United States v. Lupton

In the

United States Court of Appeals

For the Seventh Circuit

No. 09-2710

U NITED S TATES OF A MERICA,

Plaintiff-Appellee,

v.

L ARRY L UPTON,

Defendant-Appellant.

Appeal from the United States District Court

for the Eastern District of Wisconsin.

No. 07-CR-219—Lynn Adelman, Judge.

A RGUED JANUARY 13, 2010—D ECIDED S EPTEMBER 1, 2010

Before B AUER, M ANION, and T INDER, Circuit Judges.

T INDER, Circuit Judge. Larry Lupton was a real estate

broker assigned to facilitate the sale and leaseback of a

building owned by the State of Wisconsin. In the course

of soliciting bids for the sale, Lupton also solicited

kickback payments from the broker for one of the com-

peting prospective buyers—and claimed to have made

similar overtures to others. In return for the payments,

Lupton promised to crunch the numbers so that certain

2 No. 09-2710

proposals came out on top. The broker from whom

Lupton sought a kickback reported the incident to the

authorities and was outfitted with equipment to record

his future dealings with Lupton. After the informant

recorded several incriminating conversations with

Lupton, FBI agents twice interviewed Lupton, who cate-

gorically denied any involvement in illicit activity. Not-

withstanding Lupton’s denials, a grand jury indicted

him on four charges: corrupt solicitation, wire fraud, and

two counts of making false statements to government

officials. After a bench trial from which his proffered

expert testimony was excluded, Lupton was found

guilty of all four counts. He appeals both the exclusion

of his expert’s testimony and the validity of his convic-

tions. We affirm in all respects.

I. Background

When the State of Wisconsin decided to sell and re-lease

one of its buildings in early 2007, it entered into an exclu-

sive listing agreement with real estate firm UGL Equis

(“Equis”), with which it had a master contract dating

back to 2004. Under the terms of the listing agreement,

Wisconsin was to pay Equis a 4.3% commission on the

expected $20-$30 million sale price. Equis designated

one of its independent-contractor vice presidents, Larry

Lupton, as one of two point persons for the sale. Lupton

was tasked with soliciting proposals from parties inter-

ested in the deal, evaluating the bids, and recommending

the top few to the State, who would then decide which

proposal to accept. Under his contract with Equis, Lupton

No. 09-2710 3

would be paid a negotiable percentage—usually about

50%—of Equis’s commission if he closed the sale.

In February 2007, Lupton sent out a memorandum

soliciting proposals from prospective buyers and received

a number of responses. Using an evaluation matrix that

compared different features of the bids, Lupton

identified some of the top proposals. In March, he con-

tacted the bidders whose proposals rose to the top and

asked them to submit final letters of intent (“LOIs”)

containing more detailed bid information. To assist the

prospective buyers with the formulation of their LOIs,

Lupton provided them with a sample LOI. The sample

LOI contained a confidentiality clause, which most of

the contenders imported into their final LOIs verbatim.

The prospective buyers submitted their LOIs in

March, and on April 4, 2007, Lupton contacted Gabriel

Silverstein, the broker for one of the top contenders,

Chicago-based Zeller Realty Group. Lupton informed

Silverstein that Zeller was a particularly strong con-

tender for the purchase. He then told Silverstein that

brokers for two of the other top contenders had offered

to pay him a kickback in exchange for a strong recom-

mendation to the State that it accept their bids. Lupton

went on to explain that the proposed kickbacks were

about one-quarter to one-half of the fee that the brokers

expected to receive if the transaction went through,

roughly one percent of the building’s purchase price

(which Lupton was supposed to ensure was in the range of

$20-$30 million). Silverstein understood Lupton to be

seeking a kickback of about $75,000.

4 No. 09-2710

Silverstein promptly reported the April 4 conversation

to Wisconsin law enforcement authorities. Those authori-

ties in turn contacted the FBI, and the FBI outfitted

Silverstein and his telephone with recording devices

and instructed him to arrange a meeting with Lupton.

Silverstein met with Lupton on April 26, 2007, and told

him that he wanted to “revisit another conversation

that [Lupton] initiated about two weeks ago”—the April 4

conversation about kickbacks. Silverstein asked Lupton

what he was expecting from Silverstein, and Lupton

explained that he wasn’t “making much money” at

Equis, so he “talked to a couple of parties” who “already

agreed to pay [him] between a quarter and a half point.”

Lupton continued, “I just want to make assurance . . . that

if I could put you into that situation . . . that you guys

can get me a quarter point.”

Silverstein asked Lupton, “[H]ow would you envision

doing that?” Lupton replied, “Take the taxes out and

you . . . just give me . . . you know cash or check sort of

thing or you could just allocate it as a consulting fee to a

different company I have, which is NACO. North Ameri-

can Commercial Opportunities. . . . I mean, whatever

way is . . . you know way is easier, I guess, you know.”

Lupton then clarified that “obviously I don’t want any-

thing in writing you know, ‘cause you know, I don’t want

it leaked back to the State . . . or to Equis . . . .” Silverstein

asked Lupton if he should “just come back up here and

meet you or pay you separately? Is that what you’re

thinking?” to which Lupton responded, “Yeah. Yeah.”

He assured Silverstein that he was “not trying to get

greedy,” however. (Not greedy, perhaps, but self-inter-

No. 09-2710 5

ested all the same. Lupton expressed to Silverstein con-

cern about Equis’s—and thereby his own—take from

the sale potentially getting halved, and evidence intro-

duced at trial also showed that he had substantial gam-

bling losses and minimal income to offset them.)

As the conversation continued, Silverstein asked

Lupton how he planned to “make sure we’re going to

be your guys.” Lupton explained that he would “make

sure that you guys know the expectations of the State.

I mean I got to just make sure that you guys are in line to

be the top, you know, the top one or two . . . .” He

told Silverstein, “I run the analysis and basically back

you.” “I mean as long as you guys come back in the right

range . . . .” Lupton qualified his willingness to help

Silverstein, despite his expressed preference to award

the deal to a Midwestern firm like Zeller, informing him

that “I got to do technically the right thing for the

State.” Yet Lupton went on to assure Silverstein that he

would let him know if the other bidders’ offers changed

substantially so Zeller would have a chance to match or

undercut the bids: “you guys can ah come back in and . . .

match it.” Lupton then told Silverstein the identities of

the other bidders that remained in contention, as well as

some of their proposed contractual terms that Zeller

would have to match or beat. The two wrapped up their

conversation by discussing some of the provisions that

Zeller planned to include in its final proposal.

