United States v. Watkins

• Decision Date: 15 July 2022
• Docket Number: 19-12951
• Citation: 42 F.4th 1278
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Donald V. WATKINS, Jr., Donald V. Watkins, Sr., Defendants-Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

42 F.4th 1278

UNITED STATES of America, Plaintiff-Appellee,

v.Donald V. WATKINS, Jr., Donald V. Watkins, Sr., Defendants-Appellants.

No. 19-12951

United States Court of Appeals, Eleventh Circuit.

Filed July 15, 2022

Michael B. Billingsley, U.S. Attorney Service - Northern District of Alabama, U.S. Attorney's Office, Birmingham, AL, for Plaintiff-Appellee.

Chelsea Wasdin Aldridge, The Hernandez Firm, LLC, Mobile, AL, Sherri Lee Mazur, Alabama Education Assoc., Montgomery, AL, for Defendant-Appellant Donald V. Watkins, Jr.

John Mark Englehart, Englehart Law Offices, Montgomery, AL, Donald V. Watkins, Donald V. Watkins, PC, Birmingham, AL, for Defendant-Appellant Donald V. Watkins, Sr.

Before Newsom, Tjoflat, and Ed Carnes, Circuit Judges.

Tjoflat, Circuit Judge:

On April 26, 2018, a federal grand jury returned a sealed indictment against Donald Watkins, Sr., ("Senior") and his son, Donald Watkins, Jr. ("Junior"). On November 29, 2018, a ten-count superseding indictment was issued against Senior and Junior, alleging one count of conspiracy to commit wire fraud and bank fraud, in violation of 18 U.S.C. § 1349, seven counts of wire fraud, in violation of 18 U.S.C. § 1342 and § 1343, and two counts of bank fraud, in violation of 18 U.S.C. § 1342 and § 1344.

Both Senior and Junior pled not guilty. They were tried together, and both elected to proceed pro se . The trial lasted two weeks and consisted of testimony from more than 30 witnesses and the admission of more than 200 exhibits. The Government put on evidence showing that Senior and Junior had conspired to commit wire fraud when they solicited millions of dollars’ worth of investments from wealthy and famous individuals like Charles Barkley, Takeo Spikes, and Bryan Thomas for the development of certain companies, including a company called Masada Resource Group, L.L.C. ("Masada").¹ Senior and Junior, the Government posited, secured the investments through several different fraudulent misrepresentations: (1) misleading the investors into believing Senior owned at least 50% of the interest in Masada, when in fact he was only the manager;² (2) misleading investors into believing the solicited funds would be used for business purposes, when in fact they were used to pay personal expenses and debts; and (3) misleading investors into believing high-profile individuals such as Condoleeza Rice and Martin Luther King III were heavily involved in the management of Masada, when in fact they were not.

The Government also put on evidence showing that Senior and Junior had committed bank fraud when they directed a former friend and business associate, Richard Arrington, to request two separate loans from Alamerica Bank for his own company while concealing the fact that the money was intended for Senior and Junior. Such deception was necessary, the Government argued, because Senior, the Chairman of Alamerica, had already borrowed the maximum amount on his line of credit at the bank.³ At the conclusion of the Government's case, and again at the conclusion of all evidence, both Senior and Junior made a Rule 29 motion for judgment of acquittal.

The jury convicted Senior on all counts and Junior on counts one (conspiracy) and two (wire fraud). Both Senior and Junior again filed motions seeking a judgment of acquittal notwithstanding the verdict or, alternatively, a new trial. The District Court denied the motions, and sentenced Senior to 60 months of imprisonment and Junior to 27 months of imprisonment.

Both Senior and Junior appeal. On appeal, Senior argues (1) that his conviction on all counts of wire and bank fraud should be reversed because the evidence was insufficient to establish the required intent to defraud under the wire and bank fraud statutes and (2) that his conviction on the conspiracy count should be reversed because Junior lacked the specific intent necessary to be convicted of a conspiracy and a successful conspiracy conviction requires at least two co-conspirators. Alternatively, Senior argues that (1) that a new trial should be ordered on the wire and bank fraud charges because the District Court abused its discretion in refusing to define the element of "intent to harm" in its jury instructions for the wire and bank fraud charges and (2) that a new trial should be ordered because the District Court erroneously excluded and limited evidence that went to the heart of the case.

Junior argues (1) that the evidence was insufficient to support his conspiracy conviction and (2) that the evidence was insufficient to support his conviction of aiding and abetting Senior in wire fraud.

I.

