U.S. v. Svete

Citation521 F.3d 1302
Decision Date26 March 2008
Docket NumberNo. 05-13809.,05-13809.
PartiesUNITED STATES of America, Plaintiff-Appellee, v. David W. SVETE, Ron Girardot, Defendants-Appellants.
CourtU.S. Court of Appeals — Eleventh Circuit

Peter Goldberger, Ardmore, PA, E. Brian Lang (Court-Appointed), E. Brian Lang & Associates, Pensacola, FL, Michael S. Pasano, Zuckerman, Spaeder, Taylor & Evans, Miami, FL, for Defendants-Appellants.

Benjamin W. Beard, Pensacola, FL, E. Bryan Wilson, U.S. Atty., Tallahassee, FL, for U.S.

Appeals from the United States District Court for the Northern District of Florida.

Before DUBINA and KRAVITCH, Circuit Judges, and COOGLER,* District Judge.

COOGLER, District Judge:

After a six week jury trial, David W. Svete and Ron Girardot were convicted of conspiracy, mail fraud, money laundering, and interstate transportation of money obtained by fraud, all charges being related to their dealings with viaticals. They now appeal their convictions and present five issues for review. Perhaps the most significant issue is whether the current Eleventh Circuit pattern jury instruction for mail fraud, which omits the requirement of ordinary prudence by investors, is proper. The defendants also challenge the sufficiency of the evidence presented by the government and Svete alleges violations of Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963) and Giglio v. United States, 405 U.S. 150, 92 S.Ct. 763, 31 L.Ed.2d 104 (1972) based on inconsistencies between the trial and sentencing testimony of a government witness. Finally, Svete raises two sentencing issues.

Because the jury instruction seriously impaired the defendants' ability to conduct their defense on the substantive counts of mail fraud, we reverse as to those counts. We affirm as to all other issues raised by the defendants.

I. Background
A. Procedural History

Svete and Girardot were charged in a superseding indictment with conspiracy to violate the laws of the United States in violation of 18 U.S.C. § 371 (Count One); conspiracy to launder money in violation of 18 U.S.C. § 1956(h) (Count Two); mail fraud in violation of 18 U.S.C. § 1341 (Counts Three through Seven); and substantive violations of interstate transportation of money obtained by fraud in violation of 18 U.S.C. § 2314 (Counts Eight through Ten). The jury convicted Svete and Girardot of all counts. Thereafter, the district court sentenced Girardot to a term of imprisonment of 60 months as to Count One and 63 months as to Counts Two through Ten, to run concurrently with one another. In addition, Girardot was ordered to pay a special monetary assessment of $1,000, restitution in the amount of $100,722,605.34, and to serve a 3 year period of supervised release. Svete was sentenced to a term of imprisonment of 60 months as to Count One and 200 months as to Counts Two through Ten, to run concurrently with one another. Svete was also ordered to pay a special monetary assessment of $1,000, restitution in the amount of $100,722,605.34, a $21,000,000 forfeiture, and to serve a 3 year period of supervised release.

B. Facts1
1. Introduction

Viaticals are legitimate insurance products in all states, allowing patients ("viators") to sell the right to receive benefits under their life insurance policies for tax-free cash. The sale of viaticals is usually made to a provider company through a broker. The provider company, in turn, typically through a sales agent, finds independent purchasers to invest in the policies. Each purchaser (also referred to as "investor") buys the right to become a beneficiary of the viator's life insurance policy. Thereby, purchasers receive a high return on their investment if the viator dies within the time projected by the viatical settlement provider. However, investors risk a reduction of their return or a complete loss if the viator does not die within the time projected because the investor must continue to pay the premiums on the policy as they accrue or the policy will lapse.

Svete became involved with viaticals in 1997 when he incorporated LifeTime Capital, Inc. ("LCI") in Nevada as a provider company. He later incorporated Alexander Chase, d/b/a WSI, for the same purpose, as well as multiple additional businesses offering financial, office, marketing, and viatical services.2 According to trial testimony, Svete's control of these corporations was secreted, thus misleading investors and providing an avenue to launder money taken by fraud.

Svete's right hand man was Ron Girardot. Girardot first became employed with Alexander Chase, Svete's financial advisory company, in 1997 as an operations engineer responsible for processes and procedures. In April 1998, Girardot became the temporary President of LCI. From LCI, Girardot moved to another of Svete's companies, Sovereign Enterprises, as Vice President of Operations. Finally, in November 1999, Girardot moved to Svete's Blue Crest, an investment servicing company, as President. As alleged by the government, Girardot's role was to aid in defrauding investors and to launder the money taken by fraud.

During the course of trial, the government presented evidence that defendants defrauded viatical investors by intentionally misrepresenting: (1) life expectancies of viators; (2) the status of the life insurance contracts; and (3) the risks associated with the purchase of certain viatical contracts. During the time Svete's companies were buying viaticals and selling investments, not less than $101,811,873.88 was invested by at least 3,125 investors. Of that group, at least 1,351 were investors over the age of 65.