The next morning, Lupton telephoned Silverstein

unexpectedly. Lupton gave Silverstein the details of the

current best offer, a proposal submitted by a New Jersey

6 No. 09-2710

firm, Roebling Investments. The Roebling bid hadn’t been

finalized; it was verbal and Lupton hadn’t even seen

the written proposal yet. Lupton explained that he

“wanted [Silverstein] to [have] a heads up” about the

bid, and he promised to “let [Silverstein] know” Roebling’s

final numbers once he got them in writing. Lupton fol-

lowed through on his promise on April 30, 2007, when

he called to let Silverstein “know where the best LOI

came back at.” Lupton then provided Silverstein with

the details of Roebling’s updated bid, notwithstanding

the confidentiality clause in Roebling’s proposal, and

told him that he would “call back here in a few hours”

once everything was fully finalized.

Again true to his word, Lupton called Silverstein back

later that evening. He confirmed that the Roebling bid

was, as Silverstein put it, “in the same spot as before.” He

then told Silverstein that a bid from a California

company, Arlen Capital, had come in via e-mail but that

he had been unable to open the document on his cell

phone. Lupton asked Silverstein to give him some time

to review the Arlen bid and ended the call. Roughly

twenty-five minutes later, Lupton called Silverstein

back and reached Silverstein’s voicemail. He left a

detailed message about Arlen Capital’s bid, and opined

that Zeller’s “only competition is really Roebling.” He

asked Silverstein to call him the next day so they could

talk about the Arlen Capital bid and Zeller’s final bid.

Silverstein didn’t wait until the next day; he called

Lupton back almost immediately. During this third

April 30 phone call, Lupton said that Arlen Capital’s bid

No. 09-2710 7

“doesn’t make a whole lot of sense,” and Silverstein

expressed relief that nothing had changed. He explained

to Lupton that it would have been “weird” if he had

needed to call Zeller to encourage it to rework its final

bid, which he stated he was only about fifteen minutes

away from submitting to Lupton. (There is some evi-

dence indicating that Zeller was given more time than

its competitors to complete its bid.)

The next day, May 1, 2007, Lupton told Silverstein that

he had presented his analysis of the bids to someone

from the State. He claimed that he had “made the recom-

mendations to . . . put your guys, you know, number one

and then put Roebling number two.” Lupton continued,

“So I think you guys are there unless they make for

drastic changes. . . . You should be okay.” Lupton

notified Silverstein that he would be meeting with

the Wisconsin Secretary of State in a few days, and the

Secretary would decide then which bid the State would

accept. Lupton indicated that he had already provided

Silverstein with the “transaction application forms” that

he would need to fill out if Zeller was chosen as the

buyer. Lupton also asked Silverstein to provide him

with some background information on Zeller so he

could “have it prepared” in case the Secretary of State

asked him for it.

On May 10, 2007, a little more than a week after Lupton’s

last recorded conversation with Silverstein, and after

state officials involved in the sale had been interviewed,

FBI and Wisconsin Department of Justice special agents

descended on Lupton’s office to execute a search

8 No. 09-2710

warrant they had procured. Before searching Lupton’s

office, the agents asked Lupton a number of questions

about his handling of the building sale. Lupton told

the agents that he had never disclosed confidential

bid information. He explained that bidders occasionally

asked him if there was anything they could do to

improve their chances, but that he always responded by

providing general information and advice. The agents

also asked Lupton about his expected compensation for

the sale, and Lupton told them that he expected Equis

alone to pay him; he did not mention any “commission

splits,” legitimate or otherwise. At the end of the inter-

view, the agents again asked Lupton if he had ever pro-

vided a potential buyer with specific details from a com-

petitor’s proposal. Lupton reiterated that he had never

done so. The agents advised Lupton not to contact

anyone else involved in the sale.

Immediately after the agents left,1 however, Lupton

telephoned Silverstein. Lupton asked Silverstein, “out of

curiosity,” whether “the FBI . . . contacted you at all? On

this . . . building?” Silverstein said, “FBI? Why?” Lupton

explained that he wasn’t sure what was going on but

that he “got a couple . . . calls from them” and wasn’t

sure “if it[’s] actually the FBI or who they you know state

1

Terry Sparacino, the FBI special agent who executed the

search warrant and interviewed Lupton, testified that before

he and Wisconsin agent Dennis Drazkowski had even reached

the parking lot of Lupton’s building, they had already received

a telephone call from Silverstein reporting that Lupton had

called to ask about an FBI investigation. Tr. 138, Mar. 2, 2009.

No. 09-2710 9

they are.” Silverstein asked what the callers had been

saying, and Lupton said the calls were about “deal struc-

tures that have been leaked out and you know so forth.”

Silverstein told Lupton he found that interesting.

Lupton continued, “Somehow it got leaked out at some-

place so I’m not sure from where.” Lupton then ended

the call so he could “check with some other parties to

see what’s going on.”

On May 18, 2007, agents again interviewed Lupton, this

time with his attorney present. Lupton again denied

providing potential buyers with specific details from

other bids. The agents also asked Lupton about seeking

payments from potential buyers, and Lupton stated

that it would be unusual for someone in his position

to receive a share of the buyer’s commission in the form

of cash. The agents then asked Lupton about any such

arrangement he might have had with Silverstein. Lupton

initially responded that he did not recall any arrange-

ment. Later on in the interview, however, he recalled

that Silverstein had offered to pay him part of the buyer

broker’s commission. He said that if a cash payment

had been mentioned, it had been by Silverstein. Lupton

did not recall any mention of payment in the form of

a check payable to NACO, his out-of-state shell corpora-

tion. Again, he asserted that if anything like that had

been discussed, Silverstein had broached the topic.

Lupton made no mention of Wisconsin’s brokerage stat-

utes, or his conception of his duties thereunder.

