U.S. v. Tansley

UNITED STATES COURT OF APPEALS
For the Fifth Circuit

No. 91-7396

UNITED STATES of AMERICA,

Plaintiff-Appellee,

VERSUS

GARRETT A. TANSLEY, a/k/a JERRY TANSLEY and
DOUGLAS RAYMOND COX, a/k/a DOUG KELLY,

Defendants-Appellants.

Appeals from the United States District Court
For the Northern District of Texas
(March 11, 1993)

Before REYNALDO G. GARZA, HIGGINGBOTHOM and DeMOSS, Circuit Judges.

REYNALDO G. GARZA, Circuit Judge:

Appellant Cox appeals (i) the amount of funds used to

calculate his offense level in sentencing; and appellant Tansley

appeals: (ii) the sufficiency of the evidence supporting his

conviction; (iii) the inclusion of a lottery statute violation as

one of the conspiracy's elements; (iv) the limitations placed upon

his defense cross-examinations; (v) the inadmissibility of several

letters into evidence; and (vi) and the court's finding that his

role was that of a manager or supervisor for sentencing purposes.

Upon review we find that these arguments are without merit and we
therefore affirm.

FACTS

This case involves a telemarketing scheme operated from

November 1, 1989 through July 31, 1990, involving 18 defendants and

over 3500 victims nationwide. Appellant, Douglas Cox, started the

boiler room operation and became its president. It was called the

National Awards Center (NAC) and was based in Arlington, Texas.

Appellant, Garrett Tansley, as a representative of a Florida

mailout center, Marketing Response Group (MRG), caused numbered

postcards to be mailed throughout the United States guaranteeing

that the recipient had won at least one of "Top 5 Fabulous

Premiums," each having stated retail values ranging from $500 to

$25,000. If the recipient called the number inquiring about their

prizes, he would be subjected to a high-pressure phone sale by a

scripted salesperson. The callers would be asked to purchase a

water filter worth about $45 for $429 and told that they would then

be eligible for two prizes. The phone seller would request the

caller's credit card number and would reassure the buyer that the

potential awards included a $25,000 car, a $5,000 cashier's check,

$5,000 in retail merchandise checks, men's and ladies' diamond

watches valued at $500 and a $1,000 U.S. Savings Bond. In reality

the only gifts ever sent were the merchandise checks worth from $0

to $7 and the watches worth between $15 and $30 each. The

misrepresentations in the sales pitch included statements that the

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Environmental Protection Agency (EPA) would require all homes to

have the filter within a year, that the chlorine in water caused

cancer, hardening of the arteries and other diseases and that the

filter would also remove all algae, rust, bad tasting odors and

radon gas from the water. There was testimony that in reality, the

tap water had no threat of chlorine poisoning and that other

various alleged harms were fabricated.

If a person would not purchase a filter he would then be asked

to send in $12.95 to obtain his or her prize, invariably the

worthless merchandise checks. The callers were also told that only

two percent received white postcards and that very few also had the

high number of 5000 on them and this meant that they had a very

high probability of winning. In reality all of the cards were

white and had the number 5000 printed on them and were identical in

all respects. NAC then had to find various companies to launder

the various credit card purchases because most banks would not

handle telemarketing transactions. The middlemen entities would

send the purchases though their own merchant accounts in order to

launder the credit card monies. These processors are called

factors and included the United Financial Group, Inc. having a

merchant account with Malibu Savings Bank, Costa Mesa, California;

American Data Base Corporation having a merchant account at

Huntington National Bank, Shaker Heights, Ohio; and S & G

Enterprises having a merchant account at Vermont National Bank,

Rutland, Vermont.

There was substantial testimony supporting the convictions of

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Cox and Tansley. Both men were convicted of conspiracy in count

one of the indictment delineating the objects of the agreement as

1) mail fraud, in violation of 18 U.S.C § 1341; 2) wire fraud, in

violation of 18 U.S.C. § 1343; 3) bank fraud, in violation of 18

U.S.C. § 1344; 4) the engagement of an unlawful lottery, in

violation of 18 U.S.C. § 1302; and 5) the laundering of monetary

instruments, in violation of 18 U.S.C. § 1956(a) (1) and (A) (i).

