U.S. v. Richards
| Decision Date | 09 February 2000 |
| Docket Number | No. 98-20441,98-20441 |
| Citation | 204 F.3d 177 |
| Parties | (5th Cir. 2000) UNITED STATES OF AMERICA, Plaintiff-Appellee, v. AL RICHARDS, KURT LATRASSE, AND ROGER BRAUGH, Defendants-Appellants |
| Court | U.S. Court of Appeals — Fifth Circuit |
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Appeal from the United States District Court for the Southern District of Texas
Before KING, Chief Judge, STEWART, Circuit Judge, and ROSENTHAL, District Judge.1.
Defendants appeal their convictions for their involvement in a purported investment scheme that took large sums of money from the investors and returned them little or nothing. The investors believed that their money went to purchase letters of credit, which defendants were to "roll," or repeatedly sell and repurchase, to European banks. The indictment alleged that the defendants took the money from the investors, but purchased no letters of credit and instead kept the money for themselves.
Al Richards appeals his convictions for conspiracy to commit wire and mail fraud, in violation of 18 U.S.C. 371; interstate transportation of stolen property, in violation of 18 U.S.C. 2314; and wire fraud, in violation of 18 U.S.C. 1343. Richards also appeals the district court's order that he pay restitution in the amount of $487,000. Roger Braugh and Kurt Latrasse appeal their convictions for conspiracy to commit wire fraud and mail fraud; interstate transportation of stolen property; wire fraud; and mail fraud, in violation of 18 U.S.C. 1341. Braugh also appeals the district court's order that he pay $504,500 in restitution. Finding ample evidence in the record to support the convictions and no basis for reversal, we affirm.
The superseding indictment charged all three defendants with conspiracy to commit mail and wire fraud (count 1), interstate transportation of stolen property (count 2); and wire fraud (count 3). The indictment charged Braugh and Latrasse with two additional counts of wire fraud (counts 4 and 5) and one count of mail fraud (count 6). The jury convicted Richards on all three counts and convicted Braugh and Latrasse on all six counts.
At trial, the government presented evidence as to how defendants induced participants to "invest" in the so-called roll program. Potential investors were told that their money would be pooled with that of other investors and used to buy letters of credit. The letters of credit would be "rolled" - sold, repurchased, and resold - to European banks frequently and repeatedly. Each "roll" would generate a large profit to be distributed among the investors, in proportion to their investment. The investors were told that their funds would be safe at all times, held either in an account at a nationally-known brokerage firm or invested with a "prime" or "top 50" international bank. Investors were also told that they would receive at least the return of their initial investment, with interest, and would likely make substantial profit. In fact, the defendants took the invested funds for their own use, bought no letters of credit, and, except for a small payment to one participant, returned no money to the investors.
Three investors testified. Bert Hayes, an Arkansas businessman, was introduced to the program by Al Richards in a telephone call. Richards outlined an investment opportunity, but refused to discuss the details until Hayes signed a noncircumvention, nondisclosure agreement. After Hayes signed the agreement, Richards suggested they meet in Dallas to discuss the potential investment. Hayes agreed.
At the Dallas meeting, Richards told Hayes that in the "roll program," the investors' funds would be pooled to buy a $10 million letter of credit from a "top 50 prime bank." The letter of credit would be "rolled" to different European banks. The investors would earn interest with each "roll." Richards told Hayes that the interest on the "rolls" would generate ten weekly payments of $50,000 each on a $ 250,000 investment. Richards told Hayes that his money would be kept in an interest-bearing account at the Shearson Lehman Brothers brokerage firm until used to buy the letter of credit. Richards assured Hayes that he would control the money until all the other funds necessary for the roll program were raised. If the roll program could not purchase a letter of credit, Richards would return Hayes's original investment, with ten percent interest.
Richards explained that he would not personally be involved in purchasing and selling the letters of credit. His "contacts," identified as Roger Braugh and Al Sellars, would handle the roll program transactions.
Hayes signed a written contract in August 1991. The contract identified Hayes and Gold Cloud Development Corporation as the parties to a "joint business proposition." The contract was signed by Hayes and by "Roger S. Braugh by Al Richards" as the chairperson of Gold Cloud Development.