A grand jury issued a four-count indictment against

Lupton on August 14, 2007. Count I charged that between

10 No. 09-2710

April 4 and May 10, 2007, Lupton “corruptly solicited,

demanded, and agreed to accept something of value from

[Silverstein], intending to be influenced and rewarded

in connection with a business, transaction, and series of

transactions” involving the State of Wisconsin. 18 U.S.C.

§ 666(a)(1)(B). Count II alleged that Lupton “knowingly

devised and participated in a scheme to defraud Equis

and the State of Wisconsin of both property and the

right of honest services,” and used a telephone to do so,

in violation of 18 U.S.C. §§ 1343 & 1346. Counts III and IV

alleged that Lupton knowingly and willfully made

false statements to the FBI agent who interviewed him.

See 18 U.S.C. § 1001. The statement alleged to be false

in Count III was Lupton’s May 10, 2007, assertion that

he had never provided prospective buyers with specific

details from bids submitted by competing prospective

buyers. The allegedly false statement cited in Count IV

was Lupton’s May 18, 2007, statement that he had never

suggested to Silverstein that he pay Lupton in cash or

by check payable to NACO.

Lupton did not take the charges sitting down. Over the

course of the next several months, he filed various

motions to dismiss the indictment, motions to suppress,

and motions in limine, all of which the district court

denied. Lupton also sought to present the testimony of

real estate broker, attorney, professor, author, and former

Wisconsin bureaucrat Martin Greenberg. Greenberg,

Lupton asserted, would testify about the industry stan-

dards of practice governing commercial real estate

brokers in Wisconsin, which Lupton claimed not only

permitted him to engage in a “commission split” with

No. 09-2710 11

Silverstein but also required him to disclose the bid

information he did.

After an evidentiary hearing concerning the propriety

of Greenberg’s testimony, the district court concluded

that Greenberg’s opinions were “based on his interpreta-

tion of state statutes and regulations and the contracts

in this case, not his knowledge of general broker prac-

tices.” United States v. Lupton, No. 07-CR-219, 2008 WL

2224399, at *1 (E.D. Wis. May 28, 2008). The district court

excluded Greenberg’s proposed testimony pursuant

to United States v. Caputo, 517 F.3d 935 (7th Cir. 2008),

explaining, “[T]he proposed testimony essentially

amounts to legal interpretation, which is the province

of the court . . . .” Lupton, 2008 WL 2224399, at *2; see also

id. at *4 (“I will not permit a third party legal expert to, in

effect, testify that defendant’s conduct was lawful.”).

The district court also determined that Lupton failed to

establish Greenberg’s “knowledge, skill, experience,

training, or education” in anything other than the law of

real estate, id. at *2, and that Lupton further failed to

demonstrate that Greenberg’s opinions were based on

sufficient facts and data and were the product of reliable

principles and methods. Id. Additionally, the district

court noted that the proffered testimony would likely

“confuse rather than enlighten the jury” on the corrupt

solicitation and wire fraud charges, id. at *3, and cited

United States v. Hasner, 340 F.3d 1261, 1270 n.4 (11th Cir.

2003), for the proposition that Lupton’s compliance with

state law would be immaterial to one of the key issues,

whether Lupton had the requisite intent to deprive

Equis or the State of his honest services, see id. at *4.

12 No. 09-2710

In response to the district court’s exclusion of

Greenberg’s testimony, Lupton petitioned this court for

a writ of mandamus. His petition was denied, and, after

renewing one of his motions to dismiss (it was again

denied), Lupton proceeded to a bench trial in early

March 2009. On March 16, 2009, the district court found

Lupton guilty on all four counts. In its findings of fact

and verdict, the court noted that “even considering

Greenberg’s testimony, the verdict would be the same.”

United States v. Lupton, No. 07-CR-219, 2009 WL 679649,

at *8 n.11 (E.D. Wis. Mar. 16, 2009). Lupton promptly

filed a motion for acquittal and a motion to arrest judg-

ment, both of which the district court denied.

The district court sentenced Lupton to 24 months’

imprisonment, concurrent on all counts. The district

court also ordered 24 months of supervised release and

a special assessment of $400.

II. Discussion

Lupton now challenges the district court’s exclusion

of his expert’s testimony as well as the validity of all

four of his convictions. (He does not contest his below-

Guidelines sentence.) With respect to Count I, he argues

that the evidence did not establish that he was an “agent”

for purposes of 18 U.S.C. § 666, the statute under which

he was convicted. Also with respect to Count I, he con-

tends that the district court erred in concluding that

the proposed payment was not a bona fide commission

split outside the purview of the statute. See 18 U.S.C.

§ 666(c). As for Count II, Lupton claims that his

No. 09-2710 13

information-sharing behavior cannot form the basis of a

federal offense because it was legal under state law.

He argues that his convictions under Counts III and IV

were improper because his statements to the FBI agent

were not knowingly and willfully made because he

thought the conduct underlying them was legal and

were not material because they had no real effect on

the FBI’s investigation.

A. Exclusion of Expert Testimony

Lupton contends that the district court erred in excluding

Greenberg’s testimony. His principal claim is that

Greenberg’s testimony, which was intended to illuminate

“broker conduct relative to ‘honest services fraud,’ ” was

“relevant opinion evidence by a qualified expert” that

should have been admitted. We are not persuaded that

the district court abused its discretion in concluding

otherwise.

Federal Rule of Evidence 702 governs the admissibility

of expert testimony, as does the Supreme Court’s seminal

case of Daubert v. Merrell Dow Pharmaceutials, Inc., 509 U.S.

579 (1993). Rule 702 by its terms allows the admission

of testimony by an “expert,” someone with the appro-

priate “knowledge, skill, experience, training, or educa-

tion” to help the trier of fact “understand the evidence

or determine a fact in issue.” Fed. R. Evid. 702. Experts

are only permitted to testify, however, when their testi-

mony is (1) “based upon sufficient facts or data, (2) the

testimony is the product of reliable principles and meth-

ods, and (3) the witness has applied the principles and

14 No. 09-2710

methods reliably to the facts of the case.” Id. Daubert

requires the district court to act as an evidentiary gate-

keeper, ensuring that Rule 702’s requirements of

reliability and relevance are satisfied before allowing

the finder of fact to hear the testimony of a proffered

expert. See Daubert, 509 U.S. at 589; see also Kumho Tire

Co. v. Carmichael, 526 U.S. 137, 147-49 (1999); Jenkins v.

