[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________ FILED
U.S. COURT OF APPEALS
No. 05-10624 ELEVENTH CIRCUIT
December 26, 2006
________________________
THOMAS K. KAHN
CLERK
D.C. Docket No. 02-20451-CR-AJ
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
HUBERT GARLAND EVANS,
Defendant-Appellant.
_____________________________
Appeal from the United States District Court
for the Southern District of Florida
____________________________
(December 26, 2006)
Before PRYOR and FAY, Circuit Judges, and STEELE,* District Judge.
_____________________
*The Honorable William H. Steele, United States District Court for the Southern District
of Alabama, sitting by designation.
STEELE, District Judge:
Appellant Evans was convicted of wire fraud under 18 U.S.C. § 1343, based
on a May 22, 1997 telefax from the victim to Evans. The sole issue presented is
whether the jury was entitled to find that Evans caused this telefax to be sent “for
the purpose of executing” the scheme within the contemplation of Section 1343.1
We conclude that the jury was so entitled.
I. BACKGROUND
Evans was president of Jagar Limited, which imported produce to the
Bahamas for resale. Mark Mayrsohn was president of Produce Direct, Inc.
(“PDI”), which was Jagar’s primary supplier of produce. In 1995, PDI acquired
credit insurance from the Export-Import Bank to address the risk of non-payment
by Jagar. In mid-1996, in conjunction with its application to renew its policy, PDI
requested a financial report from Jagar. Jagar produced to PDI a financial
statement showing the company as profitable through the fiscal year ending June
30, 1996, even though an independent auditor’s report prepared in February 1997
1
Section 1343 provides, in pertinent part, that “[w]hoever, having devised ... any scheme
or artifice to defraud, or for obtaining money or property by means of false or fraudulent
pretenses, representations, or promises, transmits or causes to be transmitted by means of wire ...
communication in interstate or foreign commerce, any writings ... for the purpose of executing
such scheme or artifice,” shall be punished as set forth therein.
2
reflected that Jagar suffered a net loss of almost $1,000,000 during that fiscal year
and described its survival as in “substantial doubt.” The renewal policy was
issued effective September 1, 1996, with a term expiring May 1, 1997. Under the
terms of the policy, PDI was required to report to the insurer arrearages of over
120 days and to make reasonable collection efforts before filing a claim.
Jagar regularly purchased $100,000 or more of produce a week and, until
early 1997, it paid PDI’s invoices within 30 days or a bit more. At that point,
Jagar’s payments became smaller, such that its outstanding balance swelled to
over $1,100,000 by late April. On April 25, Jagar abruptly switched suppliers, but
on May 2 and May 13 it made payments to PDI totaling approximately $70,000.
On May 20, Mayrsohn telefaxed Evans a letter announcing his imminent
visit to the Bahamas and requesting a meeting to discuss the companies’ present
and future business relations. Mayrsohn then called Jagar’s bookkeeper, Diane
Fletcher, and scheduled a meeting with Evans for May 26. On May 22, Mayrsohn
telefaxed to Fletcher the letter on which conviction was based,2 the body of which
reads as follows:
Just a short note to confirm our meeting together with Mr. Evans on
2
The indictment was not returned until May 21, 2002. Thus, all earlier communications
(including transmission of the false financial statement) fell outside the statute of limitations and
could not form the basis of prosecution. See 18 U.S.C. § 3282(a).
3
Monday at 2:30 p.m. at your offices.
For your review I’ve enclosed some preliminary information, a report of the
current receivables with the aging from the invoice date. As discussed, we
must stay within 120 days for the Ex-Im Bank.
Your account is right now at that limit and we should be receiving your
payments now in order to keep up with the schedule.
We hope that you are preparing something to send us for this week and can
continue to stay within the 120 day Ex-Im requirement.
We look forward to a positive and successful meeting together.
On May 23, Fletcher telefaxed a letter to Mayrsohn confirming the Monday
meeting and listing invoices that needed to be reconciled between the parties. At
the May 26 meeting in the Bahamas, Evans made clear that Jagar would not give
PDI any new business or write a check on the spot, but he assured Mayrsohn that
Jagar would promptly send another check and would pay off its debt. On May 30,
Jagar sent PDI a check for $27,511.60, which paid in full the three oldest invoices.
On June 16, Jagar sent PDI a check for $12,015.90, which paid in full the next
oldest invoice. These were the last payments Jagar made, leaving an unpaid
principal balance of almost $1,100,000.
