U.S. v. Simon

• Decision Date: 15 March 1988
• Docket Number: No. 86-5222,86-5222
• Citation: 839 F.2d 1461
• Parties: 25 Fed. R. Evid. Serv. 92 UNITED STATES of America, Plaintiff-Appellee, v. Lynne SIMON, Jean Martinez, Marilyn Jacobs, and Carol Lindenberg, Defendants-Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1461

839 F.2d 1461

25 Fed. R. Evid. Serv. 92

UNITED STATES of America, Plaintiff-Appellee, v. Lynne SIMON, Jean Martinez, Marilyn Jacobs, and Carol Lindenberg, Defendants-Appellants.

No. 86-5222.

United States Court of Appeals Eleventh Circuit.

March 15, 1988.

Milton E. Grusmark, North Miami, Fla., for Simon.

Sheryl J. Lowenthal, Coral Gables, Fla., for Martinez.

Robert Kalter, North Miami, Fla., for Jacobs.

William A. Meadows, Jr., South Miami, Fla., for Lindenberg.

Leon B. Kellner, U.S. Atty., Linda Collins-Hertz, Laura Wean Bonn, Andrea M. Simonton, David O. Leiwant, Asst. U.S. Attys., Miami, Fla., for U.S.

Appeal from the United States District Court for the Southern District of Florida.

Before JOHNSON and EDMONDSON, Circuit Judges, and HOFFMAN ^*, Senior District Judge.

WALTER E. HOFFMAN, Senior District Judge:

Appellants were involved in a boiler room operation in which they sold oil and gas leases. The appellants made representations by mail and over the phone concerning the leases. These representations usually came from scripts prepared by the appellants' supervisors, but often the appellants made representations on their own initiative. The United States Postal Service discovered that appellants' representations were false and that the boiler room operation was fraudulent. Consequently, the government indicted, inter alia, appellant salespersons on conspiracy and fraud charges under 18 U.S.C. sections 1341 and 1343.

After six weeks of trial, a jury returned guilty verdicts against all four appellants on both mail or wire fraud and conspiracy charges. All four appellants appeal the district court's refusal to grant a motion for judgment of acquittal on the ground that the evidence at trial did not show that the appellants intended to defraud. Three appellants appeal the admission into trial evidence of prior similar acts. Two appellants appeal the district court's refusal to grant their severance motions.

FACTS

In September of 1982 the United States Department of Interior, Bureau of Land Management (BLM) made available lands for oil and gas leasing in the Denali area of Alaska. The leases were for ten years at a cost of one dollar per acre plus a onetime $75 filing fee. The minimum acreage available for leasing when the BLM opened the Denali area was 640 acres which the BLM increased to 2,560 acres in 1985. National Land Service, a private company, leased large parcels from the BLM and later sold some of its leases to Alaska Oil Leases (Alaska Oil), a partnership organized in August of 1983 by William Martin, Larry Waxman, Harvey Ganz and Michael Bonomo. The business of Alaska Oil was to sell oil and gas leases to the public through telephone solicitation. After purchasing leases from the National Land Service for $50 per acre, Alaska Oil sold the leases for $250 to $300 per acre. ¹ Of course, the challenge facing the partners at Alaska Oil was finding customers willing to pay between $250 and $300 per acre for leases worth about one dollar per acre. To accomplish this feat, Alaska Oil hired a staff of experienced telephone salespersons. The partners at Alaska Oil supplied the sales staff with the names and phone numbers of prospective customers along with prepared "scripts" from which the salespersons were to make their presentation and answer any customer objections.

The initial contact with the potential customer was dubbed the "front call." Its purpose was to explain the benefits of the investment, create interest on the part of the customer, and find out how much money the customer had available to invest. During the front call, salespersons told customers that, if they bought a lease from Alaska Oil, within six months the customer could sell the lease to an oil company at a large profit. According to Alaska Oil partner Harvey Ganz, the government's chief witness, the leases were never sold to any oil company. Furthermore, Ganz testified that the partners at Alaska Oil had no reason to believe oil companies would be interested in leases sold by Alaska Oil.

Following the initial contact, the salespersons sent a brochure to interested customers. On the cover of the brochure is a picture of an oil rig, along with the logos of several major oil companies. Ganz testified that Alaska Oil designed the cover to give the partnership an "aura of legitimacy" by creating the false impression that Alaska Oil was somehow associated with these companies. Included with the brochure were copies of articles clipped from nationally recognized publications. These articles refer to the vast oil potential of Alaska in Prudhoe Bay. According to Ganz, the articles were intended to convey the concededly false impression that the Denali Basin had the same oil producing potential as Prudhoe Bay.