Bartlett, 487 F.3d 482, 488-89 (7th Cir. 2007). We give

district courts wide latitude to make their evidentiary

determinations: we review whether they applied the

Daubert framework de novo, but we review their

ultimate conclusions as to the admissibility of expert

testimony only for abuse of discretion. United States v.

Pansier, 576 F.3d 726, 737 (7th Cir. 2009).

There is no question that the district court adhered to

the Daubert framework here. It requested briefing on the

issue and held a two-and-a-half hour hearing to

determine whether Greenberg was “qualified to testify

in the case in question and whether his testimony is

scientifically reliable.” Gayton v. McCoy, 593 F.3d 610, 616

(7th Cir. 2010). At that hearing, Greenberg offered his

interpretations of various Wisconsin statutes and

Lupton’s contract with Equis. He opined that Lupton’s

sharing of proposal terms was “prescribed and

sanctioned by statute.” Tr. 28, Mar. 20, 2008. He also

characterized Lupton’s “commission splitting” conversa-

tion with Silverstein as “a proper conversation . . . one

that was normal with respect to the way brokers conduct

their business.” Id. at 44. On cross-examination, Greenberg

conceded that he had not held a real estate broker’s

license for thirty years, had never participated in a com-

No. 09-2710 15

petitive bid transaction like the one at issue here, and

had no personal experience with the statutes he was

interpreting. He also had the following exchange with

the district court:

Court: And your conclusions about Mr. Lupton’s

activity are based on your interpretation of the

statute, then, as filtered through these articles. Is

that a fair assessment or not?

Greenberg: I’ve made my conclusion based upon

what he did compared to what the statute permits

and requires him to do.

Court: So you’re saying that as you read the

statute what he did was legal under the statute.

Greenberg: That’s exactly what I’ve testified here

today.

Id. at 70.

After the hearing, the court issued a decision and

order excluding Greenberg’s testimony. The district court

rested its determination on Greenberg’s lack of relevant

expertise and experience, the absence of facts or data

underlying his opinions, the fact that what he was

really offering was legal interpretation, and the danger

that extensive testimony about the meaning of state

statutes would confuse the jury. (Lupton had not yet

waived his right to be tried by a jury.)

The first two rationales rest upon the firm ground of

Rule 702, which governs the admissibility of expert testi-

mony even in federal criminal trials. Cf. Taylor v. Illinois,

484 U.S. 400, 410 (1988) (“The accused does not have

16 No. 09-2710

an unfettered right to offer testimony that is incompetent,

privileged, or otherwise inadmissible under the

standard rules of evidence.”). Greenberg’s thirty-year

distance from the day-to-day goings-on in the brokerage

world and lack of experience with the statutes and

contract at issue in this case call into question the extent

to which his “knowledge, skill, experience, training, or

education” qualify him to render an opinion on what

constitute “innocent, normal, and acceptable practices,”

Appellant’s Br. 42, among real estate brokers. And

Greenberg’s lack of methodology—he simply read the

statutes and discussed how he thought they might

apply—as well as the absence of any data—such as how

Wisconsin courts have applied the statutes, or how

often situations such as Lupton’s arise—support the

district court’s second Rule 702 finding that Greenberg’s

testimony was insufficiently reliable to be admitted.

Even if Greenberg had been qualified as an expert,

however, the district court would still have been within

its discretion to exclude his legally interpretive testi-

mony under the third and fourth rationales it provided.

The court was correct in noting that the meaning of

statutes, regulations, and contract terms is “a subject

for the court, not for testimonial experts. The only legal

expert in a federal courtroom is the judge.”Caputo, 517

F.3d at 942 (citation omitted); see also United States v.

Stewart, 433 F.3d 273, 311 (2d Cir. 2006) (“Clearly,

an opinion that purports to explain the law to the jury

trespasses on the trial judge’s exclusive territory.”).

Greenberg’s exchange with the court demonstrates that

he was acting—and even saw himself as—nothing more

No. 09-2710 17

than a legal expert. Moreover, the legal interpretations

he was providing related not to the statutes Lupton was

charged with violating but rather to state statutes.

Those statutes were relevant to Lupton’s defense, that

what he did was legal under state law, but they were

tangential to the crucial questions the factfinder had to

answer, namely whether the government could prove

beyond a reasonable doubt the elements of 18 U.S.C.

§§ 666, 1343 & 1346. Testimony about them would have

been of limited value at best and unduly confusing at

worst; the district court did err in concluding that it

fell nearer the latter end of that spectrum. See Fed. R. Evid.

403.

Lupton’s other unsupported complaints about the

exclusion of Greenberg’s testimony do not merit discus-

sion.

B. Challenges to Convictions

1. Count I: Corrupt Solicitation

a. Lupton was an “Agent”

Lupton was indicted for violating 18 U.S.C.

§ 666(a)(1)(B), which prohibits “an agent of an organiza-

tion, or of a State, local, or Indian tribal government, or

any agency thereof” from “corruptly solicit[ing] or

demand[ing] for the benefit of any person, or accept[ing]

or agree[ing] to accept, anything of value from any

person, intending to be influenced or rewarded in con-

nection with any business, transaction, or series of transac-

tions of such organization, government or agency in-

18 No. 09-2710

volving any thing of value of $5,000 or more.” Section

666(d)(1) defines an “agent” as “a person authorized to

act on behalf of another person or a government and, in

the case of an organization or government, includes a

servant or employee, and a partner, director, officer,

manager, and representative.” Lupton argues that he

should not have been found guilty under 18 U.S.C. § 666

because he was not an “agent” as defined in sub-

section (d)(1). He contends that he does not meet the

definition of “agent” because there is a provision in the

contract between the State of Wisconsin and Equis

that explicitly denies Equis any authority to act on behalf

of the State. He also contends, apparently in the alterna-

tive, that the record was devoid of evidence that he

was authorized to act on behalf of the State of Wiscon-

sin. We find both these arguments wanting.