2. Evidence of Fraudulent Misrepresentations

Thirty-five witnesses testified during the course of the trial that their investment failed to mature when anticipated. Those investors had been told or provided marketing materials stating that their investment policies concerned terminally ill patients as determined by independent medical specialists who had access to the viators' complete medical records and doctors. This was inaccurate on many levels. Medical doctors were retained to review patient files and estimate life expectancies. However, complete medical records were not provided to those doctors. Instead, they only reviewed medical and laboratory summaries, and did not consult with the attending physicians. Some medical files were submitted for life expectancy review multiple times in an effort to shop for the life expectancy that matched the funded amount. Other times, viator information was never even presented to independent medical doctors for mortality reports. In those instances, Charme Austin, a medical underwriter for Svete, was instructed to create opinions on life expectancy herself and to forge the signatures of independent physicians on those mortality reports. At all times during this process, sales agents were prohibited from obtaining the actual medical information establishing life expectancies.

Additional evidence of fraud perpetuated on investors came in the form of testimony regarding altered contracts. Initial viatical settlement contracts reflected that the terminally ill status of the viator was determined by a physician's medical opinion. Nanette Zima,3 who served as President and CEO of LCI for about one year, testified that she was instructed by Svete to, along with Ron Girardot,4 alter pre-existing investor agreements to remove the terms "terminally ill" and "by a physician" without the knowledge or consent of investors.

Finally, investors were told that an independent investment servicing company maintained a premium reserve account for the purpose of underwriting the policies. In fact, the company was created and controlled5 by Svete and lacked sufficient funds to pay premiums on purchased policies as they came due for one year past the life expectancy established by a particular policy, as most of the investors' contracts required.

II. Discussion

Of the five issues presented for appeal, only two, the jury instruction issue6 and the sufficiency of the evidence issue, are attributed to both defendants. Only Svete asserts potential Brady and Giglio violations, and there exists no good cause to attribute those arguments to Girardot. See n. 6, supra. It is under this framework that we begin substantive review of the issues presented.

A. Sufficiency of the Evidence

We address the sufficiency of the evidence at the outset, as a finding of insufficient evidence would obviate any need to consider the alleged trial errors. See United States v. Smith, 459 F.3d 1276, 1286 (11th Cir.2006); United States v. Bobo, 419 F.3d 1264, 1268 (11th Cir.2005) (noting the Court's prudential rule "that requires the court to review sufficiency of the evidence claims raised by defendants, even if resolution on alternative grounds would otherwise dispose of the case"). We review the record for sufficiency of the evidence de novo in the light most favorable to the government. See United States v. Brown, 40 F.3d 1218, 1221 (11th Cir.1994) (citing United States v. Harris, 20 F.3d 445, 452 (11th Cir.1994), and United States v. Camargo-Vergara, 26 F.3d 1075, 1078 (11th Cir.1994)). For there to be sufficient evidence from which a reasonable jury could find guilt,

[i]t is not necessary that the evidence exclude every reasonable hypothesis of innocence or be wholly inconsistent with every conclusion except that of guilt, provided that a reasonable trier of fact could find that the evidence established guilt beyond a reasonable doubt. A jury is free to choose among the constructions of the evidence.

Brown, 40 F.3d at 1221 (citing Harris, 20 F.3d at 452). That is, where testimony may lead to one or more conclusions, it is for the jury to decide the outcome. See Harris, 20 F.3d at 452. If, on the other hand, the record reveals a lack of substantial evidence from which a fact-finder could find guilt beyond a reasonable doubt, we must reverse the defendant's conviction. See id.

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8 cases
  • United States v. Svete
    • United States
    • U.S. District Court — Northern District of Florida
    • March 11, 2014
    ...that Defendant's testimony along with other corroborative evidence was sufficient to support his convictions. United States v. Svete, 521 F.3d 1302, 1310 (11th Cir. 2008)3 (citing United States v. Brown, 53 F.3d 312, 314 (11th Cir. 1995) for the proposition that the jury was entitled to bel......
  • U.S. v. Svete
    • United States
    • U.S. Court of Appeals — Eleventh Circuit
    • February 2, 2009
    ...in United States v. Brown, 79 F.3d 1550 (11th Cir.1996), and ordered a new trial as to the counts of mail fraud. United States v. Svete, 521 F.3d 1302, 1310-11 (11th Cir.2008), vacated, 532 F.3d 1133 (11th Cir.2008). We granted rehearing en banc to determine whether to overrule our decision......
  • U.S. v. Ellisor
    • United States
    • U.S. Court of Appeals — Eleventh Circuit
    • April 7, 2008
    ...highly subjective elements: for example, the defendant's intent or knowledge." United States v. Svete, 521 F.3d 1302, 1309, 2008 WL 788407, 2008 U.S.App. LEXIS 6219, at *15-16 (11th Cir. Mar. 26, 2008) (quoting Brown, 53 F.3d at 315) (internal quotation marks omitted). Ellisor's testimony, ......
  • Moran v. Svete
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    • U.S. District Court — Southern District of Ohio
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    ...was secreted, thus misleading investors and providing an avenue to launder money taken by fraud.United States v. Svete, 521 F.3d 1302, 1305 (11th Cir.) (hereinafter "Svete I"), vacated, reh'g en banc granted, 532 F.3d 1133 (11th Cir. 2008), aff'd in part en banc, 556 F.3d 1157 (11th Cir.), ......
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