United States v. Christopher Rice

UNPUBLISHED

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 13-4182

UNITED STATES OF AMERICA,

Plaintiff - Appellee,

v.

CHRISTOPHER C. RICE,

Defendant - Appellant.

No. 13-4183

UNITED STATES OF AMERICA,

Plaintiff - Appellee,

v.

SAMUEL B. JACOBS,

Defendant - Appellant.

Appeals from the United States District Court for the Eastern
District of Virginia, at Newport News. Mark S. Davis, District
Judge. (4:10-cr-00149-MSD-TEM-2; 4:10-cr-00149-MSD-TEM-1)

Submitted: November 26, 2013 Decided: January 7, 2014

Before TRAXLER, Chief Judge, and DAVIS and THACKER, Circuit
Judges.
Affirmed by unpublished per curiam opinion.

Jon M. Babineau, RIDDICK BABINEAU, PC, Norfolk, Virginia, for
Appellant Jacobs. Lawrence H. Woodward, Jr., SHUTTLEWORTH,
RULOFF, SWAIN, HADDAD & MORECOCK, PC, Virginia Beach, Virginia,
for Appellant Rice. Jeffrey H. Knox, Chief, Justin Goodyear,
Fraud Section, UNITED STATES DEPARTMENT OF JUSTICE, Washington,
D.C.; Dana J. Boente, Acting United States Attorney, Alexandria,
Virginia, Brian J. Samuels, Assistant United States Attorney,
OFFICE OF THE UNITED STATES ATTORNEY, Newport News, Virginia,
for Appellee.

Unpublished opinions are not binding precedent in this circuit.

2
PER CURIAM:

Appellants Samuel Jacobs (“Jacobs”) and Christopher

Rice (“Rice”) were charged in a 29-count superseding indictment

with conspiracy to commit mail fraud, multiple counts of mail

fraud, multiple counts of money laundering, and multiple counts

of forgery, all of which arose out of a fraudulent investment

scheme.

Jacobs was convicted, after a jury trial, of all

counts except for conspiracy to commit mail fraud (Count 1) and

one of the mail fraud counts (Count 6). The district court

sentenced Jacobs to 144 months imprisonment on Counts 2-5 and

15-20, and 120 months imprisonment on Counts 7-14 and Counts 21-

29, all to be served concurrently. On appeal, Jacobs challenges

the sufficiency of the evidence at trial as well as the

calculation of his Sentencing Guidelines range. 1 Rice was found

guilty by the same jury of seven counts of transactional money

1
Jacobs has filed a motion for leave to file a pro se
supplemental brief, along with a pro se supplemental brief.
Because Jacobs is represented by counsel who has filed an
extensive merits brief, as opposed to a brief pursuant to Anders
v. California, 386 U.S. 738 (1967), he is not entitled to file a
pro se supplemental brief and we, therefore, deny his motion.
See United States v. Penniegraft, 641 F.3d 566, 569 n.1 (4th
Cir. 2011) (denying motion to file pro se supplemental brief
because the defendant was represented by counsel), cert. denied,
132 S.Ct. 564 (2011).

3
laundering (Counts 8-14) and of one count of forgery (Count 25),

and not guilty of the remaining counts against him. 2 Rice was

sentenced to two five-year terms of probation, to run

concurrently, with no term of imprisonment. Rice’s sole

challenge on appeal is the sufficiency of the evidence at trial.

We have reviewed the record and find no reversible

error. Accordingly, we affirm.

I.

Both Jacobs and Rice contend that the Government

presented insufficient evidence at trial to support their

convictions. It is well settled that “[a] defendant challenging

the sufficiency of the evidence faces a heavy burden.” United

States v. Foster, 507 F.3d 233, 245 (4th Cir. 2007). We review

such challenges de novo. United States v. Kelly, 510 F.3d 433,

440 (4th Cir. 2007). In so doing, “we view the evidence on

appeal in the light most favorable to the government in

determining whether any rational trier of fact could find the

essential elements of the crime beyond a reasonable doubt.”

United States v. Cone, 714 F.3d 197, 212 (4th Cir. 2013) (citing

United States v. Collins, 412 F.3d 515, 519 (4th Cir. 2005)).