Lupton’s first contention starts out accurately enough:

the 2004 master contract between Equis and the State

of Wisconsin included the State’s “supplemental

standard terms and conditions for procurements,” one of

which stated that Equis “shall act in the capacity of an

independent contractor and not as an officer, employee,

or agent of the state.” This contractual requirement ex-

tended recursively to “each subcontractor of the con-

tractor, [who] will be deemed to be an independent

contractor and will not be considered or permitted to be

an agent . . . of the state.” Therefore, Lupton asserts, neither

he nor Equis could possibly be considered an “agent”

under § 666(d)(1). That is where his argument falls off

the rails. Whether Lupton is considered an “agent” for

purposes of 18 U.S.C. § 666 is determined by that statute,

No. 09-2710 19

not by the terms of a private contract. Parties cannot

contract around definitions provided in criminal statutes;

even if Lupton could not be considered a common law

agent under Equis’s contract, it is nonetheless possible

for him to be an “agent” under the terms of 18 U.S.C.

§ 666(d)(1). Cf. United States v. Ortiz-Santiago, 211 F.3d

146, 152 (1st Cir. 2000) (noting that the sentencing

“safety valve” is a congressional directive that the gov-

ernment cannot use plea agreements to circumvent). The

statutory definition of “agent” is an expansive one. See

United States v. Sotomayor-Vázquez, 249 F.3d 1, 8 (1st Cir.

2001). As the Sixth Circuit put it, privately agreed upon

“employment labels,” like the “independent contractor”

one Lupton purportedly wore here, “may bring some

employment relationships within the sphere of agency

status but they do not necessarily squeeze all other em-

ployment relationships out of that sphere.” United States

v. Hudson, 491 F.3d 590, 595 (6th Cir. 2007); see also

United States v. Vitillo, 490 F.3d 314, 323 (3d Cir. 2007)

(noting that § 666(d)(1) “is, by its own plain language,

not exhaustive” and concluding that “independent con-

tractors” may well fall within its ambit). The question we

must answer, then, is the one implicated by Lupton’s

second argument: did the government provide enough

evidence at trial to support the factfinder’s conclusion

that Lupton was the State’s “agent” as defined in 18

U.S.C. § 666(d)(1)? See Hudson, 491 F.3d at 595.

We start off our exploration of this question by noting

that Lupton faces a steep uphill climb here. See, e.g., United

States v. Woods, 556 F.3d 616, 621 (7th Cir. 2009) (“A

defendant faces a ‘nearly insurmountable hurdle’ in

20 No. 09-2710

challenging the sufficiency of the evidence to sustain a

conviction.”). For Lupton to prevail, we must be con-

vinced, after viewing the evidence in the light most

favorable to the government, that no rational trier of fact

could have found the essential elements of the crime

beyond a reasonable doubt. Id. In making our inquiry,

we do not reweigh the evidence or second-guess the

factfinder’s credibility determinations. United States v.

Arthur, 582 F.3d 713, 717 (7th Cir. 2009).

The factfinder concluded that Lupton was authorized

to act on behalf of the State in connection with the sale

of the building and was therefore an “agent” for pur-

poses of 18 U.S.C. § 666. Ample evidence supports that

conclusion. Lupton sent out an offering memorandum

soliciting proposals from prospective buyers. His name

was on the cover page, right along with the State of Wis-

consin’s. The memorandum provided that “[a]ll requests

for additional information” were to be directed to

Lupton or another Equis vice president and warned

potential buyers that contacting the State through other

channels could result in the termination of any agree-

ment. Lupton was responsible for further communica-

tions with potential buyers, he knew the State’s expecta-

tions, and he kept the State apprised of his efforts to get

the bidders to make better offers. Like the defendant in

Hudson, Lupton was authorized “to perform all duties,

responsibilities, and necessary actions required to mar-

ket” the building, Hudson, 491 F.3d at 594, and served

as prospective buyers’ “primary contact” for negotia-

tions with the State, id. Perhaps most tellingly, Lupton

told Silverstein that he was obligated “to do technically

No. 09-2710 21

the right thing for the State.” On this record, a ra-

tional factfinder could readily conclude that Lupton

had authority to act on behalf of the State and was thus

an “agent” as defined in 18 U.S.C. § 666(d)(1).

b. The Proposed Transaction was not

a Bona Fide Transaction

Lupton also argues that even if he is considered

an “agent,” his conviction under 18 U.S.C. § 666 is

invalid for another reason: the discussions he had with

Silverstein were in his view proposals for a bona fide

business transaction. He rests this contention on 18 U.S.C.

§ 666(c), which states that § 666 “does not apply to bona

fide salary, wages, fees, or other compensation paid, or

expense paid or reimbursed, in the usual course of busi-

ness.” Lupton maintains that what he wanted to engage

in with Silverstein was legitimate “commission splitting”

permitted by Wisconsin law, and, moreover, that he

and Silverstein only discussed the “split” hypothetically.

The district court rejected this contention and found

that Lupton’s “unusual maneuvering” with Silverstein

“reveals that this was not to be a payment in the ordinary

course of business.” Lupton, 2009 WL 679649, at *5. The

evidence was sufficient to support the factfinder’s con-

clusion. See United States v. Williams, 507 F.3d 905, 909

(5th Cir. 2007) (“Whether wages are bona fide and

earned in the usual course of business is a question of

fact for the jury to decide.”).

Regardless of whether commission splitting is permissi-

ble under Wisconsin law, the record here is replete

22 No. 09-2710

with evidence supporting the finding that this particular

“split” was neither bona fide nor sought in the ordinary

course of business. Foremost, when discussing the pay-

ment with Silverstein, Lupton never referred to the

“hypothetical” payment as a “split,” and always em-

phasized that it was for him alone. For instance, he told

Silverstein, “I just want to make assurance . . . that if

I could put you into that situation . . . that you guys can

get me a quarter point.” He also stated that “a couple

of parties . . . already agreed to pay me between a quarter

and a half point.” Likewise, when Silverstein asked

Lupton how he envisioned the commission split hap-

pening, Lupton did not say that he would get consent

from Equis or the State in writing (which is required

by Wis. Stat. § 452.133(3)). To the contrary, he explicitly

told Silverstein that he didn’t “want it leaked back to the

State or you know, to Equis.” He also assured Silverstein

that he would be “close lipped” about the whole thing.