Tansley was charged with wire fraud in count 2, but he was found

not guilty of sending a fax interstate to Cox detailing the

operation. The indictment went on to charge Cox with a total of 15

counts.

Cox was sentenced to imprisonment for 121 months each on count

1 for conspiracy, and counts 3 through 9 and 27 for wire fraud. He

was further sentenced to 60 months each on counts 28 and 29 for

bank fraud and counts 30 through 33 for money laundering. All

sentences are to run concurrently. He was further sentenced to a

three year term of supervised release and ordered to pay $5,577

restitution and a $750 special assessment. Tansley was sentenced

on count 1 to 55 months imprisonment, to a three year supervised

release, ordered to pay $5,577 restitution and a $50 special

assessment.

ANALYSIS

I. Amount Used to Determine Cox's Offense Level

The fact that NAC was only able to siphon off a partial amount

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before the accounts were frozen does not change the conspiratorial

objective of laundering the entire operation's cash. The district

court's finding under the United States Sentencing Guideline §

2S1.1(b)1 on the value of funds involved in a money laundering

offense is reviewed for clear error. See United States v.

Richardson, 925 F.2d 112, 116 (5th Cir.), cert. denied, 111 S. Ct.

2868 (1991). Cox argues that only the amount that left the

account, $175,722, should be considered laundered, not the

$1,537,000 that was deposited at the various banks.2 We find that

the larger amount that was processed through the various factors

and then deposited in various banks were put in the laundering

process and the fact that all the money was not withdrawn is

irrelevant. We take into consideration all "[s]pecific offense

characteristics . . . all acts and omissions committed or aided and

abetted by the defendant, or for which the defendant would be

otherwise accountable . . . ." U.S.S.G. § 1B1.3, comment n.1; See

1
§ 2S1.1 provides in relevant part:
(2) If the value of the funds exceeded $100,000, increase
the offense level as follows:
Value (Apply the Greatest) Increase in Level
(A) $100,000 or less no increase
(B) More than $100,000 add 1
(C) More than $200,000 add 2
(D) More than $350,000 add 3
(E) More than $600,000 add 4
(F) More than $1,000,000 add 5
2
The total amount that was entered into the laundering
process, $1,537,000, was correctly used in the sentence
calculation as opposed to the lesser amount, $175,722 actually
withdrawn, enhanced Cox's guideline four offense levels, from one
to five. His sentence guideline increased from the range of 78
to 97 months to the range of 121 to 151 months. We note that
appellant was sentenced to the minimum, 121 months.

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also Richardson, 925 F.2d at 115 n.7. The intention of laundering

the entire amount is enough for sentencing purposes. Id. at 116.

Funds under negotiation in a laundering transaction are properly

considered in the calculation of a sentence. Id. at 116 n.12.

The court may also use the broader amount that defendants

could have been "reasonably capable" of laundering. United States

v. Fuller, 974 F.2d 1474, 1484 (5th Cir. 1992). Cox clearly

intended to launder all of the monies involved in the conspiracy

and was also reasonably capable of accomplishing this. Appellant

cites United States v. Johnson, 971 F.2d 562 (10th Cir. 1992), to

support his argument that only funds that actually come out of the

"washing process" should be used in the sentence calculation. This

case can be distinguished because in it there was only intent to

launder half of the money while in the instant case all of the

solicited funds were directed to factors for deposit in their

respective merchant accounts. It is not how much is taken out but

how much is intended to be put in the process. The intent to

cleanse the entire amount for further distribution is sufficient

and the court's finding was proper. We "will uphold the district

court's sentence so long as it results from a correct application

of the guidelines to factual findings which are not clearly

erroneous." United States v. Sarasti, 869 F.2d 805, 806 (5th Cir.