We do not weigh the evidence or review the credibility of the

2
Rice was not charged in Counts 15-20 of the superseding
indictment for money laundering to conceal mail fraud, in
violation of 18 U.S.C. § 1956.

4
trial witnesses, and we assume that the jury resolved all

discrepancies in testimony in favor of the government. See id.

“We will uphold the jury’s verdict if substantial evidence

supports it and will reverse only in those rare cases of clear

failure by the prosecution.” Id.

A.

Jacobs first contends that there was insufficient

evidence to support his mail fraud convictions. To convict an

individual of mail fraud, in violation of 18 U.S.C. § 1341, the

Government must prove beyond a reasonable doubt that the

defendant: (1) devised a scheme to defraud; and (2) used the

mails in furtherance of the scheme. See United States v. Wynn,

684 F.3d 473, 477 (4th Cir. 2012). Proof of a “scheme to

defraud” requires proof of “the specific intent to deprive one

of something of value through a misrepresentation or other

similar dishonest method, which indeed would cause him harm.”

Id. at 478. Jacobs argues only that the Government failed to

prove beyond a reasonable doubt that he had the specific intent

to deprive Alliance’s investors of their money. Therefore, only

the first element of mail fraud is at issue here.

When viewed in the light more favorable to the

Government, it is clear that substantial evidence was presented

for a rational jury to conclude beyond a reasonable doubt that

Jacobs engaged in mail fraud. The evidence demonstrated that

5
Jacobs falsely told investors that the money invested with

Alliance Financial Services, Inc. (“Alliance”) would be put into

legitimate investment vehicles, such as real estate. 3 He also

falsely represented to investors that the investments would earn

interest and that the investments were secure and backed by

Jacobs’ personal assets. In addition, Jacobs misleadingly

failed to disclose the actual use of Alliance funds, which

included transfers to JBS, transfers to pay off Jacobs’ own

personal and business debts, and repayments of earlier

investors. There was substantial evidence for a rational trier

of fact to conclude that Jacobs made these misrepresentations

and omissions to investors with the intent to induce victims to

invest and reinvest their money with Alliance.

B.

Jacobs and Rice both argue that there was insufficient

evidence to support their convictions for transactional money

3
In 1998, Jacobs organized and formed JBS, Inc. (“JBS”) in
Newport News, Virginia. JBS operated several low power
television stations, which broadcasted religious sermons in
local markets from area pastors and sold advertising and
airtime. Jacobs was the president of JBS and owned the majority
of its shares. Rice began working at JBS in the early 2000s,
handling the technical operations for the television stations.

In 2005, JBS and Jacobs were experiencing significant
financial problems -- the debts of JBS and Jacobs totaled
approximately $1.9 million. In December 2005, Jacobs
incorporated Alliance. Jacobs was the president of Alliance,
and Rice was its secretary/treasurer.

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laundering. The offense of transactional money laundering, in

violation of 18 U.S.C. § 1957(a), requires the Government to

prove beyond a reasonable doubt that the defendant knowingly

engaged “in a monetary transaction in criminally derived

property of a value greater than $10,000 and is derived from

specified unlawful activity.” 18 U.S.C. § 1957(a); United

States v. Cherry, 330 F.3d 658, 668 (4th Cir. 2003). “Criminal

derived property” is defined by statute as “any property

constituting, or derived from, proceeds obtained from a criminal

offense.” 18 U.S.C. § 1957(f)(2). Therefore, to convict Jacobs

and Rice of this offense, the jury was required to find: (1)

that Jacobs and Rice knowingly participated in a monetary

transaction involving criminally derived property; and (2) that

the criminally derived property was proceeds derived from

specified unlawful activity -- that is, the mail fraud in Counts

2-6 under 18 U.S.C. § 1341. See Cherry, 330 F.3d at 668.

With respect to Jacobs, his sole challenge to his

convictions for transactional money laundering is entirely

derivative of his challenge to his mail fraud convictions.

Specifically, Jacobs argues that because he did not engage in

mail fraud, he necessarily could not have been convicted of

transactional money laundering. However, as explained above,

Jacobs’ mail fraud convictions were supported by substantial

7
evidence. Therefore, his argument challenging his convictions

for transactional money laundering fails.