He proposed that Silverstein could “take the taxes out

and . . . just give me cash or check.” Lupton suggested

that Silverstein could alternatively “allocate it as a con-

sultant fee to a different company I have which is

NACO. North American Commercial Opportunities.”

As the government points out in its brief, “[c]ash pay-

ments, payments to sham companies, and mischarac-

terization of payments are hallmarks of concealment and

fraud.” Appellee’s Br. 18; cf. United States v. Boscarino, 437

F.3d 634, 636 (7th Cir. 2006) (“Corporate insiders don’t

keep half of bona fide referral fees, nor are such fees

paid from an insider’s personal account after such a

roundabout transaction.”). To be sure, Terry Sparacino, the

No. 09-2710 23

FBI agent who interviewed Lupton, testified that Lupton

acknowledged that the receipt of cash (or payment to

a defunct corporation) would not generally be part of

a legitimate commission split. Tr. 139, Mar. 2, 2009.

Silverstein, whose testimony the district court credited

over Lupton’s, testified that commission splits between

brokers were common, but “[t]his situation was one

where it was made very clear to me from the onset

that commissions were not being shared,” and “I’ve never

in my career been approached that way.” Id. at 68-69.

Additionally, according to Sparacino, Lupton never

indicated that he was engaging in a commission split

with any buyer, nor did he inform Sparacino of his sup-

posed belief that what he had proposed was legal

under Wisconsin law. See id. at 136-40.

2. Count II: Wire Fraud

In Count II, the government alleged that Lupton

devised and participated in a scheme to defraud Equis

and the State of property and the right of honest services,

and that he transmitted a wire communication from

Wisconsin to Illinois in furtherance of that scheme. See

18 U.S.C. §§ 1343, 1346. The district court unambiguously

concluded that the government proved that Lupton

was guilty of wire fraud under both alternative

theories, deprivation of property and of honest services,

beyond a reasonable doubt. Lupton, 2009 WL 679649, at *6

(“The government in this case alleged both a scheme

to obtain money and to deprive Equis and the State of

24 No. 09-2710

honest services. The government proved the defendant

guilty beyond a reasonable doubt under both theories.”).

Lupton argues that he “cannot be convicted of ‘honest

services fraud’ (Count Two) under 18 U.S.C. § 1346 for

disclosing the terms of competing proposals to parties to

a real estate transaction because that conduct is ex-

pressly allowed,” or even required, by Wisconsin’s real

estate and open records statutory schemes. Appellant’s

Br. 17. He contends that his conviction therefore “vio-

lates fundamental principals [sic] of federalism and

impermissibly creates a federal common law crime.” Id.

at 18.

These arguments leave much to be desired, not least

some discussion of federal rather than state law, but it’s

not what Lupton argues that dooms him: it’s what

he doesn’t. The district court found Lupton guilty of

wire fraud under both theories posited by the govern-

ment: the traditional theory outlined in 18 U.S.C. § 1343,

which the government dubs “straight property,” Appel-

lee’s Br. 20, and the alternative theory defined by

§ 1346, honest services. Yet, as the government rightly

points out, Lupton’s arguments indisputably pertain

only to the latter type, not the former.2 Cf. United States

2

In his reply brief, Lupton claims that he has consistently

challenged both theories supporting his wire fraud conviction.

Reply Br. 7. An exiguous mention in one’s introductory

“statement of the case” does not a developed argument make,

however. See United States v. Dunkel, 927 F.2d 955, 956 (7th Cir.

(continued...)

No. 09-2710 25

v. Blagojevich, No. 10-2359, 2010 WL 2778838, at *1 (7th

Cir. July 12, 2010) (“[I]f you lose for two independent

reasons an appellate victory on one does not affect the

judgment.”). Lupton has therefore forfeited any chal-

lenge to his conviction for mine run wire fraud, United

States v. Boyle, 484 F.3d 943, 946 (7th Cir. 2007),

which would stand in any event because the evidence is

sufficient to support it, cf. United States v. Turner, 551

F.3d 657, 665-66 (7th Cir. 2008) (upholding a general

verdict of guilty for violations of 18 U.S.C. §§ 1343 & 1346

where evidence supporting the so-called “straight prop-

erty” variant was sufficient), cert. denied, 129 S. Ct. 2748

(2009). Specifically, the government’s evidence proved

(1) that Lupton participated in a scheme to defraud

Equis out of part of the commission it was legally due,

(2) acted with the intent to defraud Equis (“obviously

I don’t want anything in writing you know, ‘cause you

know, I don’t want it leaked back to the State . . . or to

Equis . . . .”), and (3) transmitted an interstate wire com-

munication in furtherance of his scheme. 18 U.S.C.

§ 1343; Turner, 551 F.3d at 664; Lupton, 2009 WL 679649,

at *6-*8. That would be adequate to support Lupton’s

wire fraud conviction even if the district court had

issued a general verdict. See Turner, 551 F.3d at 665-66.

2

(...continued)

1991) (“A skeletal ‘argument,’ really nothing more than an

assertion, does not preserve a claim.”); cf. Bradshaw v. Miners’

Bank, 77 F. 932, 933 (7th Cir. 1897) (expressing displeasure

with appellants’ brief because its “so-called ‘statement of the

case’ is burdened and confused with matter of argument”).

26 No. 09-2710

Lupton’s state-law-grounded arguments challenging

the honest services prong of his wire fraud conviction

get him no further.3 Lupton argues that he did not

commit what he terms “honest services fraud” because

Wisconsin real estate and open records laws permit or

require him to disclose the intimate details of prospec-

tive buyers’ bids to one another. As a threshold matter,

we note that we have some reservations about Lupton’s

characterization of the statutes to which he points.

For instance, he informs us that “Wis. Stat. § 452.139(1)

specifically provides that the provisions of Chapter 452

supercede [sic] any common law duties or obligations” of

real estate brokers. Appellant’s Br. 27. But a closer look

at the statute reveals that it goes on to limit its super-

seding reach “to the extent that those common law

duties or obligations are inconsistent with the duties

specified in this chapter or in rules promulgated

3

The same is true of his Fed. R. App. P. 28(j) submission

regarding the recent Supreme Court companion cases Skilling v.