1989).

II. Sufficiency of Evidence to Convict Tansley of Conspiracy

The standard used for sufficiency of evidence is whether any

6
juror could reasonably find the evidence established guilt beyond

a reasonable doubt. United States v. Martinez, 975 F.2d 159, 161

(5th Cir. 1992). This court reviews the evidence, both direct and

circumstantial, and all its inferences, in the light most favorable

to the verdict. United States v. Osum, 943 F.2d 1394, 1404 (5th

Cir. 1991). To prove conspiracy the government is required to

prove beyond a reasonable doubt that two or more persons agreed to

commit a crime and that at least one of them committed an overt act

in furtherance of that agreement. United States v. Duncan, 919

F.2d 981, 991 (5th Cir. 1990), cert. denied, 111 S.Ct. 2036 (1991).

There is ample evidence of the agreement to commit the scheme, that

Tansley himself was a manager in that scheme and that he personally

committed acts in its implementation. The evidence was clearly

sufficient to support Tansley's conviction of conspiracy. There

was testimony that he presented various design and wording samples

to Cox and NAC and caused the cards to be actually mailed out.

There was also evidence that Tansley offered advice on which states

to mail to so as to avoid heightened scrutiny. The appellant knew

of the inflated value of the prizes actually sent and that the

alleged prizes never were actually won by anyone. He personally

had the cards modified to increase the closing rate of the scam's

victims.

Tansley took care of virtually all the logistics of the

conspiracy except for the phone sell. Several witnesses testified

that Tansley suggested and introduced various factors to the

telemarketers. In short, there was strong evidence that Tansley

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was not only involved in the conspiracy from the beginning but that

he also was a manager of the mailings and instrumental in

instituting the credit card slip laundering. The weight and

credibility of the evidence is solely decided by the jury. United

States v. Pena, 949 F.2d 751, 756 (5th Cir. 1991). "An appellate

court will not supplant the jury's determination of credibility

with that of its own." Martinez, 975 F.2d at 161. The government

clearly proved its charge of conspiracy against the appellant.

III. The Lottery Statute

The lottery statute, 18 U.S.C. § 1302,3 is not

3
Mailing lottery tickets or related matter
Whoever knowingly deposits in the mail, or sends or
delivers by mail:

Any letter, package, postal card, or circular concerning any
lottery, gift enterprise or similar scheme offering prizes
dependent in whole or in part upon lot or chance;
Any lottery ticket or part thereof, or paper certificate, or
instrument purporting to be or to represent a ticket, chance,
share, or interest in or dependent upon the event of a lottery,
gift enterprise, or similar scheme offering prizes dependent in
whole or in part upon lot or chance;
Any check, draft, bill, money, postal note, or money order,
for the purchase of any ticket or part thereof, or of any share
or chance in any such lottery, gift enterprise, or scheme;
Any newspaper, circular, pamphlet, or publication of any
kind containing any advertisement of any lottery, gift
enterprise, or scheme of any kind offering prizes dependent in
whole or in part upon lot or chance, or containing any list of
the prizes drawn or awarded by means of any such lottery, gift
enterprise, or scheme, whether said list contains any part or all
of such prizes;
Any article described in section 1953 of this title-
Shall be fined not more than $1,000 or imprisoned not more
than two years, or both; and for any subsequent offense shall be
imprisoned not more than five years.
Id.

8
unconstitutionally vague and the jury charge was proper. The void-

for-vagueness doctrine requires that a penal statute define the

criminal offense with sufficient definiteness so that an ordinary

person may understand what conduct is actually prohibited. See

Kolender v. Lawson, 461 U.S. 352, 357, 103 S.Ct. 1855, 75 L.Ed. 903

(1983). Only a reasonable degree of certainty is required. See

United States v. Barnett, 587 F.2d 252, 256 (5th Cir.), cert.

denied, 441 U.S. 923 (1979). The requirement that statutes give

fair notice cannot be used as a shield by someone who is already

intent on wrongdoing. See United States v. Brewer, 835 F.2d 550,

553 (5th Cir. 1987). The Supreme Court stated:

In a facial challenge to the overbreadth and
vagueness of a law, a court's first task is to
determine whether the enactment reaches a
substantial amount of constitutionally
protected conduct. If it does not, then the
overbreadth challenge must fail. The court
should then examine the facial vagueness
challenge and, assuming the enactment
implicates no constitutionally protected
conduct, should uphold the challenge only if
the enactment is impermissibly vague in all of
its applications.

Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489,

494-95, 102 S.Ct. 1186, 1191, 71 L.Ed.2d 362 (1982) (footnotes

omitted). There are no First Amendment arguments of overbreadth by

Tansley; rather he contends that the statute was vague in its

application to him. Upon examination, the statute was designed

specifically to prohibit Tansley's conduct. The term "lottery" has

been defined as a "scheme for the distribution of prizes or things

of value by lot or chance among persons who have paid or agreed to

pay a valuable consideration for the chance to obtain a prize."

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Peek v. United States, 61 F.2d 973, 974 (5th Cir. 1932). The

evidence shows that the "prizes" were not mailed unless the $12.95

was paid. This consideration was requested in order for the

victims to be actually awarded their prizes and therefore the

scheme constituted a lottery. The Supreme Court further stated in

Hoffman:

[V]agueness challenges to statutes which do
not involve First Amendment freedoms must be
examined in the light of the facts of the case
at hand. . . . One to whose conduct a statute
clearly applies may not successfully challenge
it for vagueness. . . . The rationale is
evident: to sustain such a challenge, the
complainant must prove that the enactment is
vague not in the sense that it requires a
person to conform his conduct to an imprecise
but comprehensive normative standard, but
rather in the sense that no standard of
conduct is specified at all.. . .

Hoffman, 455 U.S. at 495 n.7 (citations omitted). A very

definitive standard of conduct, conduct Tansley specifically

performed, is proscribed by the statute.

The jury charge also set out the various elements correctly.

"First, whoever knowingly deposits in the mail or sends or delivers

by mail; second, any letter, postcard, or circular; third, which

concerns the offering of a prize; fourth, upon the furnishing of

consideration; and fifth, that the distribution of the prize was by

chance." R. I, 480. The evidence supports all of these elements.

Tansley did in fact conduct a lottery and the statute's application

to the facts is definitive.

IV. Cross-Examination Limitations

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 Tansley argues that the court's limiting of his cross-

examinations denied him his 6th Amendment rights to a fair trial.

The points of limitation that Tansley now appeals were restricted

either because of repetitive or argumentative questioning and the

defense failed to preserve many of them by objection and offer. A

claim of error in excluding evidence must show that a substantial

right is affected and the substance was apparent or made known to

the court by offer. Fed. R. Evid. 103(a)(2); United States v.

Harrelson, 754 F.2d 1153, 1179 (5th Cir.), cert. denied, 474 U.S.

908 (1985). The Supreme Court has recognized that trial judges

retain wide latitude insofar as the Confrontation Clause is

concerned to impose reasonable limits on cross-examinations based

on among other things, harassment, prejudice, confusion of the

issues, the witness' safety, or interrogation that is repetitive or

only marginally relevant. Delaware v. Van Arsdall, 475 U.S. 673,

679, 106 S. Ct. 1431, 1435, 89 L.Ed 2d 674 (1986). The relevant

inquiry is whether the jury had sufficient information to appraise

the bias and motives of the witness. Smith v. Collins, 964 F.2d

483, 486 (5th Cir. 1992). The record shows that the witnesses'

potential biases and motives were adequately addressed by the

defense. The limitations by the court were made after the

questioning became redundant and argumentative and most times only

peripherally relevant. Tansley's rights were not infringed upon

nor was he deprived of a fair trial.

