U.S. v. Stouffer

• Decision Date: 16 March 1993
• Docket Number: No. 91-6133,91-6133
• Citation: 986 F.2d 916
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Robert Earl STOUFFER, and James Dale Atchley, Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 916

986 F.2d 916

UNITED STATES of America, Plaintiff-Appellee, v. Robert Earl STOUFFER, and James Dale Atchley, Defendants-Appellants.

No. 91-6133.

United States Court of Appeals, Fifth Circuit.

March 16, 1993.

Rehearing and Rehearing En Banc

Denied April 29, 1993.

David Cunningham, Houston, TX, for Atchley.

Jeffery Babcock, Paula Offenhauser, Asst. U.S. Attys., Ronald G. Woods, U.S. Atty., Houston, TX, for U.S.

Appeals from the United States District Court for the Southern District of Texas.

Before REAVLEY, SMITH, and EMILIO M. GARZA, Circuit Judges.

EMILIO M. GARZA, Circuit Judge:

Raising a variety of challenges, Robert Stouffer and James Atchley appeal their convictions and sentences for aiding and abetting the following crimes: the commission of mail fraud, in violation of 18 U.S.C. §§ 2, 1341; the commission of wire fraud, in violation of 18 U.S.C. §§ 2, 1343; and the interstate transportation of stolen property, in violation of 18 U.S.C. §§ 2, 2314. Finding no grounds for reversal, we affirm.

I

Stouffer and Atchley's convictions arose from a fraudulent investment scheme involving their corporation, First United Trust Company ("FUTCO"). ¹ FUTCO's corporate purpose was to solicit and invest assets of individual investors.

FUTCO's accounts were varied, but only two were the focus of the indictment: (1) the retirement fund account; and (2) the daily income trust account ("DITA"). The retirement fund account consisted primarily of self-directed individual retirement accounts ("IRAs"). ² The DITA, as represented by the defendants, was to be akin to a bank account, whose funds would be placed in highly liquid investments including certificates of deposit, money market accounts, and Eurodollars. The monies deposited in the DITA were also to be available for withdrawal at any time. The DITA was FUTCO's financial reservoir, as it contained all the monies waiting to be directed, ³ interest and dividend payments from self-directed accounts, and matured investments.

Rather than investing the DITA funds in highly liquid accounts, Stouffer and Atchley used the DITA funds to pay for extravagant operating expenses, including: (1) salary bonuses to themselves; (2) four airplanes; and (3) a townhouse in Dallas, together with extensive personal expenditures purportedly connected to the maintenance of that townhouse. Stouffer and Atchley also invested the DITA funds on speculative real estate transactions.

In 1985, the Texas Banking Department ("TBD") examined the records of FUTCO, and issued a report expressing concern over, inter alia, the conflict between Atchley's position as CEO at both Sunwealth and the banks where FUTCO invested monies, the absence of any clear corporate policies and structure at FUTCO, and the absence of any separation between FUTCO's trust and operating accounts. Atchley subsequently resigned as CEO of Sunwealth, and became a consultant to FUTCO.

In December 1987, the TBD ordered Atchley to sever all ties with FUTCO, and placed the company under the active supervision of one of its agents. Shortly thereafter the State Banking Commissioner ordered that FUTCO cease doing business because of its inability to meet a withdrawal demand. FUTCO subsequently went into receivership, and liquidation commenced. In late 1988, the TBD again examined FUTCO, and discovered that the DITA funds had been used to fund extravagant operating expenses and speculative real estate ventures.

Stouffer and Atchley were subsequently charged in a fifteen-count indictment with: (1) aiding and abetting the commission of mail fraud (Counts 1-8), in violation of 18 U.S.C. §§ 2, 1341 (1988); (2) aiding and abetting the commission of wire fraud (Counts 9-11), in violation of 18 U.S.C. §§ 2, 1343 (1988); and (3) aiding and abetting in the interstate transportation of stolen checks (Counts 12-15), in violation of 18 U.S.C. §§ 2, 2314. Before trial, the district court denied Stouffer's motion for severance.

Stouffer and Atchley were convicted on all counts of the indictment. Stouffer was sentenced to forty-six months imprisonment on each of counts 8 and 15, such terms to run concurrently, and sixty months imprisonment on each of counts 1-7 and 9-14, such terms to run concurrently with each other and with the terms imposed for counts 8 and 15. Atchley was sentenced to sixty months imprisonment on each count, such terms to run concurrently. In addition, both men were sentenced to three years of supervised release on counts 8 and 15, such terms to run concurrently, and were held jointly and severally liable to pay restitution in the amount of $7.5 million to the Texas Banking Department.

