United States v. Hansen

• Citation: 791 F.3d 863
• Decision Date: 30 June 2015
• Docket Number: No. 14–2188.,14–2188.
• Parties: UNITED STATES of America, Plaintiff–Appellee v. Randal Kent HANSEN, Defendant–Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

791 F.3d 863

UNITED STATES of America, Plaintiff–Appellee

v.Randal Kent HANSEN, Defendant–Appellant.

No. 14–2188.

United States Court of Appeals, Eighth Circuit.

Submitted: Feb. 12, 2015.

Filed: June 30, 2015.

Rehearing and Rehearing En Banc Denied Aug. 6, 2015.

Mark K. McCulloch, argued, of Winter Park, FL, (Andrew B. Greenlee, on the brief, of Sanford, FL) for appellant.

Jeffrey C. Clapper, AUSA, argued, of Sioux Falls, SD, for appellee.

Before GRUENDER, SHEPHERD, and KELLY, Circuit Judges.

Opinion

SHEPHERD, Circuit Judge.

A jury convicted Randal Kent Hansen of mail fraud, wire fraud, and conspiracy to commit mail fraud and wire fraud, as a result of actions Hansen took while operating a hedge fund that cost its investors millions of dollars when it collapsed in 2011. The district court¹ sentenced Hansen to 108 months imprisonment and ordered him to pay over $17 million in restitution. Hansen appeals his conviction, challenging the district court's (1) denial of his motion for judgment of acquittal, (2) giving of a willful blindness instruction, and (3) instruction on conspiracy. We affirm.

I. Background

In reviewing the denial of Hansen's motion for judgment of acquittal and the giving of a willful blindness instruction, we view the evidence and all reasonable inferences supported by that evidence in the light most favorable to the government.See United States v. Foster, 740 F.3d 1202, 1205 (8th Cir.) (motion for judgment of acquittal), cert. denied, ––– U.S. ––––, 134 S.Ct. 2714, ––– L.Ed.2d –––– (2014) ; United States v. Florez, 368 F.3d 1042, 1044 (8th Cir.2004) (willful blindness instruction). Randal Kent Hansen is a farmer from South Dakota who gained investment experience by investing his own money and by serving for several years as a trust officer at a bank. At some point during the 1990s, Hansen met a stock broker named Anthony Johnson and the two developed a rapport. In 2003, Johnson offered Hansen the opportunity to invest in Hudson Capital Partners (the “Hudson Fund”), a hedge fund Johnson ran with Ward Onsa and Vincent Puma. Hansen invested in the Hudson Fund and then continued investing in other funds with Johnson, Onsa, and Puma. Johnson, Onsa, and Puma eventually proposed creating a new fund with Hansen as their co-partner. Hansen agreed.

After several years of this arrangement, Hansen and Johnson decided to create yet another hedge fund. In 2007, they formed a limited partnership named RAHFCO Funds, LP, short for Randy and Anthony's Hedge Fund Company. Hansen served as RAHFCO's general partner. As the general partner, he retained ultimate control over all of RAHFCO's investment activities. Once RAHFCO became operational, however, Hansen delegated responsibility for executing RAHFCO's trades to the Hudson Fund, RAHFCO's sub-advisor.² Thus while Hansen retained control over RAHFCO's investing, in practice, Onsa and Puma, through the Hudson Fund, executed RAHFCO's trades.

In his role as general partner, Hansen made numerous misrepresentations about RAHFCO to investors. Hansen worked with Sadis & Goldberg, a financial services law firm, to create a private placement memorandum (“PPM”) to help solicit investments. The PPM described RAHFCO as having a conservative investing strategy. It stated RAHFCO generally would be able to satisfy withdrawal requests. And it assured investors RAHFCO would receive regular audits. All of these representations proved untrue.

Hansen made other false statements directly to investors. For example, Hansen elaborated on the fund's investing strategy, explaining it would place 95% of investors' money in low-risk treasuries and only 5% in higher-risk options. He reiterated that the fund would honor withdrawal requests.

And at one point he assured an investor that RAHFCO was covered by the Securities Investor Protection Corporation (“SIPC”), which he explained was like the Federal Deposit Insurance Company but for securities. None of these statements was true.

Throughout RAHFCO's existence, moreover, Hansen sent investors quarterly earnings statements, which he had prepared, that falsely inflated the fund's performance. The statements showed the fund performing well even as it lost all its money. Hansen testified he was unaware the quarterly earnings statements were false because he relied on Onsa and Johnson to provide him the numbers and never confirmed the numbers himself. The quarterly earnings statements also falsely stated they were “Presented by SFG Accounting.” While Hansen hired SFG Accounting to do some work for RAHFCO, it did not prepare the quarterly earnings statements and had no knowledge Hansen used its name.