We review a verdict challenged for the sufficiency of the evidence de novo , resolving all reasonable inferences in favor of the verdict. United States v. Yost , 479 F.3d 815, 818 (11th Cir. 2007) (citing United States v. Pineiro , 389 F.3d 1359, 1367 (11th Cir. 2004) ). This means that we cannot disturb the verdict "unless no trier of fact could have found guilt beyond a reasonable doubt." Id . at 818–19 (citing United States v. Lyons , 53 F.3d 1198, 1202 (11th Cir. 1995) ).

We review a district court's refusal to give a proposed jury instruction for abuse of discretion. United States v. Maxwell , 579 F.3d 1282, 1303 (11th Cir. 2009) (citing United States v. Ndiaye , 434 F.3d 1270, 1280 (11th Cir. 2006) ). The same standard of review applies for a district court's evidentiary rulings. United States v. Brown , 415 F.3d 1257, 1264-65 (11th Cir. 2005) (citing Gen. Elec. Co. v. Joiner , 522 U.S. 136, 118 S. Ct. 512, 517, 139 L.Ed.2d 508 (1997) ).

II.

We first consider whether the evidence was sufficient to support Senior and Junior's convictions for wire fraud.⁴ To be convicted of wire fraud, a person must "(1) intentionally participate[ ] in a scheme or artifice to defraud another of money or property and (2) use[ ] or ‘cause[ ]’ the use of the mails or wires for the purpose of executing the scheme or artifice." United States v. Bradley , 644 F.3d 1213, 1238 (11th Cir. 2011).

We consider Senior's convictions first. Senior argues that there was insufficient evidence to establish the required intent to defraud under the wire fraud statute. Under our precedent, a defendant intends to defraud when he "attempt[s] to obtain, by deceptive means, something to which he was not entitled." Bradley , 644 F.3d at 1240 ; United States v. Takhalov , 827 F.3d 1307, 1313 (11th Cir. 2016). Here, there was sufficient evidence to establish the required intent to defraud under the wire fraud statute.⁵

Counts two through four concerned Senior's solicitation of a $150,000 loan from Barkley. Senior emailed Barkley on May 24, 2013,⁶ seeking $150,000 to cover "April and May expenditures related to" his various business projects and to tide him over until he received an expected "allotment of working capital" on June 1. However, as the Government showed at trial, emails between Senior and Junior made clear that they intended to use the monies secured from Barkley to pay expenses entirely unrelated to Senior's business ventures, including a $5,000 payment to Deandra Watkins (Senior's ex-wife) and a $2,800 payment to Lamar Media for Junior's insurance business. Thus, although Barkley received a promissory note providing that his loan was "made and transacted solely for business purposes related to Masada Resource Group, LLC," the money was in fact intended (and used) for non-business purposes. A jury could therefore reasonably conclude that Senior intended to defraud Barkley—"to obtain, by deceptive means, [money] to which he was not entitled." Bradley , 644 F.3d at 1240.

Counts five and six concerned a separate set of solicitations, again directed at Barkley. On February 4, 2014, Senior emailed Barkley (and later Barkley's financial advisor) informing him that Senior was in discussions to sell Masada to a member of the royal family of Saudi Arabia. Senior told Barkley that in order to "complete this deal" Masada needed an "additional capital infusion of $1 million" and asked Barkley for an additional $1 million investment. He also asked Barkley to convert $2,000,000 of loans Barkley had previously made to Masada into equity in the company. In return, Senior offered to upgrade Barkley's equity stake in Masada to "a 10% economic interest in all of Masada." However, as the Government's evidence showed, emails between Senior and Junior showed that they in fact intended to use Barkley's investment not as a capital infusion but to pay certain personal expenses, including $100,000 in past-due alimony to Senior's ex-wife. Based on all the evidence, then, a reasonable jury could conclude that Senior had intended to defraud Barkley—"to obtain, by deceptive means, [money] to which he was not entitled." Bradley , 644 F.3d at 1240.

Finally, counts seven and eight concerned stakeholder reports Senior emailed to Barkley's financial advisor and other investor victims in June 2014 and January 2016. At trial, the Government showed that Senior sent these emails in order to lull his victims into a false sense of security and into believing that their investments were being used for business purposes, rather than personal expenses. See United States v. Evans , 473 F.3d 1115, 1120 (11th Cir. 2006) (noting that "letters designed to conceal a fraud, by lulling a victim into inaction, constitute a continuation of the original scheme to defraud") (citing United States v. Georgalis , 631 F.2d 1199, 1204 (11th Cir. 1980) ). Given the considerable testimony from investor victims suggesting that their receipt of such progress updates led them to believe their investments were being used for legitimate business purposes, a reasonable jury could conclude that Senior sent the stakeholder reports to his investors to deter them from peering too closely into Senior's use of their investments.⁷ As such, we cannot say that "no trier of fact could have found guilt beyond a reasonable doubt." Pineiro , 389 F.3d at 1367 (emphasis added).

Finally, we turn to...