Turning now to Rice, he first argues that the evidence

at trial was insufficient to show that he personally effected

the transfers that supported Counts 8-14. He contends that the

Government offered no testimony or evidence to indicate which

defendant signed the checks or transferred the funds. This

argument is unpersuasive. The Government presented substantial

evidence of the differences between the checks to which Jacobs

admitted to signing Rice’s name and the other checks written

from Alliance’s bank account. Some of these differences

included the manner in which the “payee” line and the “amount”

line was written. In addition, the Government presented

differing “Chris Rice” signatures, which demonstrated one style

of signature on the check that Jacobs acknowledged he signed and

a different style on the remaining checks that support Counts 8-

14. Finally, the Government presented the jury with checks from

Rice’s personal bank account. The jury was permitted to compare

authentic handwriting (i.e., on Rice’s personal checks) to

contested handwriting (i.e., on checks supporting Counts 8-14)

and conclude that they match. See United States v. Dozie, 27

F.3d 95, 98 (4th Cir. 1994) (explaining that under Federal Rule

of Evidence 901(b)(3), expert opinion on handwriting is not

necessary). Therefore, there was substantial evidence to

8
support the jury’s conclusion that Rice personally effected the

transfers that supported Counts 8-14.

Rice next argues that the Government failed to

demonstrate that Rice knew that the funds in question involved

criminally derived property. Rice contends that the Government

did not present any evidence that Rice knew of any fraudulent

activity separate from that which was presented in Count 1

(Conspiracy) and Counts 2-6 (Mail Fraud), which was rejected by

the jury as to Rice. While it is true that the jury returned

not guilty verdicts for the conspiracy and mail fraud charges

with respect to Rice, there was evidence presented at trial that

Rice was aware that the funds he was transferring from Alliance

to JBS came from Jacobs’ fraud on the investors. Specifically,

Rice’s notes from board meetings demonstrated that he was aware

of Jacobs’ misrepresentations to Alliance investors.

Nevertheless, Rice wrote a number of checks from Alliance’s

account for purposes that were inconsistent with the

representations that he knew Jacobs had made to investors. In

addition, there was evidence that Rice told investor Susan

Canning, who invested $100,000 with Alliance, that Alliance

funds would be used to offer mortgages and loans to members of

the church. The evidence, however, demonstrated that Alliance

funds were actually transferred to JBS, Jacobs, and Rice.

Therefore, there was substantial evidence to support the jury’s

9
conclusion that Rice knowingly participated in a monetary

transaction involving criminally derived property. 4

Finally, Rice relies on the Supreme Court’s decision

in United States v. Santos, 553 U.S. 507 (2008) to argue that

the term “proceeds” in 18 U.S.C. § 1957 should be defined

narrowly to mean only “profits” and not the “total receipts”

from unlawful activity. As the Government correctly explains,

Santos is inapplicable here. Our court has summarized the

Supreme Court’s holding in Santos as follows: “in order to avoid

a merger of the crimes of money laundering and operating an

illegal gambling business, the term ‘proceeds’ in the money

laundering statute must be construed to mean ‘net profits,’ not

‘gross receipts,’ of the illegal gambling business.” United

4
Although the jury acquitted Rice of the mail fraud and the
conspiracy to commit mail fraud counts, this does not mean that
there was insufficient evidence to support a jury’s finding that
Rice knew the funds at issue in Counts 8-14 came from unlawful
activity. The mens rea requirement under the statute is only
that the defendant knows that the monetary transaction involves
“criminally derived property.” 18 U.S.C. § 1957(a). Criminally
derived property “means any property constituting, or derived
from, proceeds obtained from a criminal offense.” Id.
§ 1957(f)(2). Indeed, “the Government is not required to prove
the defendant knew that the offense from which the criminally
derived property was derived was specified unlawful activity.”
Id. § 1957(c) (emphasis supplied). All the Government must
prove is that the defendant knew that the property was obtained
from some criminal offense. Therefore, Rice’s acquittals
relating to mail fraud -- which is “specified unlawful activity”
under the statute -- does not automatically mean that there was
insufficient evidence to support Rice’s conviction for
transactional money laundering.