United States, 561 U.S. ___, No. 08-1384, 2010 WL 2518587

(June 24, 2010), and Black v. United States, 561 U.S. ___, No. 08-

876, 2010 WL 2518593 (June 24, 2010). We have carefully

reviewed those cases and conclude that they do not change

the outcome of this one. Specifically, we conclude (a) that

Lupton’s scheme constitutes not a mere failure to disclose a

conflict of interest, see Skilling, 2010 WL 2518587, at *28, but

rather the “paradigmatic kickback fact pattern,” id. at *27, that

remains within the ambit of § 1346, see United States v.

Cantrell, ___ F.3d ___, No. 09-1856, 2010 WL 3155912, at *1 (7th

Cir. Aug. 11, 2010), and (b) that Black is inapposite to this case,

which involved neither a general verdict nor jury instructions.

No. 09-2710 27

under this chapter.” Wis. Stat. § 452.139(1). Likewise, the

Wisconsin Supreme Court has explicitly undermined

Lupton’s interpretation of Wisconsin’s open records

law, Wis. Stat. §§ 19.31-19.39, explaining that the statutes

“clearly envision[ ] a public entity, a quasi-govern-

mental corporation, or a governmental entity, not an

independent contractor hired by such a public or gov-

ernmental entity, as being the ‘authority’ [from whom

information may be requested] for purposes of the open

records law.” WIREdata, Inc. v. Vill. of Sussex, 2008 WI 69

¶ 74, 310 Wis.2d 397, 438, 751 N.W.2d 736, 755-56.

Even if the state laws read as Lupton says, though,

his arguments misapprehend the nature of his convic-

tion. They speak only to the alleged propriety of his

information-sharing with Silverstein and do not address

the elements of wire fraud. Lupton was convicted of

scheming (with the aid of a wire communication) to

deprive Equis and the State of Wisconsin of his honest

services. 18 U.S.C. §§ 1343 & 1346. That is, he solicited a

kickback from Silverstein to advance Zeller’s interests

in the bidding process and harmed Equis and Wis-

consin intangibly by doing so. See Skilling v. United

States, 561 U.S. ___, No. 08-1384, 2010 WL 2518587, at *24,

*28 (June 24, 2010). Whether he was allowed to share

the information he shared with Silverstein is not the

guiding consideration; one can perform a perfectly legal

act in a corrupt way or as a means to achieve a more

sinister goal. Indeed, the information divulged to

Silverstein was a pawn in Lupton’s broader scheme,

the quo Lupton exchanged for Silverstein’s quid; the

information sharing was not, as he would have it, the

28 No. 09-2710

basis of his conviction. See Lupton, 2009 WL 679649, at *7

(“Further, defendant’s disclosure of specific bid infor-

mation did not occur in a vacuum—defendant disclosed

Roebling’s LOI terms to the same broker from whom

he sought a monetary kickback.”). What supports Lupton’s

conviction is substantial evidence showing the ex-

istence, intent, and advancement of his scheme, not

the precise means by which he planned to carry it out.

It is likewise unimportant that this case comes on the

heels of another case out of the Eastern District of Wis-

consin, United States v. Thompson, 484 F.3d 877 (7th Cir.

2007), in which we reversed the federal bribery and mail

fraud convictions of a Wisconsin bureaucrat because

the proof at trial demonstrated, at worst, minor devia-

tions from Wisconsin’s administrative procedure rather

than federal crimes. There, the government’s entire

case rested on the premise that “any politically

motivated departure from state administrative rules is

a federal crime, when either the mails or federal funds

are involved.” Thompson, 484 F.3d at 878. “Neither Thomp-

son nor anyone else in state government was accused

of taking a bribe or receiving a kickback.” Id. at 881.

Here, the government alleged and proved the elements

of the federal crime of wire fraud as described in

§§ 1343 & 1346; it did not make a federal case out of a

minor dereliction of state-imposed duties. And, more

importantly, Lupton’s conduct, unlike Thompson’s,

placed him squarely within even the recently narrowed

parameters of § 1346. See Skilling, 2010 WL 2518587, at *27-

*28. Lupton’s attempt to liken the two cases—rooted in

his argument about federal common law crimes—conse-

quently proves unsuccessful.

No. 09-2710 29

We also note that any attempt to minimize the “bribe-

and-kickback” nature, Skilling, 2010 WL 2518587, at *28,

of Lupton’s scheme by emphasizing its lack of comple-

tion is equally unavailing. The wire fraud statutes

criminalize the fraudulent acts undertaken to secure illicit

gains, not their ultimate successes. See United States v.

Capoccia, 503 F.3d 103, 112 (2d Cir. 2007) (noting that

some “criminal statutes . . . define offenses either as

actions taken pursuant to a scheme to defraud or as

such schemes themselves” and including among these

18 U.S.C. §§ 1341 & 1343); cf. United States v. White, 610

F.3d 956, 960 (7th Cir. 2010) (discussing the inchoate

crime of solicitation). So it’s not pertinent that the plot

was foiled long before Lupton received any kickback,

nor that Lupton recommended Roebling’s bid, not

Zeller’s, to a member of Wisconsin’s Department of

Administration. (There is evidence in the record in-

dicating that Lupton “unexpectedly and ‘out of the

blue’ made a pitch for” Roebling to this individual, Peter

Maternowski, and Lupton’s counsel gave us the same

information at oral argument.) In any event, it’s not

necessarily the case that Lupton failed to live up to his

promises to Silverstein. The recommendation he made

was not to the final decisionmaker, and he himself indi-

cated that he had similar deals with other bidders—he

may have been recommending different bids at different

points to satisfy the terms of these other alleged deals or

to mitigate any appearance of inappropriately favoring

one bidder over the others. While the fact that Lupton

recommended Roebling may pique the interest of law

enforcement officials, it does nothing to alter the validity

of his wire fraud conviction in this case.

30 No. 09-2710

3. Counts III & IV: False Statements to FBI Agent

Lupton’s third and fourth convictions both stemmed

from 18 U.S.C. § 1001, which makes it a crime to

knowingly and willfully make a materially false state-

ment in connection with a matter within the jurisdiction

of a federal agency, here, the FBI. See United States v.

