United States v. Simpson

• Decision Date: 15 January 2014
• Docket Number: No. 12–10574.,12–10574.
• Parties: UNITED STATES of America, Plaintiff–Appellee v. Matthew Norman SIMPSON; Nathan Todd Shafer, Defendants–Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

741 F.3d 539

UNITED STATES of America, Plaintiff–Appellee

v.Matthew Norman SIMPSON; Nathan Todd Shafer, Defendants–Appellants.

No. 12–10574.

United States Court of Appeals, Fifth Circuit.

Jan. 15, 2014.

James Wesley Hendrix, Assistant U.S. Attorney, U.S. Attorney's Office, Dallas, TX, for Plaintiff–Appellee.

Shirley L. Baccus–Lobel, Law Offices of Shirley Baccus–Lobel, Franklyn Ray Mickelsen, Jr., Broden & Mickelsen, David James Pire, Dallas, TX, for Defendants–Appellants.

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

Before OWEN, SOUTHWICK, and GRAVES, Circuit Judges.

JAMES E. GRAVES, JR., Circuit Judge:

Matthew Simpson and Nathan Shafer raise multiple challenges to their convictions and sentences for participation in a wire and mail fraud conspiracy in the telecommunications industry. Simpson was also convicted of aiding and abetting the transmission of spam, obstruction of justice, and registration of a false domain name. We affirm all the convictions, except for Simpson's conviction for registration of a false domain name. We also affirm Shafer's sentence. However, we vacate and remand Simpson's sentence in light of our reversal of one of his convictions.

I. Factual and Procedural Background

Nineteen co-defendants, including Simpson and Shafer, were indicted in 2009 for their involvement in a lengthy conspiracy to defraud telecommunications companies and other entities. Count One of the fourth superseding indictment charged both Simpson and Shafer (along with other co-defendants) with conspiracy to commit wire and mail fraud in violation of 18 U.S.C. §§ 1341, 1343, and 1349. The indictment charged that the defendants, beginning in March 2003 and continuing through January 2010, engaged in a conspiracy to fraudulently obtain property and services relating to telecommunications and the use of computers. Count Two charged Simpson with aiding and abetting violations of 18 U.S.C. § 1037, which prohibits persons from sending bulk commercial email messages with the intent to deceive recipients and internet service providers about the origin of the messages. Count Four charged Simpson with obstruction of justice by destruction of evidence in violation of 18 U.S.C. § 1512(c)(1). Count Seven charged Simpson with false registration of a domain name, and alleged that he used that domain in the course of the conspiracy. 18 U.S.C. § 3559(g)(1).

Trial evidence showed that the defendants and their co-conspirators conspired to defraud various telecommunications companies, lessors, creditors, credit reporting agencies, and various other service providers, of goods and services. Evidence showed that beginning in 2003, the co-conspirators were involved in the creation and/or operation of a series of corporate entities which defrauded telecommunications companies, including, inter alia: American Discount Telecom (ADT), a company that promulgated a method of using routing codes that made long distance or toll-free calls appear to be local calls, thus avoiding paying larger telephone service providers for use of their networks; TxLink, a wholesale dialup internet company which Simpson used to steal network capacity and divert customer payments from one of his employers, CommPartners; camophone.com, a spoofing service that allowed customers to disguise the number they were calling from, which allowed spoofed calls to be routed locally through toll-free lines, thereby avoiding paying fees for the calls; ColoExchange, a colocation company that Simpson used to engage in both lease fraud and insurance fraud; Aston Technology, a company that Michael Faulkner, a co-conspirator, pretended to control to obtain network capacity without paying for it; and Union Datacom (UDC), Premier Voice, Lone Star Power, Incavox, and several other corporate entities that entered into contracts for commercial telecommunications services, leases, and other agreements for goods and services, which were not paid for. The companies were then abandoned or renamed by the co-conspirators to avoid the debts. Evidence showed that the defendants provided false identity information and postal addresses; provided false credit histories, bills, invoices, financial statements, and credit references; and used assumed identities in applications and contracts in order to hide their association with the shell corporate entities and with each other.

Most of the co-conspirators pleaded guilty. Four co-conspirators went to trial. After a ten-week trial, Simpson was convicted on one count of conspiracy to commit wire fraud and mail fraud (Count One), one count of fraud and related activity in connection with electronic mail (Count Two), one count of obstruction of justice through destruction of evidence (Count Four), and one count of false registration of a domain name (Count Seven). He was acquitted on an additional count of obstruction of justice. Shafer was convicted on one count of conspiracy to commit wire fraud and mail fraud (Count One). The two additional co-defendants at trial were acquitted.

