United States v. Peterson

• Decision Date: 25 May 2016
• Docket Number: No. 14–3716,14–3716
• Citation: 823 F.3d 1113
• Parties: United States of America, Plaintiff–Appellee, v. Christian Peterson, Defendant–Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

823 F.3d 1113

United States of America, Plaintiff–Appellee

v.Christian Peterson, Defendant–Appellant.

No. 14–3716

United States Court of Appeals, Seventh Circuit.

Argued September 28, 2015

Decided May 25, 2016

Peter M. Jarosz, Office of the United States Attorney, Suite 700, 222 W. Washington Avenue, Madison, WI 53703–2775, for Plaintiff–Appellee.

Craig W. Albee, Federal Defender Services of Eastern Wisconsin, Incorporated, Suite 182, 517 E. Wisconsin Avenue, Milwaukee, WI 53202–4503, for Defendant–Appellant.

Before Flaum, Kanne, and Sykes, Circuit Judges.

Sykes, Circuit Judge.

Before running into legal trouble, Christian Peterson, an entrepreneur doing business in Madison, Wisconsin, owned several manufacturing and real-estate development firms. He misused corporate finances, frequently making unauthorized intercompany loans and occasionally using corporate funds to pay off his personal gambling debts. Eventually all of his business ventures failed, his companies defaulted, and federal agents launched an investigation. Peterson was indicted on thirteen criminal counts—bank fraud, making false statements to banks, money laundering, and pension theft—and a jury found him guilty of eight of those crimes. On Peterson's motion the district judge entered judgment of acquittal on two counts and at sentencing imposed a within-guidelines prison term of 84 months on the remaining six.

Peterson has appealed, raising many issues for review. His arguments for judgment of acquittal or a new trial have no merit; the evidence was easily sufficient to support the jury's verdict. We also reject his claims of evidentiary and instructional error. Peterson next challenges the joinder of the pension-theft count for trial with the others, but this claim too is meritless. Regarding the sentence, the judge correctly calculated the gross receipts Peterson derived from his fraud; because he was the sole perpetrator, all proceeds of the fraud were properly attributed to him. But Peterson repaid in full a $300,000 wire transfer prior to detection of his fraud, so that sum should not have been included in the total loss amount. We affirm the convictions but vacate the sentence and remand for resentencing.

I. Background

Two of Peterson's businesses are relevant to this case. The first is Maverick, Inc., which supplied polyurethane scrap-foam material to carpet-pad manufacturers. Peterson originally was the sole owner of Maverick, but in 2006 he acquired a partner, Dr. James Shapiro, who owned a 25% interest in the company. The other business relevant here is Peterson Properties of Chicago, LLC, which Peterson created to develop a parcel of land in Fitchburg, Wisconsin. Peterson had two partners in this venture: his Maverick partner, Shapiro, and James Spahr, each of whom held a one-third interest in the company. Maverick and Peterson Properties each maintained lending agreements with different banks; these loan agreements figured prominently in the charges the government brought against Peterson.

A. Maverick's Line of Credit at Marshall & Ilsley Bank

Beginning in 2003, Maverick maintained a line of credit and a checking account at Marshall & Ilsley Bank (“M&I”). The credit line and checking account were linked through a “sweep” arrangement meant to provide flexibility for Maverick. Under this arrangement the credit line would automatically compensate for insufficient funds in the checking account. Conversely when the checking-account balance rose above a certain level, funds from that account were automatically applied to Maverick's credit balance. By 2008 Maverick's line of credit at M&I had increased from $1.5 million to $6.25 million.

Although the M&I credit line was limited by its terms to use for Maverick's business purposes, Peterson drew on it to fund his other companies. In March 2006 M&I banker Randy Paulson asked Peterson to discontinue this practice in light of the risks that it posed to M&I. Peterson agreed and promised to pay off any debts that his other companies owed to Maverick. However, when Peterson met with Paulson in May 2007 to discuss renewal of Maverick's credit line, the debt owed to Maverick by Peterson's other companies had increased by almost $2 million. Peterson again promised to stop using Maverick's credit line for anything other than purchasing scrap foam and to pay off all outstanding debts by the end of the year.

Peterson also drew on the M&I credit line to support his gambling habit. On April 5, 2006, Peterson had his office assistant contact M&I to request a $300,000 wire transfer to the MGM Grand casino in Las Vegas. When Paulson questioned why he wanted money wired to a casino, Peterson forwarded an e-mail from a commercial real-estate broker listing properties that he and the broker planned to visit the next day. Peterson sent a follow-up e-mail to Paulson a few minutes later stating, “This is my itinerary. I would not use Maverick funds for personal use and I certainly wouldn't spend $300k!!!” M&I wired the requested funds to the casino, and Peterson promptly used the money to pay off debts he had incurred at the blackjack tables.