Hansen additionally assured investors, as the PPM had done, that RAHFCO would be audited regularly. However, no audits took place. Hansen hired the accounting firm Spicer Jeffries to conduct an audit in 2007, but Spicer Jeffries ceased its audit after Hansen refused to authorize Spicer Jeffries to obtain a brokerage statement confirming that RAHFCO had actually made the investments it reported it had. When Sadis & Goldberg learned that Spicer Jeffries had discontinued its audit, the law firm withdrew from its representation of RAHFCO. Hansen never informed investors that Spicer Jeffries ceased its audit or that Sadis & Goldberg withdrew its representation. Nor did he attempt to find another auditor.

Hansen testified that he became concerned about RAHFCO's lack of transparency after Sadis & Goldberg withdrew as counsel. He visited Onsa, who had been executing RAHFCO's trades, to ease his concerns. Although Onsa showed Hansen a trading account that contained $25 million, Onsa never confirmed any of the fund's particular investments for Hansen. Hansen did not press Onsa for more information.

Another area of concern for RAHFCO was that Johnson was charged in 2007 with securities fraud in relation to another investment company. Johnson spoke with Hansen the day after the arrest and informed Hansen he had been arrested for securities fraud. Hansen did not inform investors of Johnson's charges. Similarly, Onsa was sued civilly for fraudulent securities trading in 2009. Although Hansen knew of this suit, he did not inquire further and did not notify investors of the issue.

RAHFCO investors began to withdraw their money from the fund in 2008 as the economy declined. Although the fund honored the requests at first, it started experiencing liquidity problems in early 2009. These problems escalated later in 2009 when a group of investors learned about Onsa's legal troubles. Hansen testified that RAHFCO's liquidity problems signaled to him that the fund had deviated from its purported investing strategy.

By 2010, RAHFCO was having great difficulty satisfying its withdrawal requests. Around that time, Hansen began depositing money into RAHFCO's checking account. The amounts of Hansen's deposits corresponded with the amounts RAHFCO was paying investors to satisfy withdrawal requests. In one instance, for example, RAHFCO wrote an investor a check for $129,000 when the fund did not have enough money in its checking account to cover that amount. A few days later, however, Hansen deposited $140,000 from his personal account into RAHFCO's checking account. Hansen claimed his deposits were legitimate investments in RAHFCO and denied he deposited money to pay off investors. Yet, on one occasion, Hansen paid $300,000 from his personal account directly to an investor who wished to withdraw from the fund. Further, in 2010, Johnson convinced a professional basketball player to invest $1.7 million in RAHFCO. Instead of investing the player's money, however, RAHFCO used the money to satisfy other investors' withdrawal requests. Hansen claimed he had no knowledge of this diversion.

By May 2011, RAHFCO had collapsed and Hansen was forced to inform investors that the fund had lost all their money and “that for some time, the earnings figures in our statements have been inaccurate.” That statement was true.

A grand jury indicted Hansen on charges of mail fraud, wire fraud, and conspiracy to commit mail fraud and wire fraud, in violation of 18 U.S.C. §§ 1341, 1343, and 1349. The case proceeded to a trial, where Hansen argued he was innocent of fraud because he did not know his misstatements were false when he made them. He claimed he was unaware of RAHFCO's fraud and that he had been duped by Johnson, Onsa, and Puma, just like every other investor. The jury found Hansen guilty on all counts and the district court sentenced him to 108 months imprisonment with 3 years supervised release and ordered him to pay over $17 million restitution to 75 victims. Hansen appeals his conviction.

II. Discussion

A. Motion for Judgment of Acquittal

We first address Hansen's argument that the district court erred in denying his motion for judgment of acquittal. We review this denial de novo, “ ‘view[ing] the evidence in the light most favorable to the guilty verdict, [and] granting all reasonable inferences that are supported by that evidence.’ ” United States v. Foster, 740 F.3d 1202, 1205 (8th Cir.) (quoting United States v. Clark, 668 F.3d 568, 573 (8th Cir.2012) ), cert. denied, ––– U.S. ––––, 134 S.Ct. 2714, ––– L.Ed.2d –––– (2014). “We must affirm the verdict if a reasonable juror could have found the defendant guilty of the crime charged beyond a reasonable doubt.” Id.

Hansen argues he is entitled to a judgment of acquittal because the government failed to show he had an intent to defraud or even any knowledge of RAHFCO's fraud. Each of the charges Hansen faced at trial—mail fraud, wire fraud, and conspiracy to commit mail fraud or wire fraud—required the government to prove that Hansen intended to commit fraud. See United States v. Parker, 364 F.3d 934, 941 (8th Cir.2004) (mail fraud); United States v. McKanry, 628 F.3d 1010, 1017 (8th Cir.2011) (wire fraud); Foster, 740 F.3d at 1205 (conspiracy). “Absent an outright admission of intent to defraud, the requisite intent can be shown by circumstantial evidence.”...