United States v. Correia
| Decision Date | 28 November 2022 |
| Docket Number | 21-1823 |
| Citation | 55 F.4th 12 |
| Parties | UNITED STATES of America, Appellee, v. Jasiel F. CORREIA, II, Defendant, Appellant. |
| Court | U.S. Court of Appeals — First Circuit |
Daniel N. Marx, with whom William W. Fick and Fick & Marx LLP were on brief, for appellant.
Mark T. Quinlivan, Assistant United States Attorney, with whom Rachael S. Rollins, United States Attorney, was on brief, for appellee.
Before Lynch, Selya, and Howard, Circuit Judges.
At a youthful age, defendant-appellant Jasiel F. Correia, II, successfully persuaded investors to back his SnoOwl app. He then parlayed his work as an innovator and entrepreneur into a stunning electoral victory, winning office (at the age of twenty-three) as mayor of the city of Fall River, Massachusetts (the City). But the swiftness of the defendant's rise was matched by the swiftness of his fall: a federal grand jury indicted him on charges relating to his SnoOwl promotion, and a superseding indictment added charges relating to public corruption. The defendant did not seek a severance and, following an eighteen-day trial, he was convicted on most of the charges. The district court set aside some convictions, but let others stand and sentenced the defendant to serve seventy-two months in prison. The defendant now appeals. After careful consideration of a chiaroscuro record, we affirm.
We start with the relevant facts, recounting them "in the light most hospitable to the verdict, consistent with record support." United States v. Tkhilaishvili, 926 F.3d 1, 8 (1st Cir. 2019). We divide this discussion into three parts. First, we set out the facts supporting the defendant's convictions for wire fraud. Second, we set out the facts supporting his convictions under the Hobbs Act. Third, we trace the travel of the case.
In late 2012, while a college student, the defendant began putting together a plan to develop an app called SnoOwl. For help, he enlisted three people: his then-roommate, a friend from high school, and a software engineer. The defendant hoped that SnoOwl, when perfected, would enable consumers to find events, specials, and services being offered by businesses near them.
To realize this vision, though, seed money had to be obtained. The defendant assumed responsibility for courting potential investors. Over time, he persuaded at least five people to invest in the endeavor. All five testified at trial, but we focus the lens of our inquiry on two of them: Mark Eisenberg and Victor Martinez. Eisenberg was a business coach who had previously owned or operated firms in various industries. Martinez — a friend of Eisenberg's — ran a chain of pizza restaurants.
Eisenberg and Martinez first met the defendant on November 4, 2014. During that meeting, the defendant lauded the prospects of SnoOwl and asked them to invest $50,000 toward its development. As part of his pitch, the defendant told them about his background. Most relevant here, he described his previous experience "develop[ing] an app." That app — which the defendant had developed with a fellow student, Alec Mendes, while at Providence College — was called FindIt. Like SnoOwl, FindIt's purpose was to help consumers identify local businesses that were advertising specials and accepting coupons. FindIt earned money by charging businesses for advertisements — and over the entire span of its existence, FindIt generated only a few thousand dollars in revenue.
At their initial meeting, the defendant informed Eisenberg and Martinez that FindIt was "eventually sold to a group out of Cambridge." This unidentified group — as the defendant told it — then "turned around and sold [the app] to Facebook." Eisenberg recalled being "impress[ed]" by this feat, and he remembered that the defendant had indicated that he received money from FindIt's sale.
The defendant's account of FindIt's success was at odds with the tale told by the record. In point of fact, there was no evidence that FindIt was ever purchased by an outside group from Cambridge or elsewhere. To the contrary, Mendes testified that FindIt was abandoned and went offline. Around the same time, Mendes and the defendant agreed to divide FindIt's assets amongst themselves. The defendant received a payout of approximately $2,000 — but nothing in the record suggests that those funds derived from any sale of the app or its underlying source code.
Unaware of FindIt's ignominious ending, Eisenberg and Martinez "believe[d] [the defendant's] representations." Eisenberg testified unequivocally that he would not have invested in SnoOwl had he "known that there was no college app that was sold to people in Cambridge, who then sold it to Facebook."