All the while Maverick was experiencing a sharp down-turn in business. It lost one of its main purchasers of scrap foam, and another of its major clients reduced its orders by 87% between 2006 and 2007. Maverick eventually defaulted on its credit, went into receivership, and ceased operations. In February 2009 Peterson terminated the 401(k) plan that Maverick had maintained for its employees since 2002 and instructed the plan's administrator to send him any remaining funds. Peterson subsequently received a check for just over $29,000, which he used for personal expenses. After learning that the plan had been terminated, one of the three participating employees confronted Peterson. Peterson reimbursed the plan in full.

B. Loan from Greenwoods Bank to Peterson Properties

In late 2007 Peterson Properties, the other Peterson company relevant here, obtained a loan from Greenwoods State Bank in Lake Mills, Wisconsin. The company had previously borrowed approximately $7 million from a different bank to purchase and develop a tract of land in Fitchburg. By fall of 2007, the company was looking to refinance its existing loan and obtain additional funds for development.

To that end Peterson met with bankers at Greenwoods, giving them a personal financial statement. Greenwoods, in turn, offered Peterson Properties a $1.1 million loan. On Peterson's behalf, Greenwoods president Michael Weber filled out a loan application identifying the loan's purpose as land and site improvements for the Fitchburg property. On December 5, 2007, Peterson signed a closing statement and repayment note for the loan, both of which likewise identified land and site improvements as the loan's purpose.

All three partners in Peterson Properties personally guaranteed the Greenwoods loan. Spahr's guarantee was conditioned on his company, Landmark Building Systems, receiving the contract for any improvements that the Fitchburg tract required. On December 7, 2007, Peterson Properties entered into a contract with Landmark Building Systems to this effect. The contract, which Peterson signed on behalf of Peterson Properties, provided that Landmark would receive $893,580 to perform all site construction.

Peterson made three draws on the Greenwoods loan. The first occurred on December 6, 2007, and totaled $871,168.57. Of this amount Peterson paid $155,000 to Spahr for the starting costs of site construction. Peterson used the rest of the first draw to pay debts owed by Peterson Properties, $300,000 of his personal gambling debts, and a $250,000 developer's fee to himself. A week later, Peterson made a second draw of $100,000, which he deposited into Maverick's checking account at M&I. Another week later, Peterson made a third draw of $128,931.43 for legal fees associated with the Fitchburg tract. This third draw completely exhausted the Greenwoods loan. Like Maverick, Peterson Properties soon collapsed and defaulted on its loan.

C. Indictment and Trial

After Peterson's companies defaulted, federal agents began a criminal investigation, and he was eventually indicted on 13 counts: engaging in a scheme to defraud banks in violation of 18 U.S.C. § 1344 (Counts 1–4); making false statements to a bank in violation of 18 U.S.C. § 1014 (Counts 5–8); money laundering in violation of 18 U.S.C. § 1957 (Counts 9–12); and pension theft in violation of 18 U.S.C. § 664 (Count 13). The case was tried to a jury, which was instructed that a bank's negligence is not a defense to fraud. The jury returned a verdict of guilty on 8 of the 13 counts.

Peterson filed a posttrial motion for judgment of acquittal, see Fed. R. Crim. P. 29(c), arguing that the evidence was insufficient to support the jury's verdict. The judge granted this motion in part, entering judgment of acquittal on one count of bank fraud and a related money-laundering count. Peterson then moved for a new trial on the remaining counts, see Fed. R. Crim. P. 33, and renewed an earlier motion regarding severance of the pension-theft count. The judge denied both motions. Peterson thus stood convicted of 6 of the 13 counts: the bank-fraud and false-statement counts arising from M&I's $300,000 wire transfer to the MGM Grand; the bank-fraud, false-statement, and money-laundering counts arising from the Greenwoods loan to Peterson Properties; and the pension-theft count in connection with the Maverick 401(k) plan.

At sentencing the judge applied two guideline enhancements that are relevant here. First, she found that Peterson derived $1,116,169 in gross receipts from his fraud: $300,000 from the M&I wire transfer to the MGM Grand and $816,169 from the Greenwoods loan. Based on this same calculation, the judge found that M&I and Greenwoods suffered losses in excess of $1 million as a result of Peterson's fraud. Given a base offense level of 7, a 16–level increase for total loss exceeding $1 million,...