10
States v. Halstead, 634 F.3d 270, 271 (4th Cir. 2011). We

further explained that “when the illegal activity includes money

transactions to pay for the costs of the illegal activity, a

merger problem can occur if the [G]overnment uses those

transactions also to prosecute the defendant for money

laundering.” Id. at 279. Here, however, “the financial

transactions of the predicate offense” -- i.e., Jacobs’ mail

fraud -- “are different from the transactions prosecuted as

money laundering” -- i.e., Rice’s subsequent transfers of

Alliance funds. See id. at 279-80. Therefore, there is no

merger problem and Santos does not apply.

C.

Jacobs next argues that there was insufficient

evidence to support his additional money laundering convictions

in Counts 15-20. The offense of money laundering to conceal

mail fraud, in violation of 18 U.S.C. § 1956(a)(1)(B)(i),

requires the Government to prove beyond a reasonable doubt the

following four elements: (1) an actual or attempted financial

transaction; (2) involving the proceeds of a specified unlawful

activity; (3) knowledge that the transaction involves the

proceeds of some unlawful activity; and (4) knowledge that the

transaction was designed in whole or in part to conceal the

nature, location, source, ownership, or control of the proceeds

of a specified unlawful activity. Cone, 714 F.3d at 214.

11
 Just like Jacobs’ challenge to his convictions for

transactional money laundering described above, Jacobs’ sole

challenge to his convictions for money laundering to conceal

mail fraud is entirely derivative of his challenge to his mail

fraud convictions. Specifically, Jacobs argues that because he

did not engage in mail fraud, he necessarily could not have been

convicted of money laundering to conceal mail fraud. However,

as explained above, Jacobs’ mail fraud convictions were

supported by substantial evidence. Therefore, his argument

challenging his convictions for money laundering to conceal mail

fraud fails.

D.

Finally, both Jacobs and Rice contend that there was

insufficient evidence to support their convictions for forgery.

To convict an individual of possessing and uttering a forged

security, in violation of 18 U.S.C. § 513(a), the Government

must prove beyond a reasonable doubt that the defendant did (1)

make, utter, or possess (2) a forged security of an organization

(3) with intent to deceive another person, organization, or

government. 18 U.S.C. § 513(a).

With respect to Jacobs, when viewed in the light most

favorable to the Government, substantial evidence was presented

for a rational jury to conclude beyond a reasonable doubt that

Jacobs possessed and uttered a forged security with the intent

12
to deceive another person. Rice was the only signatory on

Alliance’s bank account, and a bank representative testified

that no one other than Rice was authorized to sign checks from

the Alliance account. However, there was substantial evidence

at trial from which a jury could conclude that Jacobs signed

Rice’s name to numerous checks from Alliance’s bank account

without authorization. A number of examples of the handwriting

of Jacobs and Rice were introduced during the course of trial.

In particular, Jacobs stipulated to having prepared and signed

Rice’s name to the check supporting Count 25, and he testified

to having repeatedly signed Rice’s name on Alliance checks. The

check supporting Count 25 as well as various other checks were

presented to the jury. The jury was entitled to consider the

handwriting evidence and the testimony regarding who signed the

various checks to determine whether Jacobs possessed and uttered

a forged security. See Dozie, 27 F.3d at 98. Accordingly,

there was substantial evidence for the jury to convict Jacobs of

Counts 21 through 29.

Turning next to Rice, when viewed in the light most

favorable to the Government, substantial evidence was presented

for a rational jury to conclude beyond a reasonable doubt that

Rice possessed and uttered a forged security in support of his

conviction for Count 25. Count 25 relates to a check written by

Jacobs to Pastor Willie Royster on August 21, 2007 from the

13
Alliance account, on which Jacobs signed Rice’s name. Pastor

Royster had requested a withdrawal of the funds he had invested

in Alliance because of his dissatisfaction with Jacobs and

Alliance. The August 21, 2007 check bounced. At a September

2007 board meeting, Rice attempted to explain what happened,

claiming that the bad check was written from the wrong Alliance

account. The evidence at trial, however, revealed that Alliance

only had one bank account. Rice’s attempted explanation was

evidence from which a jury could concluded that Rice had

knowledge and involvement with the August 21, 2007 check, which

the jury concluded was a forgery to support Jacobs’ Count 25

conviction.