The day after meeting with the two investors, the defendant sent them an email attaching, among other things, "an updated business plan." The business plan included information on SnoOwl's expenses — specifically, $6,750 per month for software, $179 per month for server space, and $8,000 for a legal-fee obligation. The business plan also represented that "[o]ther costs associated with running the day-to-day operation of SnoOwl are negligible," adding a caveat that "[f]uture expenses will include hiring new talent and contractors, providing livable salaries to employees, and cloud server space."
Eisenberg and Martinez each agreed to invest $25,000 in SnoOwl in exchange for a 3.5% equity stake. These details were confirmed by email and — to aid in formalizing the investments — the defendant emailed each of them an "investor agreement." Through the investor agreements, the defendant committed to (among other things) "not sell[ing], assign[ing], transfer[ring] or otherwise convey[ing] business assets ... owned, held by or owed to the Company ... except in the ordinary course of business, without the Investor's consent." The agreement further required SnoOwl to act responsibly "to protect the integrity of the company and the investment." Eisenberg signed the agreement, but the record is tenebrous as to whether Martinez actually signed. What is luminously clear, though, is that each man cut a check for $25,000 and delivered it to the defendant.
The defendant did not hesitate to spend the investors' money on personal expenses. He spent thousands of dollars on (among other things) car payments, casinos, hotel stays, transportation expenses, clothing, women's shoes, cologne, and student loans. He also used company funds in service of his political ambitions.
Although these expenditures were made outside the ordinary course of the company's business, the defendant never sought the investors' consent. Eisenberg testified that had he "known that investment money ... was going to" things like "cologne," "$700 shoes for [the defendant's] girlfriend," and "strip clubs, casinos, and other places of recreation that were not involved with the company," he would not have invested. Martinez, too, testified that he would "[a]bsolutely not" have invested had he been told that the defendant "was going to use investment money ... on expensive shoes, cologne, and many other personal items."
The defendant also convinced other individuals to invest in SnoOwl. Three such investors testified at trial, sounding many of the same themes as Eisenberg and Martinez. This testimony was reinforced by a substantial amount of documentary evidence. Taken as a whole, the documents showed that, from 2013 through 2015, the defendant solicited investments totaling $358,190. Of this sum, the defendant spent approximately $18,600 on "[c]lothing, health care products, jewelry, personal grooming and personal trainers"; $27,023 on "hotel expenses"; $25,121 on "dining expenses"; $31,780 on "transportation related expenses"; and $37,282 on "personal credit cards, student loans and a vehicle." He also spent thousands of company dollars on "entertainment expenses" such as movies, sightseeing, amusement parks, and golf. Few, if any, of these expenses were generated in the ordinary course of SnoOwl's business. An Internal Revenue Service (IRS) agent estimated that the defendant spent $228,654 from SnoOwl's accounts on "personal expenditures."
The second cache of facts relates to the defendant's tenure as the City's mayor. After winning election in 2015, the defendant assumed office in January of 2016. As mayor, the defendant enjoyed many powers — our concern here is primarily with his role in allowing marijuana vendors to open marijuana shops in the City.
Some background helps to lend perspective. When Massachusetts legalized medical marijuana in 2012 and recreational marijuana in 2016, it gave localities a place in the application process for prospective entrants into the market. As relevant here, between July of 2016 and August of 2018, the Commonwealth's laws and regulations required that an applicant obtain a letter of support or non-opposition (a non-opposition letter) from the municipality in which the applicant proposed to operate. See, e.g., 105 Mass. Code Regs. 725.100(B)(3)(f) (2016). In addition, an applicant needed to enter into a host community agreement with the municipality, see Mass. Gen. Laws Ann. ch. 94G, § 3 (West 2018) ; 935 Mass. Code Regs. 500.101(1)(a) (2018), which typically committed the business to paying up to three percent of its gross sales to the municipality. The Massachusetts Cannabis Control Commission required both a non-opposition letter and a host community agreement as preconditions to the issuance of a license to sell marijuana at retail. See 935 Mass. Code Regs. 500.101(1)(a) (2018).
As mayor, the defendant held sole responsibility and executive authority to issue non-opposition letters and approve host community agreements. See Fall River, Mass., Charter § C-3-2. Soon after he assumed office, a number of prospective vendors approached the City about opening marijuana businesses. We encapsulate below the experiences of four of those prospective vendors.
In 2016, David Brayton began trying to open a marijuana business in the City. His initial...
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