The salespersons recontacted potential customers seven to ten days after the customers received this brochure. The second contact was known as the "drive call." Like the front call, salespersons made the drive call from a script. The script for the second call stated that Alaska Oil was releasing "the most valuable leases in [its] inventory," when in fact, as the record makes clear, none of the leases were valuable, and none were of greater value than any other. The drive script also stated that the question was not whether there was oil and gas on Alaska Oil's land, but only a question of how much. The script further stated that exploration for the untapped oil should begin within six to eight months. Testifying for the government, Ganz stated that the partners at Alaska Oil had no idea when oil companies would begin exploration, and had no reason to expect such exploration. Ganz testified to numerous other false or misleading representations in the drive script which were intended to convey the impression that oil companies were spending billions of dollars exploring lands in the Denali Basin, and were trying to control the land Alaska Oil was selling.

Alaska Oil's sophisticated sales operation was not novel. Prior to forming Alaska Oil, all four partners worked at another telephone sales room which operated under the names of U.S. Oil and Gas, Eagle Oil and Stratford Company. These companies provided customers a chance to win an oil lease by selling them the right to participate in a lottery program offered by the federal government. The same person owned all three companies and the record suggests that the three were essentially one business operation. In an attempt to secure experienced sales personnel, the partners at Alaska Oil hired former employees of U.S. Oil and Gas, Eagle Oil and Stratford Company (hereafter U.S. Oil) to market their leases. All four appellants were previously employed with one of these "three" companies.

In addition to hiring the same salespersons, Alaska Oil used the same sales techniques that were used at U.S. Oil. Specifically, salespersons at U.S. Oil, like those at Alaska Oil, were given names of potential customers on lead cards. The sales approach involved making multiple telephone calls to these potential customers. Scripts were written for salespersons to use in making these calls. Some of the scripts used by Alaska Oil salespersons were taken from the U.S. Oil operation and modified by the partners at Alaska Oil to fit the new program. When the partners formed Alaska Oil, the government had already begun investigating the U.S. Oil operation. ² Shortly after Alaska Oil began marketing leases, all four partners were indicted for their activities at U.S. Oil. The record shows that the partners assured the appellants that Alaska Oil was a legitimate organization free from any illegalities that might plague any former boiler room operation with which they were involved.

Of course, as postal authorities discovered, Alaska Oil was just as fraudulent as the earlier operations. Through informants, the Postal Service planted "lead cards" in Alaska Oil's files. Eventually, a salesperson at Alaska Oil contacted a postal inspector, assuming he was a potential customer. The inspector recorded several calls from Alaska Oil. Subsequently, and apparently on the basis of the recorded calls, the Postal Service obtained a warrant and searched Alaska Oil's premises, seizing certain business records. In March of 1984 the government closed Alaska Oil and indicted fourteen persons including the partners Harvey Ganz and Michael Bonomo on mail and wire fraud and conspiracy charges. Also included in the fourteen persons indicted were appellant salespersons Lynne Simon, Jean Martinez, Carol Lindenberg and Marilyn Jacobs.

After six weeks of trial, a jury returned guilty verdicts against appellant salespersons on both conspiracy and fraud charges. ³ In this appeal, all four appellants challenge the sufficiency of evidence at trial to show intent to defraud; appellants Simon, Martinez and Lindenberg challenge the admission into trial evidence of their employment with U.S. Oil; appellants Lindenberg and Jacobs challenge the trial judge's refusal to grant their motion for severance.

I. SUFFICIENCY OF THE EVIDENCE

The jury below convicted each appellant on both conspiracy and mail or wire fraud charges. When reviewing verdicts challenged on a sufficiency of the evidence basis we must keep in mind the proper standard. We must view the evidence in a light most favorable to the government, drawing all inferences and resolving all credibility choices to support the verdict. Glasser v. United States, 315 U.S. 60, 62 S.Ct. 457, 86 L.Ed. 680 (1942); United States v. Plotke, 725 F.2d 1303, 1306 (11th Cir.), cert. denied, 469 U.S. 843, 105 S.Ct. 151, 83 L.Ed.2d 89 (1984). To reverse convictions, we must find that reasonable minds could not remove all reasonable doubt as to the defendants' guilt. United States v. McCrary, 699 F.2d 1308, 1311-12 (11th Cir.1983). Upon careful examination of the record below, we find the evidence sufficient to support the convictions.

A. Fraud Charges

The indictment...