United States v. Lewis
| Decision Date | 09 December 2013 |
| Docket Number | Criminal No. 3:12-CR-159-D(01) |
| Parties | UNITED STATES OF AMERICA, Plaintiff, v. DAVID KEVIN LEWIS, Defendant. |
| Court | U.S. District Court — Northern District of Texas |
A jury convicted defendant David Kevin Lewis ("Lewis") of one count of conspiracy to commit securities fraud, in violation of 18 U.S.C. § 371, and 23 counts of securities fraud, in violation of 15 U.S.C. §§ 77q(a) and 77X.1 Lewis moves under Fed. R. Crim. P. 29 for a judgment of acquittal and, alternatively, under Rule 33 for a new trial.2 Among the questions presented is whether a six- or five-year limitations period applies to his criminal conduct. For the reasons that follow,3 the court denies the motions.
Lewis is the controlling principal of Always Consulting, Inc. ("ACI"), which was chartered in Nevada and authorized to do business in Texas.4 ACI offered and sold interests in oil and gas well drilling projects to the public. The ACI Rattlesnake Springs Drilling Project ("Rattlesnake Springs Project")—promoted as a plan to drill 20 wells in Osage County, Oklahoma—was the last program offered by ACI. Under the program, ACI offered 35 units of interest at a cost of $100,285.71 per unit for a total of $3,509,999.80. From June 2006 through October 2006, ACI raised $2,539,642.86 from the sale of interests in the project.
Lewis was the Chairman and Director of Field Operations of ACI.5 Codefendant Bruce Kyle Griffith ("Griffith") was the President and Chief Executive Officer of ACI. Codefendant Thomas Markham ("Markham") was hired as ACI's only geologist. Lewis, Griffith, and Markham were indicted for conspiring to commit securities fraud concerning the Rattlesnake Springs Project, and Lewis and Griffith were indicted for securities fraud. Prior to trial, Griffith pleaded guilty to the conspiracy count and to one count of securities fraud. Markham pleaded guilty to misprision of a felony. The government called Griffith and Markham as witnesses at Lewis' trial.
The Rattlesnake Springs Project was not as promoted. Lewis purchased lists of "leads" containing names and contact information for potential investors. He and Griffith provided this information to "fronter" employees, who contacted potential investors using outlines and scripts containing sales pitches, arguments, and talking points—materials designed to make prospective investors believe the project was a potentially profitable investment. Lewis also provided the fronters with a "Do Not Call" list, entitled "Undercover Regulators," which listed, state by state, the names and contact information of individuals across the country whom Lewis suspected of being state or federal regulators posing as potential investors. The fronters contacted potential investors and persuaded numerous people to purchase interests in the Rattlesnake Springs Project. These investors were led to believe that ACI had obtained leases for land covering 20 well sites, that ACI had permits to drill each of the 20 wells, and that the project was ready to begin.6 But ACI secured only 12 of the 20 leases, did not obtain any of the necessary drilling permits, and never drilled a single well. Prospective and actual investors were led to believe that Lewis, Griffith, and Markham had extensive experience in the oil and gas industry. They were never told that all three had prior felony convictions, including federal convictions.7
Count 1 charged Lewis with conspiracy to commit securities fraud. The substantive counts, Counts 2-24, incorporated the fraudulent scheme charged in the indictment and charged separate counts of securities fraud (including aiding and abetting culpability) based on each use of a facility of transportation or communication in interstate commerce. That is, each count referred to the collection of an investor's check payable to the Rattlesnake Springs Project. Each of these checks was either deposited into the Rattlesnake Springs Project account directly or into the ACI operating account at JP Morgan Chase Bank, N.A. ("JP Morgan Chase"), and each was connected with a separate offer and sale of an interest in the Rattlesnake Springs Project.8
Lewis moves for a post-verdict judgment of acquittal and, alternatively, for a new trial. The government opposes the motions.9
The court turns first to Lewis' motion for judgment of acquittal.