The district court sentenced Simpson to 240 months on Count One; 36 months on Count Two, to run concurrent; 240 months on Count Four, to run consecutive to Count One; and 84 months on Count Seven, to run concurrent, for a total of 480 months in prison. The district court ordered Simpson to pay restitution in the amount of $17,674,704. The district court sentenced Shafer to 108 months in prison on Count One and ordered restitution in the amount of $3,262,909.50. The court also entered an order of forfeiture against each defendant. The defendants appealed.

II. Discussion

Simpson and Shafer raise multiple challenges to their convictions and sentences. We address each of their arguments in turn.

A. Adequacy of Count One (Simpson)

Simpson first argues that the indictment was too indefinite on Count One. We review the sufficiency of the indictment de novo. United States v. Cooper, 714 F.3d 873, 876 (5th Cir.2013). “An indictment is legally sufficient if (1) each count contains the essential elements of the offense charged, (2) the elements are described with particularity, and (3) the charge is specific enough to protect the defendant against a subsequent prosecution for the same offense.” Id. at 877 (5th Cir.2013) (internal quotation marks omitted) (quoting United States v. Threadgill, 172 F.3d 357, 366 (5th Cir.1999)). Simpson does not describe these standards or explain how they are not met, but generally argues that the indictment purports to cover a single seven-year conspiracy by various different groups of co-conspirators to defraud multiple entities, but that no overarching agreement is described.

We find that the indictment met the required standards. The elements of conspiracy under 18 U.S.C. § 1349 are: (1) two or more persons made an agreement to commit an unlawful act; (2) the defendant knew the unlawful purpose of the agreement; and (3) the defendant joined in the agreement willfully, with the intent to further the unlawful purpose. See United States v. Grant, 683 F.3d 639, 643 (5th Cir.2012). “An agreement may be inferred from concert of action, voluntary participation may be inferred from a collection of circumstances, and knowledge may be inferred from surrounding circumstances.” Id. (quoting United States v. Stephens, 571 F.3d 401, 404 (5th Cir.2009)). The elements of mail fraud under 18 U.S.C. § 1341 are: “(1) a scheme to defraud; (2) use of the mails to execute the scheme; and (3) the specific intent to defraud.” Id. The elements of wire fraud under 18 U.S.C. § 1343 are: “(1) a scheme to defraud and (2) the use of, or causing the use of, wire communications in furtherance of the scheme.” United States v. Stalnaker, 571 F.3d 428, 436 (5th Cir.2009). Count One contained the essential elements of the wire and mail fraud conspiracy offenses, and described them with sufficient particularity and specificity. It stated the manner and means of the conspiracy, including, inter alia, that defendants acted in concert to make false representations to obtain services and property, create and use shell companies to hide identities and relationships, and use false postal addresses, and took various other steps to hide their true identities and their relationships to the various involved companies. The indictment listed over 140 overt acts as part of the conspiracy, including fraudulent misrepresentations by Simpson in mailings, emails and telephone calls in furtherance of the scheme. Count One is broad, describing many instances of wire and mail fraud by the defendants, but it is not vague or indefinite.

B. Conspiracy (Simpson and Shafer)

Both defendants argue that there is insufficient evidence supporting their conviction of conspiracy to commit wire and mail fraud. We review the sufficiency of the evidence de novo. See United States v. Shum, 496 F.3d 390, 391 (5th Cir.2007). “When reviewing the sufficiency of the evidence, we view all evidence, whether circumstantial or direct, in the light most favorable to the government, with all reasonable inferences and credibility choices to be made in support of the jury's verdict.” United States v. Ford, 558 F.3d 371, 375 (5th Cir.2009).

1. Simpson

Simpson argues that the evidence is insufficient because: (1) the trial evidence did not prove the existence of a single conspiracy as alleged in the indictment; (2) his relationship with Michael Faulkner was a “buyer-seller” relationship, and thus he could not be held liable for Faulkner's business misconduct; and (3) evidence of fraudulent regulatory filings became the “gravamen” of the conspiracy, in violation of Cleveland v. United States, 531 U.S. 12, 121 S.Ct. 365, 148 L.Ed.2d 221 (2000). We address each argument in turn.

a. Single Conspiracy

“The question whether the evidence establishes the existence of one conspiracy (as alleged in the indictment) or multiple conspiracies is a fact question within the jury's province.” United States...