Moreover, because Rice was the sole authorized signer

on Alliance’s account, Rice received account statements, which

would have demonstrated a number of instances in which Jacobs

admittedly signed Rice’s name to Alliance checks. Indeed, based

on the evidence that Rice regularly received Alliance account

statements that indicated checks had been signed by someone

other that Rice, the jury was permitted to infer that Rice made

Alliance checks available to Jacobs despite Rice’s knowledge of

Jacobs’ practice of signing Rice’s name to checks. One such

check was the August 21, 2007 check, which all parties

stipulated was signed by Jacobs. Therefore, there was

substantial evidence for the jury to convict Rice of Count 25.

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 II.

As an alternative to his sufficiency of evidence

arguments, Jacobs challenges the district court’s calculation of

his Sentencing Guidelines range. We review a sentence for

reasonableness, applying an abuse of discretion standard. Gall

v. United States, 552 U.S. 38, 51 (2007). In considering

whether a district court properly applied the Sentencing

Guidelines, “we review the district court’s factual findings for

clear error and its legal conclusions de novo.” United States

v. Osborne, 514 F.3d 377, 387 (4th Cir. 2008) (internal

quotation marks omitted). Clear error exists “only if, on the

entire evidence, we are left with the definite and firm

conviction that a mistake has been committed.” United States v.

Manigan, 592 F.3d 621, 631 (4th Cir. 2010) (internal quotation

marks and alterations omitted).

A.

Jacobs first argues that the district court erred in

adopting the Presentence Report’s (the “PSR”) calculation of

attributable loss at more than $400,000 and assessing a

corresponding 14-level enhancement under United States

Sentencing Guidelines (“U.S.S.G.”) § 2B1.1(b)(1)(H). When

calculating attributable loss, the Guidelines provide for

certain amounts to be credited toward the loss. The commentary

to the Guidelines states, “[i]n a case involving collateral

15
pledged or otherwise provided by the defendant,” the amount to

be credited toward the loss is “the amount the victim has

recovered at the time of sentencing from disposition of that

collateral, or if the collateral has not been disposed of by

that time, the fair market value of the collateral at the time

of sentencing.” U.S.S.G. § 2B.1.1 cmt. n.3(E)(ii).

Jacobs contends that the district court should have

credited, against his attributable loss, the value of the

“collateral” that Jacobs “pledged” to secure the investments in

Alliance. Jacobs cites testimony from trial showing that he

executed multiple promissory notes pledging those assets

constituting his personal net worth as collateral to cover all

of the loans made from Alliance to JBS and Jacobs personally.

According to Jacobs, these assets included television stations

and FCC licenses owned by JBS, which had a fair market value of

between two and half and three million dollars. Jacobs is

wrong.

As the Government notes, “collateral” refers to

property that is pledged as security against a debt. See

Black’s Law Dictionary (9th ed. 2009). Neither the promissory

notes nor Jacobs’ oral guarantees ever identified any specific

“property” that served as security for the investor’s

investments in Alliance. Although Jacobs owned the television

stations and the potentially valuable FCC licenses that came

16
with them, the testimony at trial revealed that one cannot grant

a security interest in an FCC license. As such, it was not

clearly erroneous for the district court to refuse to credit the

fair market value of the FCC licenses against Jacobs’

attributable loss. Accordingly, the district court did not err

in adopting the PSR’s calculation of attributable loss at more

than $400,000 and assessing a corresponding 14-level

enhancement.

B.

Jacobs next argues that the district court erred by

assessing a four-level enhancement under U.S.S.G.

§ 2B1.1(b)(2)(B), which provides that the offense level should

be increased four levels if the offense involved 50 or more

victims. The commentary to the Guidelines defines “victim” as

“any person who sustained any part of the actual loss determined

under subsection (b)(1).” U.S.S.G. § 2B1.1 cmt. n.1. “Actual

loss” in turn is defined as “the reasonably foreseeable

pecuniary harm that resulted from the offense.” Id. § 2B1.1

cmt. n.3(A)(i). Jacobs contends that because many of the

investors were reimbursed for their losses prior to sentencing,

the actual number of victims was less than 50.

Jacobs’ PSR contains a chart that identifies 138

victims and lists the amount each gave to Alliance, the amount

that was returned, and the amount still owed. The PSR, which

17
the district court adopted, notes that of the victims who had

been repaid, “most were repaid after an investigation was

initiated by agents.” J.A. 1741.