Ringer, 300 F.3d 788, 791 (7th Cir. 2002). Count III was

predicated upon Lupton’s May 10, 2007, assertion to FBI

Agent Sparacino that he had never provided prospec-

tive buyers with specific details from bids submitted by

competing prospective buyers. Count IV rested on

Lupton’s May 18, 2007, claim to FBI Agent Sparacino

that he had never suggested to Silverstein that he be

paid in cash or by check payable to any company other

than Equis. The district court found that Lupton

knowingly and willfully made both these statements in

the course of a matter within the jurisdiction of the

United States, and that the statements were false and

material. Lupton claims the statements were not “know-

ingly” and “willfully” made because he had a good faith

belief that the conduct he was denying was legal. Lupton

also claims that the district court erred in its determina-

tion that the statements were “material,” because the

statements had no actual effect on the investigation: FBI

agents already had in their possession the tapes of

Lupton and Silverstein’s conversations when they ques-

tioned Lupton. In his reply brief, he also argues that

his statements constituted an “exculpatory no” and thus

could not serve as a basis for liability.

Lupton contends that his statements could not have

been made knowingly or willfully because he believed

No. 09-2710 31

in good faith that he was obligated to disclose bid details

to competing bidders and that he was engaging in legiti-

mate commission splitting negotiations. But the “know-

ingly and willfully” requirement in 18 U.S.C. § 1001 relates

only to the defendant’s knowledge and intent that the

statements he made to a government entity were false

or were made with the conscious purpose of evading

the truth. United States v. Dick, 744 F.2d 546, 553 (7th Cir.

1984). It has nothing to do with the legality of the under-

lying conduct about which the defendant spoke. Lupton

told the agents that he never disclosed specific informa-

tion from prospective buyers’ bids to other prospective

buyers. That statement did not concern his ability or lack

thereof to disclose the information; the issue was

whether he disclosed it. Like the agent to whom he was

speaking, Lupton knew he had disclosed specific infor-

mation from Roebling’s proposal to Silverstein and there-

fore had to know that his statement to the contrary

was false. Similarly, Lupton knew that his statement

about never having discussed payments made directly to

him or to NACO was false when he made it, for he had

recently engaged in a lengthy, in-person conversation

with Silverstein about that very topic. Lupton never told

the agents about his alleged beliefs that his conduct was

legal. He didn’t say something like, “Yes, I shared those

details, but I thought I was required to by Wisconsin

law.” To the contrary, he flatly denied ever sharing bid

information or discussing payments to NACO. And

given the ample evidence that he was aware he had in

fact done those very things, we cannot conclude that the

district court clearly erred.

32 No. 09-2710

We likewise hold that district court did not clearly err

in concluding that both of Lupton’s statements filled

the materiality bill. To be “material” for purposes of 18

U.S.C. § 1001, a statement “must have a natural tendency

to influence, or be capable of influencing, the decision of

the decisionmaking body to which it was addressed.”

Turner, 551 F.3d at 663 (quotation omitted). We do not

require the statement to actually influence the agency to

which it was directed, or even that the agency rely on

the statement in any way. See id.; United States v. Burke,

425 F.3d 400, 409 (7th Cir. 2005) (“That the prosecutors

knew (or thought they knew) the answers to the ques-

tions they asked Burke does not make the information

less material.”); United States v. Ranum, 96 F.3d 1020,

1028 n.12 (7th Cir. 1996) (“[I]t is not necessary for an

allegedly false statement to have any ill effect at all, as

long as it is capable of having such an effect.”). Instead,

we have recognized, like many of our sister circuits, that

a frequent aim of false statements made to federal inves-

tigators is to cast suspicion away from the declarant,

“which in the ordinary course would have an intrinsic

capability . . . to influence an FBI investigation.” Turner,

551 F.3d at 664.; see id. at 663-64 (collecting cases).

When statements are aimed at misdirecting agents and

their investigation, even if they miss spectacularly or

stand absolutely no chance of succeeding, they satisfy

the materiality requirement of 18 U.S.C. § 1001.

Lupton’s May 10 statement that he never shared

specific bid details from prospective buyers with other

prospective buyers could only have been designed to

cast suspicion away from him, with respect to both his

No. 09-2710 33

relationship with Silverstein and any similar arrange-

ments he might have had with other prospective buyers.

If the agents hadn’t had the tapes of Lupton divulging

the contents of Roebling’s and Arlen’s bids to Silverstein,

Lupton’s statement might reasonably have caused them

to turn their attention away from him. That is enough

for a factfinder to conclude that the statement was mate-

rial; it is of no moment that the agents did have the

tapes and that the statement thus had no actual impact

on the investigation. And the May 18 statement, in

which Lupton denied ever suggesting that Silverstein

pay him in cash or pay NACO by check, was also of the

type that would naturally tend to influence the course

of the agents’ investigation. Indeed, Agent Sparacino

testified that he came away from the interview with a

sense that Lupton was trying to deflect the agents’ focus

from him. Tr. 141, Mar. 2, 2009.

Lupton forfeited his “exculpatory no” argument by

raising it for the first time in his reply brief. See Boyle, 484

F.3d at 946. But even if he hadn’t, the argument

would be without traction because the Supreme Court

has clearly held that “the plain language of § 1001 admits

of no exception for an ‘exculpatory no.’ ” Brogan v. United

States, 522 U.S. 398, 408 (1998); United States v. Brandt,

546 F.3d 912, 917 (7th Cir. 2008) (“In Brogan, the

Supreme Court explicitly and unequivocally rejected the

‘exculpatory no’ doctrine as a defense to criminal

liability under § 1001.”). And in any event, Lupton said

much more than “no” during his two interviews with the

FBI, so this isn’t a situation in which one could even rea-

sonably advocate for the resurrection of the defunct

34 No. 09-2710

“exculpatory no” doctrine. Lupton chose to lie to Agent

Sparacino, and he must live with the consequences of

that choice. Burke, 425 F.3d at 409.

III. Conclusion

For the foregoing reasons, we A FFIRM the challenged

evidentiary ruling, findings, and verdicts of the district

court.

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