U.S. v. Sprick

• Decision Date: 14 November 2000
• Docket Number: No. 99-50941,99-50959,99-50941
• Citation: 233 F.3d 845
• Parties: (5th Cir. 2000) UNITED STATES OF AMERICA, Plaintiff-Appellee, v. MICHAEL ARLAN SPRICK, Defendant-Appellant
• Court: U.S. Court of Appeals — Fifth Circuit

Page 845

233 F.3d 845 (5th Cir. 2000)

UNITED STATES OF AMERICA, Plaintiff-Appellee, v. MICHAEL ARLAN SPRICK, Defendant-Appellant.

No. 99-50941, 99-50959.

IN THE UNITED STATES COURT OF APPEALS, FIFTH CIRCUIT

November 14, 2000

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Appeals from the United States District Court for the Western District of Texas

Before KING, Chief Judge, WIENER, Circuit Judge, and LYNN^*, District Judge.

WIENER, Circuit Judge:

In this prosecution for bank fraud, mail fraud, and money laundering, Defendant-Appellant Michael Arlan Sprick appeals the jury's verdict of guilty on one of six bank fraud counts, six of six mail fraud counts, and seven money laundering counts ---- one related to the bank fraud count of conviction and six related to the mail fraud counts of conviction. He contends that the evidence was legally insufficient to sustain his convictions for the one count of bank fraud under 18 U.S.C. § 1344(2) and one related count of money laundering under 18 U.S.C. § 1956, as well as the six counts of mail fraud under 18 U.S.C. § 1341 and six related counts of money laundering. He also asserts that the district court erred in (1) admitting evidence of a failed e-mail transmission, in violation of Federal Rule of Evidence 403, and (2) adopting the probation department's finding that the amount of money laundered exceeded $1,000,000.

We conclude that the district court did not abuse its discretion in admitting evidence of the failed e-mail transmission and did not commit clear error in adopting the probation department's finding that the amount laundered exceeded $1,000,000. Viewing all the evidence in the light most favorable to the jury's verdict, as we must, we find that the evidence was sufficient to support that verdict as to all charges against Sprick except the one count of bank fraud and the one count of money laundering related to the bank fraud. Therefore, we affirm in part and reverse in part Sprick's convictions based on the jury's verdict, and we affirm the rulings of the district court contested by Sprick.

I. Facts and Proceedings

In the mid-1980s, Sprick went into business as a financial advisor. His principal clients were three elderly widows: Mrs. Maurita Johnson, who entrusted him with $1,090,000; Mrs. Corrine Parker, who entrusted him with $800,000; and Mrs. Annie Hallford, who entrusted him with $70,000. Each entrusted funds to Sprick in the expectation that he would manage them for her benefit. To each victim it was a given that Sprick would not spend her funds to support his lavish lifestyle or otherwise for his personal benefit. Yet Sprick did just that, spending his investors' money on, among other things, a luxurious personal residence in Odessa, Texas.

At the time of trial, Mrs. Johnson was an 83 year-old widow who had suffered for many years from macular degeneration, an eye disease that causes progressive blindness. Because of her advancing age and deteriorating eyesight, Mrs. Johnson's accountant counseled her to engage a financial advisor to manage her money. As Mrs. Johnson was a long-time friend of Sprick's grandmother, he was eventually able to persuade her to entrust her life savings of roughly $1,000,000 to him. She later entrusted another $90,000 to him. According to Mrs. Johnson, she understood that Sprick was to manage her money for her benefit at all times; in fact, she instructed Sprick to invest only in "blue chip stocks."

Mrs. Johnson's eyesight continued to deteriorate, so she signed a power of attorney that gave Sprick authority to deal directly with her funds. She understood that he would do so only for the limited purposes of handling her investments, paying her bills, and eventually taking care of her funeral and burial. Mrs. Johnson did not read the power of attorney, even though she had the ability to do so, relying instead on Sprick's description of its contents. Sprick also informed Mrs. Johnson that she would not have to pay him any commissions out of her money. Don Copeland, a Special Agent with the Internal Revenue Service ("IRS") testified that nothing in the power of attorney gave Sprick the right to spend Mrs. Johnson's money on himself.

Sprick placed Mrs. Johnson's funds in an account with Fidelity Brokerage ("Fidelity") and set up an annuity contract for her with USG Annuity & Life Company ("USG"). Sprick listed the address for the USG contract as P.O. Box 14095, Odessa, Texas, which he had obtained in one of his "doing business as" names, "Southwest Senior Services." He also designated that entity as the beneficiary of the USG contract. In opening the annuity account with USG, Sprick listed his own mailing address as P.O. Box 14044, Odessa. Because the numbers of the two post office boxes were different, no "red flags" were raised in the eyes of USG. Two deposits totaling $198,000 were made into the USG account in the spring of 1993. In 1998, two withdrawal requests were purportedly made by Mrs. Johnson, and two checks payable to her ---- one for $49,000 and the other for $162,000 ---- were mailed by USG to the Southwest Senior Services address, P.O. Box 14095, in Odessa.