The jury convicted Evans on three counts of wire fraud, involving the May
22 telefax as well as subsequent transmissions from Mayrsohn to Evans dated
June 27 and July 3. The district court granted Evans’ motion for judgment of
acquittal with respect to the latter two letters but denied the motion with respect to
the May 22 telefax.
4
II. STANDARD OF REVIEW
“We review de novo the denial of a motion for judgment of acquittal.”
United States v. Hernandez, 433 F.3d 1328, 1332 (11th Cir. 2005). “When the
motion raises a challenge to the sufficiency of the evidence, we review the
sufficiency of the evidence de novo, drawing all reasonable inferences in the
government’s favor.” Id. (internal quotes omitted). “To affirm the denial ..., we
need determine only that a reasonable factfinder could conclude that the evidence
established the defendant’s guilt beyond a reasonable doubt.” United States v.
Perez, 443 F.3d 772, 774 (11th Cir. 2006).
III. DISCUSSION
A transmission is “for the purpose of executing” the scheme if it is “incident
to an essential part of the scheme.” Pereira v. United States, 347 U.S. 1, 8, 74
S.Ct. 358, 362-63, 98 L.Ed. 435 (1954). “Letters mailed after a scheme has
reached fruition cannot have been ‘for the purpose of executing’ the scheme
within the meaning of 18 U.S.C. s 1341.” United States v. Georgalis, 631 F.2d
1199, 1204 (5th Cir. 1980).3 This description of “fruition” as the critical juncture
3
The mail fraud statute, like its wire fraud counterpart, applies to transmissions “for the
purpose of executing such scheme or artifice.” 18 U.S.C. § 1341. Because “[t]he ‘scheme or
artifice to defraud’ and ‘for the purpose of executing’ language in the mail and wire fraud statutes
5
derives from Kann v. United States, 323 U.S. 88, 65 S.Ct. 148, 89 L.Ed. 88 (1944),
in which the Court held that, because the scheme “had reached fruition” before the
transmissions at issue, “[i]t cannot be said that the mailings in question were for
the purpose of executing the scheme, as the statute requires.” Id. at 94, 65 S.Ct. at
151. Supreme Court and Eleventh Circuit cases have since repeatedly identified
“fruition” of the scheme as the point beyond which mail and wire transmissions
cannot be in furtherance of the scheme.4 E.g., Schmuck v. United States, 489 U.S.
705, 711-12, 109 S.Ct. 1443, 1448, 103 L.Ed.2d 734 (1989); United States v.
Maze, 414 U.S. 395, 402, 94 S.Ct. 645, 649, 38 L.Ed.2d 603 (1974); United States
v. Adkinson, 158 F.3d 1147, 1163 (11th Cir. 1998) (“We have not hesitated to
reverse mail fraud convictions where the underlying scheme has reached fruition
prior to the mailing.”).
A scheme has “reached fruition” when it is “fully consummated.”
Henderson v. United States, 425 F.2d 134, 141 (5th Cir. 1970); accord United
States v. Kent, 608 F.2d 542, 546 & n.6 (5th Cir. 1979); see also Kann, 323 U.S. at
94, 65 S.Ct. at 151 (“The scheme in each case had reached fruition [because] [t]he
are construed identically,” United States v. Hasson, 333 F.3d 1264, 1271 n.7 (11th Cir. 2003),
we borrow freely from cases construing Section 1341.
4
This Court sometimes uses the phrase “in furtherance of the scheme” in lieu of the
quoted statutory language. E.g., Hasson, 333 F.3d at 1270; United States v. Italiano, 837 F.2d
1480, 1482 (11th Cir. 1988). The two phrases carry the same meaning.
6
persons intended to receive the money had received it irrevocably” and “[i]t was
immaterial to them, or to any consummation of the scheme, how the bank which
paid or credited the check would collect from the drawee bank.”).
Evans describes the “true objective” of the scheme as getting PDI to
continue supplying produce on credit. That objective, Evans continues, was fully
accomplished by April 25, when Jagar stopped acquiring produce from PDI.
Thus, he concludes, the scheme had reached fruition by that date, such that
Mayrsohn’s telefax of May 22 could not have been for the purpose of executing
the scheme.5
To the extent Evans assumes that a scheme to defraud necessarily reaches
“fruition” when the defendant receives the “fruit” of his fraud, he is mistaken.
“[I]t is a well-established principle of mail fraud law that use of the mails after the
money is obtained may nevertheless be ‘for the purpose of executing’ the fraud.”