On appeal, Stouffer contends that the district court: (1) abused its discretion by admitting certain evidence; (2) erred in instructing the jury; (3) erred in determining his base offense level; (4) erred in failing to resolve disputed issues of fact for sentencing purposes, pursuant to Fed.R.Crim.P. 32; and (5) erred in ordering restitution for all losses caused by the scheme to defraud. In addition, Stouffer argues that insufficient evidence supports his conviction.

Atchley contends on appeal that the district court: (1) abused its discretion by denying his motion for severance; (2) failed to comply with Fed.R.Crim.P. 32; (3) erred in calculating his base offense level; (4) erred in departing upward from the sentencing guidelines; and (5) erred in ordering restitution for all losses caused by the scheme to defraud. Atchley also argues that insufficient evidence supports his conviction. ⁴

II

A

Stouffer and Atchley both contend that insufficient evidence supports their convictions. In assessing a challenge to the sufficiency of the evidence, we must consider the evidence in the light most favorable to the verdict and must afford the government the benefit of all reasonable inferences and credibility choices. United States v. Ayala, 887 F.2d 62, 67 (5th Cir.1989). The evidence is sufficient if a rational trier of fact could have found the essential elements of the offense beyond a reasonable doubt based upon the evidence presented at trial. Id. Stouffer and Atchley specifically claim that the government failed to prove that: (1) they possessed the requisite intent to harm investors; and (2) stolen checks were transported in interstate commerce.

(1)

To convict Stouffer and Atchley of mail, wire, and travel fraud, the government had to prove, inter alia, that they possessed a fraudulent intent. See United States v. St. Gelais, 952 F.2d 90, 95 (5th Cir.1992) (holding that convictions under the mail and wire fraud statutes require a showing of fraudulent intent); United States v. Starr, 816 F.2d 94, 98 (2d Cir.1987) (same); United States v. Bryant, 770 F.2d 1283, 1288 (5th Cir.1985) (holding that conviction under statute proscribing the interstate transportation of stolen goods requires a showing of fraudulent intent), cert. denied, 475 U.S. 1030, 106 S.Ct. 1235, 89 L.Ed.2d 343 (1986). ⁵ The element of fraudulent intent, in turn, requires a showing that defendants contemplated or intended some harm to the property rights of their victims. See St. Gelais, 952 F.2d at 95 ("Only a showing of intended harm will satisfy the element of fraudulent intent." (quoting Starr, 816 F.2d at 98)). Stouffer and Atchley contend on several grounds that the government failed to prove that they possessed the intent to harm investors.

Stouffer and Atchley first contend that they lacked the requisite intent to harm investors because of their good faith reliance upon the authority of the TBD after it assumed control in December 1987. See Brief for Stouffer at 26-28; Brief for Atchley at 18-23. The record indicates, however, that Stouffer and Atchley did not notify the state banking officials that they were providing fraudulent information to prospective FUTCO clients, see Record on Appeal, vol. 24, at 2069, and that the state banking officials did not advise Stouffer or Atchley to do so. See id. at 2055. Therefore, Stouffer and Atchley did not rely upon the authority of the TBD, and we find the good faith defense inapplicable.

Second, Atchley maintains that his removal from FUTCO in December 1987 constituted a withdrawal from the scheme to defraud, thereby negating any intent to harm investors. See Brief for Atchley at 19. We disagree. Withdrawal from a joint criminal enterprise, such as a scheme to defraud, requires that the proponent show that he affirmatively took actions inconsistent with the object of the enterprise, and communicated his intent to withdraw in a manner reasonably calculated to reach his cohorts. United States v. United States Gypsum Co., 438 U.S. 422, 464-65, 98 S.Ct. 2864, 2887, 57 L.Ed.2d 854 (1978); see United States v. Martino, 648 F.2d 367, 405 (5th Cir.1981) (applying withdrawal defense to scheme to defraud). Because Atchley can only show that he was forcibly removed from FUTCO by government authorities, he cannot prove that he took an affirmative action inconsistent with the scheme to defraud. Cf. United States v. Branch, 850 F.2d 1080, 1082-83 (5th Cir.1988) (holding that the arrest of a party involved in a conspiracy does not constitute an affirmative showing of withdrawal or abandonment), cert. denied, 488 U.S. 1018, 109 S.Ct. 816, 102 L.Ed.2d 806 (1989). Therefore, Atchley cannot show that he did not possess the requisite intent to harm investors after his removal from FUTCO. See Martino, 648 F.2d at 405 (holding that participant in scheme to defraud "can disclaim responsibility for acts of his co-schemers only if he undertakes some affirmative act of withdrawal").

Lastly, Stouffer argues that he did not intend to harm FUTCO's investors because of his belief that FUTCO's corporate charter authorized investments in all types of ventures. See Brief for Stouffer at 23-26. This argument is without merit. The evidence at trial established that Stouffer: (a) instructed employees to misrepresent to clients that DITA funds...