United States v. Ronnanita Fluker

In the

United States Court of Appeals

For the Seventh Circuit

Nos. 11-1013, 11-3008 & 11-3082

U NITED STATES OF A MERICA,

Plaintiff-Appellee,

v.

R ONNANITA F LUKER, R OY F LUKER, III,

and R OY F LUKER, JR.,

Defendants-Appellants.

Appeals from the United States District Court

for the Northern District of Illinois, Eastern Division.

Nos. 1:08-cr-00540—David H. Coar and

Gary S. Feinerman, Judges.

A RGUED S EPTEMBER 5, 2012—D ECIDED O CTOBER 26, 2012

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

B AUER, Circuit Judge. This case proves the old adage,

“If something sounds too good to be true, it probably

is.” Following a three-week trial, Roy Fluker, Jr. (“Roy Jr.”),

Roy Fluker III (“Roy III”), and Ronnanita Fluker

(“Ronnanita”), (collectively, the “Appellants”), were found

guilty of charges related to their participation in various

fraudulent, Ponzi-like schemes that duped victims into

2 Nos. 11-1013, 11-3008 & 11-3082

investing millions of dollars into programs that were

destined to fail. The Appellants were sentenced to prison

at separate sentencing hearings. In this consolidated

appeal, Roy Jr. and Roy III challenge three of the

district court’s evidentiary rulings that they believe

deprived them of a fair trial. Roy III also contends that

the district court erred in calculating his sentence under

the United States Sentencing Guidelines (“U.S.S.G.” or

“Sentencing Guidelines”). Ronnanita challenges the

district court’s decision to provide the jury with an

“ostrich” instruction, as well as the calculation of her

sentence. We affirm all of the convictions and sentences.

I. BACKGROUND

From early 2005 until late 2007, Roy Jr., together with

his son Roy III and his daughter Ronnanita, devised

and participated in various schemes that defrauded

thousands of people. Roy Jr. founded a company All

Things in Common, LLC, which did business under the

name More Than Enough, Inc. (“MTE”), in May 2005,

and later a second company, Locust International, LLC

(“Locust”), in January 2006. Using the MTE business, the

Appellants created, marketed, and carried out a “Spend

and Redeem Program” and a “Housing Program” for

roughly eighteen months until the programs collapsed.

Roy Jr. generally created and structured the particular

program’s terms while Roy III and Ronnanita were re-

sponsible for overseeing and executing the specific trans-

actions.

Nos. 11-1013, 11-3008 & 11-3082 3

The Spend and Redeem Program consisted of two

parts. First, participants would “spend” by paying MTE

an initial minimum payment of $500, with a maximum

of $5,000. Then, in exchange for the participants’ initial

payments, MTE would provide the participants with

certificates that they could “redeem” at the monthly

“venue” meetings (to be discussed later) for a monetary

payment. The Spend and Redeem Program promised

participants that they would receive a twenty-five

percent return on their total investment every month

for twelve consecutive months—i.e., a guaranteed 200%

return after one year. In other words, a $500 initial pay-

ment would entitle the participant to receive $1,500

after twelve months; a $5,000 initial payment would

yield a $15,000 payment after twelve months. Participants

could contribute up to $20,000 per year to the Spend

and Redeem Program, plus additional money for

children under eighteen. Witnesses testified at trial that

the Spend and Redeem Program was just a “hook;” the

real money was made from the Housing Program.

The Housing Program was more complex, as MTE

offered two options within the program: the “Reverse

Mortgage Program” and the “35 Percent Equity Pro-

gram.” Which program an individual could participate

in depended on the individual’s credit scores, loan bal-

ances, and the amount of equity the individual had in

his home.

The Reverse Mortgage Program required the partic-

ipant to own a minimum of seventy-five percent equity

in his home. To participate, the participant would

4 Nos. 11-1013, 11-3008 & 11-3082

refinance or sell his home and pay MTE from the

equity proceeds an amount equal to at least seventy-

five percent of the home’s value. In return, the

Appellants told the participant that the equity money

would be used to repay a traditional thirty-year loan

in five years and that MTE would be solely re-

sponsible for paying the lenders on behalf of the

participant-borrowers. The Appellants also promised to

make monthly payments to the participants in an

amount equal to roughly one percent of the total loan

value.

In order to qualify for the 35 Percent Equity Program,

participants were required to own a minimum of thirty-

five percent equity in their homes. Like the participants

in the Reverse Mortgage Program, to join the program,

participants needed to pay MTE from the equity

proceeds from the sale or refinancing of the home.