United States v. Ashdown, 509 F.2d 793, 799 (5th Cir. 1975). “If the scheme
continues, mailings made after receipt of the money can clearly support
5
Evans suggests in the alternative that the scheme reached fruition when the renewal
policy was issued in September 1996, apparently on the theory that, with the policy in place, PDI
could have no hesitation about supplying endless produce on credit. Evans’ premise is facially
implausible, since the policy covered only 90% of the first $600,000 in losses, while Jagar’s debt
reached $1.1 million. At any rate, the superseding indictment charged, and Evans concedes, that
the purpose of the fraud included actually obtaining produce on credit, not simply increasing the
probability of doing so. Thus, the scheme could not have reached fruition before April 25.
7
conviction.” United States v. Knight, 607 F.2d 1172, 1175 (5th Cir. 1979). “This
is another way of saying that the scheme may embrace more than just fraudulent
acquisition of money or documents.” United States v. Kent, 608 F.2d 542, 546
(5th Cir. 1979). For example, a “two pronged” scheme may include both “writing
checks on closed accounts to obtain goods and services without paying for them”
and “working to retain those goods as long as possible by convincing merchants
and banks that the ... checks were actually legitimate.” United States v. Lee, 427
F.3d 881, 888 (11th Cir. 2005).
More specifically, “[p]recedent is clear that letters designed to conceal a
fraud, by lulling a victim into inaction, constitute a continuation of the original
scheme to defraud.” Georgalis, 631 F.2d at 1204. That is, when the scheme
includes not only obtaining the benefit of the fraud but also delaying detection of
the fraud by lulling the victim after the benefit has been obtained, the scheme is
not fully consummated, and does not reach fruition, until the lulling portion of the
scheme concludes. The Government concedes that Evans had received the full
benefit of his fraud as of April 25. The issue is whether Mayrsohn’s May 22
telefax falls within this lulling doctrine.
The doctrine traces its roots to United States v. Sampson, 371 U.S. 75, 83
S.Ct. 173, 9 L.Ed.2d 136 (1962):
8
[T]he indictment in this case alleged that the defendants’ scheme
contemplated from the start the commission of fraudulent activities which
were to be and actually were carried out both before and after the money
was obtained from the victims [and] specifically alleged that [certain
documents] were mailed by the defendants to the victims for the purpose of
lulling them by assurances that the promised services would be performed.
We cannot hold that such a deliberate and planned use of the United States
mails by defendants engaged in a nationwide, fraudulent scheme in
pursuance of a previously formulated plan could not ... be found ... to be ‘for
the purpose of executing’ a scheme within the meaning of the mail fraud
statute.
Id. at 80-81, 83 S.Ct. at 176. The mailings at issue in Sampson, which were sent
by the defendants to multiple victims after the defendants “had obtained all the
money they expected to get from that victim,” id. at 79, 83 S.Ct. at 175, “were
designed to lull the victims into a false sense of security, postpone their ultimate
complaint to the authorities, and therefore make the apprehension of the
defendants less likely than if no mailings had taken place.” Maze, 414 U.S. at
403, 94 S.Ct. at 650. Such transmissions fall within the lulling doctrine. E.g.,
United States v. Lane, 474 U.S. 438, 452, 106 S.Ct. 725, 733, 88 L.Ed.2d 814
(1986); United States v. Hewes, 729 F.2d 1302, 1321 (11th Cir. 1984); United
States v. Toney (“Toney I”), 598 F.2d 1349, 1353 (5th Cir. 1979). Evans offers a
number of reasons why the lulling doctrine should not apply here, but none is
convincing.
First, Evans argues that the superseding indictment did not charge that his
9
scheme included lulling PDI into inaction after Jagar finished receiving produce
on credit. This argument was not asserted in Evans’ initial brief, and “[a]rguments
raised for the first time in a reply brief are not properly before a reviewing court.”
Herring v. Secretary, Department of Corrections, 397 F.3d 1338, 1342 (11th Cir.
2005) (internal quotes omitted). At any rate, the superseding indictment charged
that, as part of the scheme or artifice to defraud, “[t]o lull PDI and the Ex-Im Bank
and prevent them from detecting Jagar’s true financial condition and the falsity of
Jagar’s submitted financial statements, on repeated occasions [Evans] falsely
represented and caused to be falsely represented to PDI that Jagar was in good
financial condition, and that Jagar had the financial ability to pay its escalating
outstanding balance to PDI.” Evans concedes that these allegations “essentially
asserted that the May 22nd fax was a ‘lulling’ letter.”