Mrs. Parker was 92 years old at the time of trial and testified by way of a video deposition. She signed a power of attorney naming Sprick as her agent, understanding that he would spend her money for her benefit only and not for his. Over the course of their business relationship, Sprick mailed a number of account statements to Mrs. Parker, reflecting that she had invested more than $1,000,000 with him, $145,000 of it with Fidelity Brokerage. He informed Mrs. Parker that his services would cost her nothing and that all commissions would come from the brokers. In all, she invested $800,000 with Sprick.

Mrs. Parker's nephew, James Standefer, became suspicious when Sprick refused to discuss Mrs. Parker's financial condition and when Standefer learned that Sprick had invested some of Mrs. Parker's money in a 10-year, low interest annuity that would not become payable until she was 98 years old and that charged a substantial penalty for early withdrawals. As a result, Standefer had Mrs. Parker withdraw the power of attorney that she had given to Sprick. When Standefer threatened to report Sprick's activities to the District Attorney, Sprick replied "I speculated and it didn't work out and I may do time for this . . ."

After Standefer subsequently demanded the return of his aunt's remaining balance of $160,000, Sprick wrote a check from his business account with Bluebonnet Savings Bank ("Bluebonnet").¹ This check initially bounced. Sprick then made an early withdrawal of funds from Mrs. Johnson's USG annuity account, incurring a substantial penalty. He did not inform Mrs. Johnson that he was withdrawing cash from this annuity, instead signing her name without her knowledge. After Sprick deposited $162,000 of Mrs. Johnson's proceeds into his own account in Bluebonnet, that bank called Mrs. Parker to inform her that the previously-bounced check would clear. IRS Agent Copeland testified that Sprick's financial records made it clear that he sent numerous financial statements containing false investment information regarding the Fidelity Brokerage account to Mrs. Johnson and Mrs. Parker.

Mrs. Annie Hallford is the grandmother of Sprick's ex-wife. Mrs. Hallford invested $38,000 with Sprick in 1986 (while he was still married to her granddaughter) but did not grant him a power of attorney. She understood that Sprick would invest her money for her benefit and would not spend it on himself. Mrs. Hallford did not give Sprick permission to spend $20,000 of her money in 1990 or $12,000 in 1996, as he did. These amounts represent two annuities that Sprick had purchased in Mrs. Hallford's name with Guarantee Reassurance Company ("Guarantee"). In 1990, a check for $20,000 was mailed from Guarantee to P.O. Box 14044 in Odessa, an address registered to Sprick. In 1996, a request to withdraw $12,000 from Mrs. Hallford's annuity contract was sent to Guarantee in Jacksonville, Florida via Federal Express from another of Sprick's business names, Southwest Financial Services, listing its address as 23 Amethyst Cove, Odessa, Texas, which was Sprick's home address at the time. The annuity contract nowhere specified that Sprick could receive checks on behalf of Mrs. Hallford. When the check was received, both Mrs. Hallford and Sprick endorsed it. Following Sprick's divorce from her granddaughter, Mrs. Hallford requested the return of her funds and received a check from Sprick, doing business as Southwest Senior Services, for $48,906.58.

The evidence reflects that Sprick never opened investment accounts in the names of either Mrs. Johnson or Mrs. Parker. (A document that appeared to be a contract between Mrs. Johnson and Fidelity was found during the search of Sprick's home, but it was determined to be a sham). On the other hand, Sprick did have an account with Fidelity in the name of Southwest Financial Services. Mrs. Parker's three checks made out to Fidelity ---- one for $62,000, another for $50,000, and a third for $30,000 ---- were deposited into Sprick's account, on which no interest of either Mrs. Parker or Mrs. Johnson was reflected.

Sprick opened a bank account at Bluebonnet in 1993 in the name of "Southwest Senior Services" by depositing a $500 check from his Southwest Financial Services account at Fidelity. He then deposited into his Bluebonnet account the proceeds of a $99,000 certificate of deposit ("C.D.") belonging to Mrs. Johnson, as well as a $1,000 check belonging to her. The funds in this account were used by Sprick to pay his own debts and to make investments in his own name. For example, in the spring of 1993 Sprick took more than $491,000 from Mrs. Johnson's C.D.s and $25,000 of her money that he had run through his Bluebonnet account and deposited all of it into his own Fidelity account. Later that year, he transferred $52,000 of...