But under this program, the amount only needed to

be thirty-five percent of the home’s value. These partici-

pants were told that they would not be responsible

for making any payments during the first six months

after the transaction. After the six-month grace period,

the participants would be responsible for making

monthly payments to MTE—later Locust—for the next

fifty-four months until the loan was paid off. The Ap-

pellants claimed these payments would be approxi-

mately one-half of the participant’s previous mortgage

payment. Regardless of which Housing Program

subprogram an individual participated in, the Appellants

essentially promised that the program would allow the

participants to do two things: reduce their monthly

Nos. 11-1013, 11-3008 & 11-3082 5

mortgage payments and own their homes mortgage-free

within five years. The reality is that the Appellants

were causing the participants to take out a loan with a

high interest rate and a principal balance that was sig-

nificantly more than the previous balance owed.

In the event an individual was otherwise ineligible

to participate in the Housing Program but had

a sufficient credit score, MTE would provide an

“A-Buyer” to facilitate the individual’s participation.

A-Buyers were essentially straw purchasers for the

various transactions; they were other MTE members

who had credit scores that would allow them to qualify

for loans. Thus, the A-Buyer would take out a loan to

“purchase” the home of a Housing Program participant

who was otherwise ineligible for the program, but the

seller-participant would continue to live in the home rent

free and simply comply with the payment terms of what-

ever subprogram he was participating in. The terms

usually required the seller-participants to make

monthly payments to MTE. The Appellants assured the

A-Buyers that MTE would accept all responsibility

under the loan for paying the lender.

The Appellants, in addition to Hayward Borders

and six other individuals who became MTE’s Board

Members, set out in June 2005, to market and promote

the aforementioned programs. Monthly “venue” meetings

were held at various churches and hotels throughout

the Chicagoland area at which Roy Jr., Roy III, or another

MTE employee explained MTE’s programs to those

in attendance. The Appellants claimed the programs

6 Nos. 11-1013, 11-3008 & 11-3082

would “develop an economy basically for the African-

American community” and would teach individuals

about “functional spending.” Each venue had a capacity

of one hundred members. When a given venue reached

its maximum capacity, the Appellants would open

another one. New venues were opened in Wisconsin,

Nevada, Florida, Georgia, and Texas before the Appel-

lants’ scheme collapsed. Ronnanita’s role at the meetings

involved assisting Roy Jr. with his presentations,

typically by providing information from her computer

files, and collecting cash from interested participants.

In response to questions as to how the Appellants

could promise such significant returns from the

programs, Roy Jr. stated that MTE had invested in the

foreign market exchange and had achieved significant

returns by buying and selling currencies. Roy Jr. also

represented to participants that he had invested in real

estate or gold mines in Africa. When pressed for

details, Roy Jr. claimed that the investment strategies

could not be revealed because they were patented.

On one occasion, Roy Jr. compared his refusal to pro-

vide details of MTE’s investment strategies to KFC’s

refusal to provide customers with its fried chicken rec-

ipe. Roy III made similar misrepresentations re-

garding MTE’s investments and claimed patents. If an

active participant had a question about a program or

needed something done, he would go to Ronnanita,

who was known as being “second in command” to Roy Jr.

As time passed, more investors were enticed into par-

ticipating in the schemes. Although the earliest Spend

Nos. 11-1013, 11-3008 & 11-3082 7

and Redeem Program participants were paid back

millions of dollars, many of them were induced to

reinvest much of their earnings and to encourage other

potential participants to join.

Around March 2006—roughly nine months after the

scheme began—the Appellants introduced MTE’s “Presi-

dential Club,” also known as the “Big Boys Club,” to

about thirty of MTE’s past Spend and Redeem Program

participants. Members of this group were required to

invest at least $50,000, but, unlike participants in the

original program, they would have to wait two months

after their initial investments before they would begin

to receive their first twenty-five percent payments.