Second, Evans argues that the lulling doctrine applies only if the defendant
continues to perpetrate similar frauds, as in a Ponzi scheme. This is a common
scenario, because the lulling of earlier victims facilitates the defrauding of later
victims,6 but the doctrine applies equally when, as here, there is but a single victim,
6
See, e.g., United States v. Brewer, 807 F.2d 895, 898 (11th Cir. 1987) (applying the
lulling doctrine where the scheme “was designed so that the investors’ early demands for
repayment were delayed for a sufficient time to allow [the defendant] to repay them by using
monies which were received as more and more victims later contributed”); Georgalis, 631 F.2d
at 1204 (applying the lulling doctrine where the defendant continued to solicit further funds from
investors); United States v. Toney (“Toney II”), 605 F.2d 200, 206-07 (5th Cir. 1979) (applying
10
as to whom the defendant has received the full benefit of the fraud before the
lulling communication. See Lane, 474 U.S. at 441, 452-53, 106 S.Ct. at 727-28,
733-34 (applying the lulling doctrine to a scheme to defraud one insurer in
connection with one insured loss); see also Henderson, 425 F.2d at 141
(identifying delay in detection in order to perpetrate additional frauds, and delay in
detection by lulling the victim, as separate bases for finding a mailing to be in
execution of the scheme). Nor can we divine any reason why a doctrine that
applies to attempts to “postpone [victims’] ultimate complaint to the authorities,
and therefore make the apprehension of the defendants less likely” should be
triggered when the defendants’ reason for desiring to avoid apprehension is to
perpetrate future frauds but not when their motivation is to escape the legal
consequences of their past frauds.7
the lulling doctrine where, during the period the complaining victim was lulled, additional
investors were acquired); Toney I, 598 F.2d at 1353 & n.6 (applying the lulling doctrine where
“[a]n integral part of the scheme was reassuring past purchasers in order that future purchasers
could be persuaded to buy ... distributorships,” “thereby prolonging the life of the fraudulent
scheme”); see also Kann, 323 U.S. at 94-95, 65 S.Ct. at 151 (recognizing that a mailing after the
defendant has received the fruit of his fraud may be for the purpose of executing the scheme
“where the use of the mails is a means of concealment so that further frauds which are part of the
scheme may be perpetrated”).
7
Evans suggests that his argument is supported by Henderson, which noted that “one
common element in the ‘lulling’ cases is that the lulling devices comprised a fundamental part of
the basic scheme and its desired continued perpetration.” 425 F.2d at 143. The Henderson Court
did not hold that the lulling doctrine applies only when the defendant sought “continued
perpetration” of the fraud, and any dearth of cases applying the doctrine when the scheme
involves a single victim of a completed fraud vanished with Lane.
11
Evans next argues that the lulling doctrine applies to a transmission from a
victim only if the transmission was preceded by a lulling communication from the
defendant.8 This Court need not resolve whether the doctrine is so restricted,
because there were communications attributable to Evans prior to May 22 that a
properly functioning jury could have found to be lulling. First, the checks dated
May 2 and May 13 made it appear as though Jagar would honor its obligation to
pay off its debt. Second, Evans’ agreement (through Fletcher) to meet with
Mayrsohn made it appear as though Jagar was willing to negotiate a resolution of
the parties’ differences. See Toney I, 598 F.2d at 1354 (“So long as [the victim]
thought there was a possibility that matters could be settled through direct
negotiations with [the defendant], he was less likely to report the fraudulent
scheme.”).
Evans notes that he agreed to meet with Mayrsohn on short notice, which he
argues is incompatible with a lulling purpose. The jury was authorized to find
otherwise, especially since a refusal to meet might have fueled Mayrsohn’s
suspicions, while meeting with him allowed Evans the opportunity to more
8
Evans does not, and could not successfully, assert that a communication from a victim
can never fall within the lulling doctrine. See Brewer, 807 F.2d at 897-98 (applying the lulling
doctrine to demand letters from victims); Toney I, 598 F.2d at 1353-54 (applying the lulling
doctrine to letters from a victim’s attorney).
12
persuasively lull PDI into further delay. Moreover, the jury was entitled to view
the agreement to meet, and the partial payments sent in early May, in light of
Evans’ conduct in the days after May 22, which the jury could easily find to be
lulling: his May 23 telefax (through Fletcher) identifying particular invoices
requiring reconciliation before they could be paid, and his promise at the May 26
meeting to pay off Jagar’s debt, both of which falsely signaled that Jagar would
uphold its obligations.
Evans also complains that Mayrsohn, by his May 20 telefax requesting a
meeting, initiated the string of communications between them. Whatever the result
would have been had Evans remained silent, he did not do so, and his situation is
thus no different than that of the defendants in Toney I, who did not initiate the
correspondence but who (through their company) replied and who were found
liable based on subsequent letters from the victim’s attorney. 598 F.2d at 1352,
1354.