The contract provided that Hayes would deposit his investment funds in a designated brokerage firm account on September 5, 1991. On the Monday following that date, Gold Cloud Development would purchase a "One Year Zero Interest Coupon Standby Letter of Credit with a $10,000,000.00 USD face value." Gold Cloud Development would "orchestrate the sale of the Standby Letter of Credit in the European or Japanese secondary markets based on an already existing contractual arrangement . . . ." Gold Cloud Development would wire Hayes his share of the profits from that sale, expected to be $50,000, to a bank Hayes would designate. "The original $ 10 Million USD principal would be reinvested on Monday each week for the purchase of a new Standby Letter of Credit to repeat the same weekly chain of events, for a period of no less than ten (10) transactions."
On September 6, 1991, Hayes sent a $ 250,000 check to a designated Shearson Lehman Brothers account for investment in the Gold Cloud Development roll program. On the same day, Richards signed and sent Hayes a "Business Proposal on Funding Commitment." This document set out Al Richards' plan to use GEI Associates, a company Richards owned and ran, to raise $10 million to buy the first letter of credit. The business proposal provided that if GEI Associates could not raise the money necessary to buy the first letter of credit, Hayes would receive his money back, with interest.
When Hayes sent in his $250,000 check, he told Richards he wanted to meet the individuals who would be handling the roll transactions. Richards arranged a meeting with Hayes and Roger Braugh and Al Sellars a few weeks later. At that meeting, Hayes asked Al Sellars if the investment was safe. Sellars, noting that Hayes was wearing a Mason pin, told Hayes that he was also a Mason and that the investment was "as safe as the Rock of Gibraltar." Sellars asked Braugh to "roll" the investment at least twice in the next week so that Hayes could see how the program worked.
After that meeting, Hayes understood Braugh to be in control of the roll program transactions. Hayes expected to be paid within a few weeks for the first roll transaction, set to occur the following week. Several weeks passed with no payments. Hayes began to question both Richards and Braugh about the program and about his money. In December 1991, Richard told Hayes that the initial arrangement was not working and proposed a different arrangement. Richards proposed to change the payment plan from ten weekly payments of $50,000 each to 42 weekly payments of $ 20,000 each. Hayes agreed and signed a revised contract. "Roger S Braugh by Al Richards" signed as the chairperson of Gold Cloud Development.
Early in 1992, Braugh introduced Hayes to Kurt Latrasse. Braugh identified Latrasse as an expert in the roll program. Latrasse told Hayes that his money was invested in England and "doing very well." In June 1992, Latrasse advised Hayes to cancel his contract with Richards and GEI Associates so that Hayes could deal directly with Braugh and Latrasse and avoid paying commissions to Richards. Hayes followed Latrasse's advice and, by letter to Richards dated June 12, 1992, canceled the contract with Richards and GEI Associates.
In August 1992, Hayes complained to Braugh that he still had not received any payments from his investment. Braugh expressed surprise and explained that he had sent Richards several checks intended for distribution to Hayes. Braugh sent Hayes photocopies of seven canceled checks, totaling $50,000, signed by Braugh and made out to Richards. The notation "Bert Hayes payment" appeared on the memorandum line of each check. Hayes telephoned Richards to ask why he had not sent Hayes the $50,000. Richards expressed surprise; he insisted that the checks were his own commissions, not Hayes's investment returns. Richards accused Braugh of lying to Hayes. During this time, Braugh sent Hayes a $15,000 check so that Hayes could pay the interest due on the loan he had taken out to fund his $ 250,000 investment in the roll program.
In September 1992, Hayes sent a fax message to Latrasse asking for an accounting and a status report on the investment. Hayes received no response. A few weeks later, Hayes sent Latrasse a second fax, again asking for an accounting. On October 5, 1992, Latrasse sent a fax, announcing that Gold Cloud Development had been able to purchase "the commitments" for the roll program in late November 1991. Latrasse continued:
Now, as to the future, we believe we will be able to return the original investment plus a reasonable return to you within this month. We would propose at that time to invest the net proceeds (after principal and interest on your loan has been satisfied) in a master collateral commitment. . . . [I]nasmuch as you have been patient as...
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