UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 05-4493
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
WILLIAM LUTHER STEWART, a/k/a Luke Stewart,
Defendant - Appellant.
Appeal from the United States District Court for the District of
South Carolina, at Columbia. Cameron McGowan Currie, District
Judge. (CR-03-1088-CMC)
Submitted: May 16, 2006 Decided: June 16, 2006
Before NIEMEYER and KING, Circuit Judges, and HAMILTON, Senior
Circuit Judge.
Affirmed by unpublished per curiam opinion.
James M. Griffin, Columbia, South Carolina, for Appellant.
Reginald I. Lloyd, United States Attorney, Dean A. Eichelberger,
Assistant United States Attorney, OFFICE OF THE UNITED STATES
ATTORNEY, Columbia, South Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
PER CURIAM:
William Luther Stewart was convicted of wire fraud, in
violation of 18 U.S.C. §§ 1343 and 2, and the district court
sentenced him to 30 months’ imprisonment.
The indictment charged that through a scheme and artifice to
defraud, Stewart, together with his colleague, Edwin G. Blair, and
their company, Media Fusion, LLC, obtained a loan of $1 million
from SCANA Corporation, a company that owns South Carolina Electric
and Gas, to fund implementation of a new technology that Stewart
had allegedly developed. In particular, Stewart was charged with
misrepresenting the fact that he had successfully developed a
technology by which to transmit voice, video, and data over the
power grid, and, to make his representations credible, with
misrepresenting his credentials and his relationships with other
major technology companies and institutions, such as MIT, NASA, the
Defense Advanced Research Projects Agency, Microsoft, and San Diego
Gas and Electric. The indictment also charged that in furtherance
of the scheme, Stewart and Blair sent a fax from Texas to SCANA in
South Carolina, which contained projected monthly milestones and a
budget for implementation of the technology.
The jury found Stewart guilty of the charge, and the district
court entered a judgment of conviction and the 30-month sentence on
May 6, 2005.
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On appeal, Stewart contends (1) that the evidence was
insufficient to support the verdict; (2) that the district court
abused its discretion in admitting letters from NASA and a U.S.
Attorney in Mississippi, confirming, after the loan had already
been made to Stewart, the inaccuracy of some of Stewart’s
misrepresentations; and (3) that the district court erred in
sentencing by applying a $1 million-loss figure when Stewart was
acquitted of the specific count charging that his scheme caused the
transmission of $1 million from South Carolina to Texas.
For the reasons that follow, we affirm.
I
Stewart contends first that the government failed to present
evidence sufficient to convict him, arguing that there was no
evidence that he created or directed the sending of the fax, that
he participated in the misrepresentations, and that the
misrepresentations were false.
Taking the evidence in a light most favorable to the
government, however, we believe that there was substantial evidence
to support Stewart’s conviction. Even though the fax was sent by
Blair, the jury could reasonably have believed that Stewart
directed Blair to send the fax or that he assisted Blair in doing
so. Stewart and Blair were the two principals of Media Fusion and
were constant companions in obtaining the loan from SCANA. The fax
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furthered the scheme to defraud SCANA because SCANA officials
requested the financial information contained in the fax before
they made their loan and testified that they would not have loaned
Media Fusion the $1 million if they had known that the technology
was not ready for immediate installation. The fax implied that it
was developed and ready for installation because the fax minimized
future costs for research and development and forecasted revenue-
producing consumer use within 12 months of the loan. In addition,
the jury could reasonably have agreed with SCANA officials who
testified that Stewart constantly led them to believe that the
technology was more fully developed than it actually was. The
officials stated that Stewart had told them that the technology was
“proven technology” capable of near-term commercialization. The
evidence showed that in actuality, however, Stewart had never
tested the technology on a power line to prove it could pass
digital signals through transformers. Even if the jury believed
Stewart that he had done some testing, he testified that he had
only tested some individual components of the technology, and not
the technology as a whole. In light of the testimony that SCANA
officials told Stewart they only were interested in ready-to-market
technology, the jury could have inferred an intent to defraud from
Stewart’s repeated misrepresentations. From our review of the
record, we conclude that the jury had ample evidence on which to
convict Stewart on the § 1343 charge.