Evans next argues that the May 22 telefax lulled no one but instead advanced
the discovery of his fraud. As to the former point, the success of the lulling effort
is immaterial. Hewes, 729 F.2d at 1321 (“[T]he failure of the letters actually to lull
all of Rekcus’s creditors does not relieve the appellants of criminal liability
[because] [s]uccess of the fraudulent scheme is not an element of a Section 1341
13
offense.”); Toney I, 598 F.2d at 1354 n.8 (“Regardless of whether the content of the
two letters [by the victim’s attorney] had the effect of lulling anyone, ... the jury
could reasonably find that the participants in the fraudulent scheme intended that
[the attorney’s] writing and mailing of the count letters would at least delay further
complaints.”).
As to the latter, while a transmission from a victim may not be in furtherance
of the scheme if its “only likely effect would be to further detection of the fraud,”
United States v. LaFerriere, 546 F.2d 182, 187 (5th Cir. 1977), that principle has
been applied by this Court only when the victim recognizes the likelihood of fraud
and threatens to sound the alarm if not swiftly satisfied.9 Here, the May 22 telefax
did not demand immediate satisfaction but simply reminded Evans that PDI would
have to report arrearages over 120 days and expressed the “hope” that Jagar would
send sufficient funds to stay inside that boundary. Nor did PDI’s apparent intent to
comply with its insurer’s reporting requirement communicate a threat to involve the
authorities in ferreting out a fraud, especially one which neither the telefax nor the
evidence at trial indicates Mayrsohn then suspected. Evans’ related suggestion that
9
In LaFerriere, the victim “ strongly suspected that he was a victim of fraud,” and his
attorney’s letter “demand[ed]” satisfaction “within five days of receipt of this letter,” failing
which the victim would make an “immediate complaint” to the state insurance commission and
also “press both civil and criminal action.” 546 F.2d at 185 n.3, 186.
14
the telefax helped fulfill PDI’s obligation to make reasonable collection efforts
before seeking insurance benefits and thus “inch[ed] [PDI] closer to the date upon
which it could make a claim,” at best illustrates the unhelpful truism that, with each
passing day, a fraud comes closer to exposure as the remaining potential delay in
its discovery declines.
Finally, Evans argues that, in order to support conviction, his scheme as
originally hatched in 1996 must have included receiving communications such as
the May 22 telefax. For this he relies on Sampson, in which the Court noted that
the “scheme contemplated from the start” the use of lulling communications to
persuade investors that the promised services would be performed. 371 U.S. at 80,
83 S.Ct. at 176. Assuming without deciding that the intention to lull must be part
of the scheme from its inception, the intention to lull in any particular manner need
not be. On the contrary, “[a]s the execution of the scheme ... proceeds, new ways
may be adopted or invented to effectuate the original design,” since “[m]ere details
may be changed and the scheme remain the same.” Weiss v. United States, 122
F.2d 675, 680 (5th Cir. 1941). Evans does not challenge the superseding
indictment’s allegation that the scheme originally included lulling by means of
affirmative misrepresentations of Jagar’s financial health. It is thus irrelevant
whether the scheme also originally included lulling by other means.
15
Undeterred, Evans maintains that his scheme never included receiving
communications from the victim. The jury, however, was entitled to find
otherwise. As discussed above, by sending two teasing checks and agreeing to
meet and discuss the parties’ business relations, Evans appeared to engage in
lulling activity, especially when viewed through the prism of his post-May 22
behavior. The very purpose of lulling activity is to keep the victim dealing with the
defendant rather than with the authorities, and the agreement to meet on May 26
was a clear indication that PDI should continue to deal with Evans. Mayrsohn’s
May 22 telefax confirming the meeting and preparing for it did precisely that and
was thus part and parcel of the scheme to delay detection of the fraud by lulling
PDI into believing that the parties’ difficulties would be worked out. To borrow
from Toney I, “[i]f, as the jury could find, [Evans’] motive in inviting [PDI] to
continue the correspondence was to lull [PDI] into deferring any complaint to the
authorities, then [Mayrsohn’s] responses were an integral part of [Evans’]
fraudulent scheme.” 598 F.2d at 1354. The May 22 telefax was, in short, “incident
to an essential [lulling] part of the scheme.” Pereira, 347 U.S. at 8, 74 S.Ct. at
362-63.
16
IV. CONCLUSION
The jury’s determination that Evans caused the May 22 telefax to be sent
“for the purpose of executing” his scheme is consistent with governing law and is
supported by sufficient evidence. The trial court thus properly denied Evans’
motion for judgment of acquittal.
AFFIRMED.
17