Each of the Appellants’ representations and promises

to the participants were false, and the programs had

absolutely no chance of succeeding. The money the Ap-

pellants received was used for a multitude of expenses,

including but not limited to the MTE Board Members’

salaries and cars, tropical vacations, and purchasing real

estate. Hundreds of thousands of dollars were used for

the Appellants’ personal expenses and affairs, like pay-

ments for Roy III’s wedding. More significantly, the

money coming in was not kept in separate bank

accounts, so the precise amount generated from each

program or subprogram could not be tabulated. For

example, equity money received from the Housing Pro-

gram was often deposited into the same bank accounts

as the Spend and Redeem Program proceeds. Despite

the Appellants’ assurances that the Spend and Redeem

Program was separate and distinct from the Housing

8 Nos. 11-1013, 11-3008 & 11-3082

Program, all the monthly mortgage payments that

MTE and Locust made to lenders on behalf of the

Housing Program participants and A-Buyers were

made directly from the money contributed by both

Spend and Redeem and Housing Program participants.

Roy Jr. had at least eighteen accounts at three different

national banks that were used to pay whatever expenses

were due. Money was freely transferred between the

accounts whenever necessary, usually by Ronnanita

at Roy Jr.’s direction.

The scheme as a whole began to collapse in the sum-

mer of 2006, roughly twelve months after its inception

and three months before the banks froze the Appellants’

accounts. As with all Ponzi schemes, the money coming

in had to exceed the money going out. Before the

freeze in September 2006, Grace Edwards, the MTE

Board Member who prepared the “redeem” checks each

month for the Spend and Redeem Program participants,

recognized that the incoming cash flow was insufficient

to cover the amounts due. Roy Jr. told Edwards to let

him know how much money was needed each month

to complete the redemptions, and she obliged. Edwards,

who only had access to one account, then noticed

deposits totaling hundreds of thousands of dollars

were made to that account each month. This continued

until the scheme’s ultimate demise. It was also around

this time when the Appellants caused monthly mortgage

payments made by MTE and Locust to be late. Housing

Program participants and A-Buyers began receiving

unexpected telephone calls from lenders advising them

of overdue payments, and they attempted to contact

Nos. 11-1013, 11-3008 & 11-3082 9

the Appellants about these issues. The Appellants rarely

answered or returned the calls.

The State of Illinois Attorney General served Roy Jr., as

well as All Things in Common, on September 20, 2006,

with an amended Temporary Order of Prohibition

entered by the Illinois Securities Department.1 This led

to the banks putting a hold on MTE’s accounts. Never-

theless, the Appellants continued to operate venue meet-

ings under the company name Wealth Creation Institute

as well as solicit new participants for both programs.

This time, however, the Appellants referred to the

Spend and Redeem Program as an “educational program

or school.”

In order to reduce discontent among Housing

Program participants who had heard rumors about MTE,

Ronnanita sent letters in January 2007 explaining that

Locust was now responsible for MTE’s mortgage

program and that the participants had no reason to

worry. In actuality, MTE had stopped making payments

on the participants’ mortgages around late 2006, which

eventually caused many of the participants to default

on their mortgages and lose their homes to foreclosure.

Some Housing Program participants continued making

monthly payments to the Appellants in 2007, even after

the Appellants were legally ordered to cease their MTE

operations.

1

Neither Roy III nor Ronnanita was named in this order, and

Ronnanita’s Presentence Investigation Report (“PSR”) con-

cluded that the evidence did not support a finding that either

possessed knowledge of the order.

10 Nos. 11-1013, 11-3008 & 11-3082

By the time the overall scheme ended in 2007, the

Appellants had already received more than $16 million

from the Spend and Redeem Program and more than

$2.6 million from the Housing Program. Over 3,000 people

from the Spend and Redeem Program and more

than 25 people from the Housing Program were affected

in only eighteen months. For the scheme to have

continued, the Appellants would have needed to

generate $45 million over approximately the next year

to make the Spend and Redeem Program “redeem”

payments and at least $7 million over the next five years

to make the required Housing Program payments. Bank

records demonstrate that the money the Appellants

received was never invested in any significant way in

order for a return to have been generated. As the

district court put it, the scheme was a “virtual impossi-

bility.”

Roy Jr. admitted the fraudulent nature of the Spend

and Redeem Program in a consent order of prohibition

signed with the Illinois Secretary of State Securities De-

partment on October 8, 2007 (the “Consent Order”). Roy III

signed a separate consent order of prohibition re-

garding the Spend and Redeem Program on October 5,

2007.

