendant Louis B. Oberhauser and additional charges concerning a subsequent conspiracy. Joe King and Richard King, subsequent to their convictions at trial, pled guilty to additional counts in the superseding indictment. Richard Gravatt was apprehended in the Los Angeles, California, area on or about December 10, 1999. As a result of his apprehension, the remaining Defendants, Richard Gravatt and Louis B. Oberhauser, were then tried before this Court and a jury during a six-week period of time in September and October, 2000. Defendant Richard Gravatt was convicted of 68 counts. Defendant Louis B. Oberhauser, as previously noted, was convicted of two counts.

Defendant Oberhauser was convicted of Count 53, a money laundering count concerning a $160,000 transfer into the Oberhauser & Neveaux IOLTA trust account in August 1996. On August 28, 1996, Richard King requested a transfer of $160,000 from a Group Resources, Inc., Sun Trust Bank Account in Cleveland, Tennessee, to the Oberhauser & Neveaux IOLTA trust account. With respect to Count 59, also money laundering, on November 25, 1996, $160,000 was transferred from the Oberhauser & Neveaux IOLTA trust account to a charitable organization known as ChildHelp.

For the benefit of his firm's client, G-3, Inc., Defendant Oberhauser set up the Oberhauser & Neveaux IOLTA trust account at Anchor Bank in Wayzata, Minnesota, on February 1, 1996. G-3 was an entity the directors of which included Defendants Murray Evans and Joe King. On February 5, 1996, Defendant Joe King requested that Defendant Oberhauser set up a trust account at Norwest Bank in place of the Anchor Bank account. Pursuant to Defendant Joe King's request, Defendant Oberhauser and his partner John Neveaux then set up an Oberhauser & Neveaux IOLTA trust account at Norwest Bank in Wayzata, Minnesota, on February 8, 1996, for the receipt and distribution of funds for their client, G-3, and its successor, K-7, Inc.

Also on February 8, 1996, Defendant Oberhauser sent Defendant Joe King a retainer letter stating, "I am very pleased that you have retained this firm to consult with you regarding corporate matters relating to G-3, Inc., and the distribution of funds." In the retainer agreement, Defendant Oberhauser states: "On behalf of G-3, Inc., I will accept wire transfers of funds into a designated depository account on G-3, Inc.'s behalf, and I will disburse these funds by check or wire transfer per written direction of Joe W. King or other parties properly authorized by corporate action and consented to in writing by a majority vote of the shareholders."

On February 12, 1996, Defendant Oberhauser faxed Defendant Joe King a memo regarding "instructions for wiring funds in [the] trust account," which contained information concerning the IOLTA trust account at Norwest Bank, Wayzata, Minnesota, including the bank's phone number, the trust account number, wiring instructions, and Barry Kelner and Rita Stevens as contact persons at Norwest Bank. G-3's directors then signed a corporate resolution providing that "the corporation desires to authorize a deposit of certain funds or instruments or other intangible property for the benefit of the corporation in the trust account of the law firm of Oberhauser & Neveaux ...." That corporate resolution authorized Defendant Joe King to direct that funds be deposited into the Oberhauser & Neveaux IOLTA trust account.

The Oberhauser & Neveaux IOLTA trust account at Norwest Bank in Wayzata, Minnesota, was primarily used by K-7, Inc. for the receipt of investor funds, rendering Oberhauser & Neveaux as an escrow agent. All Defendants, including Defendant Oberhauser, asserted throughout the trial that the investor funds were to be used for what they described as a legitimate T-Bill, or treasury bill, leasing program. The government maintained, from the inception of the indictment, that there was no proof of any legitimate or actual T-Bill leasing program. Based upon the evidence provided to the Court, it is the Court's view that there is no credible evidence to suggest that there was ever such a legitimate program or that any of the so-called documents supposedly verifying the program were authentic. Nonetheless, that was the purpose for which the IOLTA trust account was set up at Norwest Bank in Wayzata, Minnesota.

Between March 14, 1996 and October 28, 1996, 18 investors deposited a total of $3,511,000 into the trust account at Norwest Bank, Wayzata, Minnesota. These investor funds were to be placed in the promised leasing program. Each investor had a contract directly governing the terms and conditions for the use of these funds from the account.

In addition to the $3,511,000 in K-7 investor funds, the trust account also received four additional wire transfers, totaling $270,000: (1) from Group Resources, Inc., on August 28, 1996, for $160,000 (Count 53); (2) from P.L. Yang on May 19, 1997, for $60,000; (3) from Fargo Trust on December 11, 1997, for $25,000 (Count 85); and (4) from Cleveland Trust on December 11, 1997, for $25,000 (Count 86).

On October 17, 1996, Defendant Oberhauser transferred $600,000 to Adam Gaslowitz for an alleged "lease fee." On October 25, 1996, there was a $411,000 transfer out to K-7, Inc. for an alleged "partial set up fee." On October 29, 1996, there was a $2,400,000 transfer out to Tirzah Business Trust, which allegedly represented a John Dow Brokerage Commission. There was also a...