Jacobs does not challenge this finding, but merely

contends that only the 30 victims to whom Jacobs was ordered to

pay restitution could be counted as victims. The commentary to

U.S.S.G. § 2B1.1, however, makes clear that that is not correct.

Specifically, comment 3(E) states:

(E) Credits Against Loss.—Loss shall be reduced by the
following:
(i) The money returned . . . by the defendant or
other persons acting jointly with the defendant, to
the victim before the offense was detected. The time
of detection of the offense is the earlier of (I) the
time the offense was discovered by a victim or
government agency; or (II) the time the defendant knew
or reasonably should have known that the offense was
detected or about to be detected by a victim or
government agency.

U.S.S.G. § 2B1.1 cmt. n.3(E). This comment demonstrates that

the amounts obtained by Alliance but repaid after Jacobs had

reason to know his offense was detected or about to be detected

constitute part of the actual loss. As such, the people and

entities from whom Alliance obtained this money constitute

victims of his offense, regardless of whether they were still

owed money at the time of sentencing. Accordingly, the district

court did not err in concluding that Jacobs’ offense involved 50

or more victims.

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 C.

Jacobs next challenges the district court’s inclusion

of a two-level enhancement after finding that Jacobs’ conduct in

running Alliance constituted “sophisticated means” of fraud

pursuant to U.S.S.G. § 2B1.1(b)(10). The commentary to the

Guidelines defines “sophisticated means” as “especially complex

or especially intricate offense conduct pertaining to the

execution or concealment of the offense.” Id. § 2B1.1 cmt.

n.8(B). Examples of sophisticated means include “hiding assets

or transactions, or both, through the use of fictitious

entities, corporate shells, or offshore financial accounts.”

Id.

In this case, the district court found that the

sophisticated means enhancement was appropriate because Alliance

did not conduct any real investing or any legitimate business.

Instead, it existed solely so that Jacobs could hide from the

investors the transactions in which he paid his old business

debts and personal expenses. In addition, Jacobs made

misrepresentations to the board members so they would recruit

additional investors into Alliance. Jacobs promised high

returns on investments, but he initially repaid investors the

promised rates using other investors’ money. These findings

were not clearly erroneous.

19
 Jacobs promised investors that he would safely invest

their money, but instead he transferred it to JBS, to himself,

and to Rice. All the while, Jacobs assured investors that their

investments were safe and earning a return. Jacobs engaged in

conduct amounting to intentional concealment so that he could

improperly use investor funds. Accordingly, the district

court’s findings were supported by substantial evidence, and it

did not err in applying the sophisticated means enhancement.

D.

Lastly, Jacobs challenges the four-level enhancement

pursuant to U.S.S.G. § 3B1.1(a) for being “an organizer or

leader of a criminal activity that involved five or more

participants or was otherwise extensive.” The commentary to the

Guidelines explains that, in considered whether a scheme is

“otherwise extensive,” the district court may consider “all

persons involved during the course of the entire offense.” Id.

§ 3B1.1 cmt. n.3. For instance, “a fraud that involved only

three participants but used the unknowing services of many

outsiders could be considered extensive.” Id. (emphasis

supplied).

In this case, the evidence is clear that Jacobs

organized and led Rice through the participation of Jacobs’

scheme to defraud Alliance investors. Therefore, Jacobs was an

“organizer or leader of criminal activity.” Further, the

20
district court’s finding that the scheme was “otherwise

extensive” was not clearly erroneous. Indeed, Jacobs created

and maintained a business entity for more than three and a half

years, fraudulently obtained money from 138 different

individuals and entities, and relied on the unwitting

participation of at least six pastors whom Jacobs made board

members of Alliance. Jacobs was dishonest with the board

members, each of whom then solicited investments from their

church members. Considering these facts, the district court did

not err in finding that Jacobs was a leader or organizer of

criminal activity that was “otherwise extensive.”

III.

For the reasons stated, we affirm Jacobs’ conviction

and sentence. We also affirm Rice’s conviction. We dispense

with oral argument because the facts and legal contentions are

adequately presented in the materials before this court and

argument would not aid the decisional process.

AFFIRMED

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