V. Inadmissibility of Letters

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 Tansley again argues that his right to a fair trial was denied

because he was not allowed to submit into evidence three letters.4

The admissibility of evidence is a matter within the discretion of

the trial court. See United States v. Abroms, 947 F.2d 1241, 1249

(5th Cir. 1991), cert. denied, 112 S.Ct. 2992 (1992). The letters

talked about the payment of awards. The purpose of their

submission was viewed solely to bolster the defense's arguments.

Since they were to be admitted to assert their truth, they failed

to pass the hearsay test and were properly excluded. See United

States v. Mastropieri, 685 F.2d 776, 793 (2d Cir.), cert. denied,

459 U.S. 945 (1982). A trial court's ruling of admissibility will

not be disturbed unless there was an abuse of discretion creating

the likelihood of prejudice to a defendant. United States v.

Stout, 667 F.2d 1347, 1353 (11th Cir. 1982); United States v. Nill,

518 F.2d 793 (5th Cir. 1975). The letters also were only partially

relevant and even if allowed were not potentially exculpatory.

There was no error here.

VI. Tansley's Supervisory Role

The appellant challenges his three level offense increase in

sentencing based on his role as a manager or supervisor of the

conspiracy under U.S.S.G. § 3B1.1(b).5 At first the district court

4
The three letters were all signed by Peter Porcelli,
President and CEO of MRG.
5
U.S.S.G. § 3B1.1(b) states:
(b) If the defendant was a manager or supervisor (but
not an organizer or leader) and the criminal activity involved
five or more participants or was otherwise extensive, increase by

12
agreed that the appellant did not exercise a leadership role. The

government then correctly convinced the court of Tansley's lesser

role as a manager in the scheme. This conspiracy had many

participants, and certainly meets the statutory five participants

or otherwise extensive requirement set by the guideline. The

finding by the courts that a defendant had significant management

responsibilities and therefore warranted the three level increase

has consistently been upheld. United States v. Pierce, 893 F.2d

669, 676 (5th Cir. 1990), cert. denied, 113 S.Ct. 621 (1992). The

fact that Tansley brought in other coconspirators, including

mailers and factors in furtherance of the scheme, underscores his

supervisory role. United States v. Liu, 960 F.2d 449, 456 (5th

Cir.), cert. denied, 113 S.Ct. 418 (1992). Tansley had advised

Galindo and Cox on how and where to mail the postcards. He

personally introduced and modified the design of the cards and had

them mailed throughout the country. Tansley advised the

coconspirators on which states to avoid mailing to so as to escape

heightened scrutiny. Tansley also advised about the need for

factors and helped arrange their introduction and use. He was

instrumental in creating, designing and carrying out the

telemarketing mailing for the conspiracy throughout. His special

wording and subsequent modifications were designed to increase the

number of victims throughout the nation by fraudulently arousing

the interests of recipients who were in turn bombarded with a sales

pitch for money, either $429 or $12.95.

three levels.

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 The standard of review for a factual finding of the district

court is that of clear error. See United States v. Alfaro, 919

F.2d 962, 966 (5th Cir. 1990). We will uphold the court's sentence

as long as the guidelines are correctly applied to findings that

are not clearly wrong. United States v. Kinder, 980 F.2d 961, 963

(5th Cir. 1992). Tansley helped plan, design and advise this

scheme from the beginning. His introduction of the factors was

instrumental and necessary for the conspiracy to succeed. Tansley

handled almost all of the part of the scheme that lead up to the

sales pitch and was instrumental in the subsequent laundering of

the proceeds. The court's finding is reasonable and there is also

no error here.

CONCLUSION

The calculations of both Cox's and Tansley's sentences were in

accordance to the guidelines. The evidence in support of Tansley's

conspiracy conviction is strong. The scheme was in clear violation

of the lottery statute. The limitations of the defense cross-

examinations were not erroneous and the court's refusal to admit

the three letters into evidence for hearsay reasons was proper.

For the above reasons Cox's sentence and Tansley's conviction and

sentence are

AFFIRMED.

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