"A motion for judgment of acquittal challenges the sufficiency of the evidence to convict." United States v. Hope, 487 F.3d 224, 227 (5th Cir. 2007) (quoting United States v. Lucio, 428 F.3d 519, 522 (5th Cir. 2005) (internal quotation marks omitted)). "When the defendant challenges the sufficiency of the evidence, 'the relevant question is whether, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.'" United States v. Uvalle-Patricio, 478 F.3d 699, 701 (5th Cir. 2007) (quoting Jackson v. Virginia, 443 U.S. 307, 319 (1979)). "The evidence is sufficient to support the conviction if, when viewing the evidence and any valid inferences from the perspective favorable to the verdict, 'a rational juror could have found [the] defendant[] guilty beyond a reasonable doubt.'" United States v. Adams, 338 Fed. Appx. 417, 420 (5th Cir. 2009) (per curiam) (quoting United States v. Anderson, 174 F.3d 515, 522 (5th Cir. 1999)). "The jury makes credibility determinations and can find guilt even when some 'reasonable hypothesis of innocence' could be said to exist." Id. (quoting United States v. Mitchell, 484 F.3d 762, 768 (5th Cir. 2007)). Id. (citing United States v. Millsaps, 157 F.3d 989, 994 (5th Cir.1998)). "'The evidence need not exclude every reasonable hypothesis of innocence or be wholly inconsistent with every conclusion except that of guilt, and the jury is free to choose among reasonable constructions of the evidence.'" United States v. Anderson, 174 F.3d 515, 522 (5th Cir. 1999) (quoting United States v. Burton, 126 F.3d 666, 669-70 (5th Cir. 1997)).
Count 1 charged Lewis with conspiracy to commit securities fraud, in violation of 18 U.S.C. § 371.10 To prove a conspiracy under § 371, the government must show: "(1) an agreement between two or more persons to pursue an unlawful objective; (2) the defendant's knowledge of the unlawful objective and voluntary agreement to join the conspiracy; and (3) an overt act by one or more of the members of the conspiracy in furtherance of the objective of the conspiracy." United States v. Coleman, 609 F.3d 699, 704 (5th Cir. 2010) (citing United States v. Peterson, 244 F.3d 385, 389 (5th Cir. 2001); United States v. Dadi, 235 F.3d 945, 950 (5th Cir. 2000)). Lewis argues that the evidence does not support his conviction for conspiracy because the record lacks any evidence of an agreement. The government maintains that a conspiracy conviction does not require proof of a formal agreement between the conspirators and that the evidence was sufficient for a rational trier of fact to find the essential elements of a conspiracy beyond a reasonable doubt.
The court holds that a rational juror could have found Lewis guilty of conspiracy beyond a reasonable doubt. "No formal agreement between the parties is essential to theformation of a conspiracy, for the agreement may be shown by concerted action, all the parties working together understandingly with a single design for the accomplishment of a common purpose." United States v. Mendez, 496 F.2d 128, 130 (5th Cir. 1974); see also United States v. Klein, 560 F.2d 1236, 1243 (5th Cir. 1977). A rational jury could have found that Lewis engaged in concerted action, according to a single design, for accomplishing the common purpose of the fraudulent scheme charged in the indictment. It could have found that he committed several of the overt acts charged,11 including that he wrote the offering memorandum; that he and Griffith opened a bank account with JP Morgan Chase; that he met with prospective investors to promote the Rattlesnake Springs Project; and that he had telephone conversations with individual investors. In addition to Lewis' commission of various overt acts, the jury could rationally have found that Lewis was in charge of the day-to-day activities in ACI's office; that he had regular meetings with sales representatives, including the fronters; and that he reviewed and approved the participation agreements, even though Griffith signed them. This is not a case in which the evidence showed nothing more than mere association between Lewis and his coconspirators. Cf. Klein, 560 F.2d at 1243 (). A rational jury could have found from the evidence that Lewis engaged in concerted action, according to a single design, for accomplishing the common purpose of the fraudulent scheme charged in the indictment.
Viewing the evidence and the valid inferences from the perspective favorable to the verdict, the court holds that a rational jury could have found all the essential elements of the conspiracy count beyond a reasonable doubt. Lewis' motion is denied with respect to Count 1.
The court now turns to the substantive counts of securities fraud.12
Counts 2-24 charged Lewis with securities fraud, in violation of 15 U.S.C. §§ 77q(a) and 77x. These counts also charged that Lewis was guilty as an aider and abettor. See 18 U.S.C. § 2. 15 U.S.C. § 77q(a) provides, in pertinent part:
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