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II
Stewart also contends that the district court abused its
discretion in admitting into evidence a 1999 letter from NASA and
a 2000 letter from the Department of Justice because the letters
were dated after SCANA had made the $1 million loan to Media
Fusion. The government, however, offered the letters to
demonstrate that part of the scheme included Blair’s
misrepresentations about Media Fusion’s relationship with NASA made
to forestall SCANA from recalling the $1 million loan. We agree
that these letters were relevant evidence of intent to mislead
SCANA with the “design[] to lull the victims into a false sense of
security [and] postpone their ultimate complaint to the
authorities.” United States v. Lane, 474 U.S. 438, 451-52 (1986)
(quoting United States v. Maze, 414 U.S. 395, 403 (1974)). We
disagree with Stewart’s contention that the letters were also
unduly prejudicial because they contained indirect evidence of
matters on Media Fusion’s website. The district court agreed with
Stewart in noting that the letters’ references to information found
on a website failed the best evidence rule. The court received
them, however, for a limited purpose and not for the substantive
evidence of the content of Media Fusion’s website, and in order to
be sure that the documents were received for that limited purpose,
the district court gave the jury a limiting instruction. In these
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circumstances, we do not believe that the district court abused its
discretion.
III
Finally, Stewart contends that the district court erred in
calculating the amount of loss in determining his sentencing
guidelines range. Finding that SCANA’s $1 million loan was “the
value of the money, property, or services unlawfully taken,”
U.S.S.G. § 2F1.1 App. Note 8 (Nov. 1998), the district court
increased Stewart’s offense level 11 levels, resulting in a
sentencing guideline range of 30-37 months’ imprisonment. Stewart
argues that because he was not convicted of Count 5, which charged
him with wire fraud for SCANA’s $1 million loan, the court could
not consider the amount of the loan as relevant conduct. The
jury’s acquittal, however, was based on a failure of proof under a
standard of beyond-a-reasonable-doubt, and in sentencing, the
district court need only have found the loss of the $1 million by
a preponderance of the evidence. Accordingly, in determining the
appropriate sentencing guideline, the court was entitled to
consider acquitted conduct as relevant conduct. See United States
v. Watts, 519 U.S. 148, 157 (1997).
Moreover, the evidence supported the finding that $1 million
was the proper amount of loss. Application Note 8 to U.S.S.G. §
2F1.1 (Nov. 1998) explains that in determining the loss, the court
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should consider the commentary to U.S.S.G. § 2B1.1, which provides
that “Where the offense involved making a fraudulent loan or . . .
other unlawful conduct involving a loan . . ., the loss is to be
determined under the principles set forth in the commentary to
section 2F1.1.” U.S.S.G. § 2B1.1 App. Note 2 (Nov. 1998). The
commentary to § 2F1.1 describes how the nominal loss -- in this
case the amount of the loan -- can overstate the actual loss when
the defendant has repaid some of the loan or collateralized it with
property that is not worthless. See U.S.S.G. § 2F1.1 App. Note 8
(“If a defendant fraudulently obtains a loan by misrepresenting the
value of his assets, the loss is the amount of the loan not repaid
at the time the offense is discovered, reduced by the amount the
lending institution has recovered (or can expect to recover) from
any assets pledged to secure the loan”). The district court,
however, concluded that there were no such offsets because as of
sentencing the loan remained uncollected and because Media Fusion
had provided no collateral.
Stewart argues that SCANA was effectively a “‘strategic’
partner” with Media Fusion and thus recovered some value from the
loan because SCANA put the money to use in the common enterprise
“in an attempt to commercialize defendant’s technology.” The
district court, however, reasonably found that SCANA received no
offsetting value from these efforts. The technology never became
commercially viable and never provided any benefit to SCANA.
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Because there was no repayment of the loan, no collateral to
secure its repayment, or no other expectancy to reduce its
outstanding amount, the district court did not clearly err in
finding for sentencing that the loss was $1 million.
* * *
Accordingly, we affirm the judgment of the district court. We
dispense with oral argument because the facts and legal contentions
are adequately presented in the materials before the court, and
argument would not aid in the decisional process.
AFFIRMED
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