On July 9, 2008, a Grand Jury in the Northern District

of Illinois returned an eleven-count indictment against

Roy Jr., Roy III, and Ronnanita for their conduct vio-

lating 18 U.S.C. §§ 1341, 1343—mail and wire fraud. The

Appellants were tried together and, after a three-week

jury trial, convicted on May 25, 2010. Roy Jr. was

convicted on all eleven counts. Roy III was found guilty

Nos. 11-1013, 11-3008 & 11-3082 11

on five counts of wire fraud, and Ronnanita was found

guilty on five counts of wire fraud and three counts of

mail fraud. The Appellants each filed post-trial motions,

which the district court denied in their entirety.

At sentencing for Ronnanita on December 16, 2010,

the district court accepted the PSR’s findings, but also

acknowledged that “Roy Fluker, Jr., is the person who

is most responsible for what happened.” Accordingly,

even though the Sentencing Guidelines called for a sen-

tencing range of 210 to 262 months’ imprisonment,

the district court sentenced Ronnanita to ninety-six

months’ incarceration, plus restitution in the amount of

$10,783,960.45.2 On August 16, 2011, the district court

sentenced Roy III to ninety-six months’ imprisonment

with restitution in the amount of $7,336,957.49. Roy Jr.

was sentenced on August 25, 2011, to 180 months’ impris-

onment plus $7,336,957.49 restitution. This consolidated

appeal followed.

II. DISCUSSION

A. Evidentiary Rulings

Roy Jr. and Roy III challenge the admission of three

pieces of evidence. They assert that this evidence was

2

Ronnanita was sentenced by Judge David H. Coar, who

presided over the Appellants’ trial. On January 1, 2011, before

Roy Jr. and Roy III were sentenced, Judge Coar took inactive

status, and the case was reassigned to Judge Gary S. Feinerman,

who subsequently sentenced Roy Jr. and Roy III.

12 Nos. 11-1013, 11-3008 & 11-3082

improperly admitted and its admission denied them a

fair trial. We review the admission of this evidence

for abuse of discretion. United States v. Chapman, No. 11-

2951, 2012 U.S. App. LEXIS 18379, at *11 (7th Cir. Aug. 30,

2012).

1. Roy Jr.’s Consent Order 3

Roy Jr. signed the Consent Order on October 8, 2007,

after the Attorney General of the State of Illinois initiated

a civil action against him because of the fraudulent

nature of the Spend and Redeem Program. In the Con-

sent Order, Roy Jr. acknowledged that he failed to

disclose the following material facts to Spend and

Redeem Program participants:

(a) MTE had no substantive investments capable

of producing returns sufficient to repay Investors;

(b) MTE was using Investors’ funds to meet MTE

and [Wealth Creation Institute’s] obligations to

repay prior Investors; and

(c) MTE’s ability to repay Investors was dependent

on MTE’s continuing to fraudulently raise funds

from future Investors.

Roy Jr. also acknowledged that “he had the opportunity

to consult with an attorney regarding this matter;” the

3

Roy III originally challenged the admission of the consent

order he signed but later stipulated that the Government

could present a redacted form of his consent order to the jury.

Nos. 11-1013, 11-3008 & 11-3082 13

“Stipulation [was] entered into freely and voluntary;”

and he was not promised anything with regard to “civil

or criminal liability arising from the facts underlying

this matter.”

Roy Jr. filed a motion in limine to exclude the Consent

Order. The parties discussed the motion during a

status hearing on June 30, 2009, and the district court

stated, “[A]s to the general notion that none of this

comes in, that’s not going to happen.” Proceeding in

light of the district court’s comment, Roy Jr. entered into

a stipulation with the Government that the Consent

Order would either be admitted in its entirety or with

certain portions redacted. The district court instructed

the parties that “there should be an instruction at the

end, and there should also be an instruction when this

evidence comes in[,] that it’s only to be used for the

person who signed the consent and no other defendant.”

At trial, the entire Consent Order was admitted

without redaction, accompanied by an instruction ad-

monishing the jury to consider the Consent Order

only against Roy Jr.

The brief and reply brief for Roy Jr. and Roy III

are unclear as to who exactly is challenging the admissi-

bility of the Consent Order, Roy Jr. alone or Roy Jr. and

Roy III.4 Either way, the limiting instruction, coupled

4

Roy Jr. and Roy III filed a consolidated brief and reply brief.

In the sections discussing the admissibility of the Consent

Order, the parties are inconsistent, first stating that “Roy

(continued...)

14 Nos. 11-1013, 11-3008 & 11-3082

with the fact the Consent Order did not contain any

references to Roy III, sufficiently removed any unfair

prejudice to Roy III, see United States v. Javell, No. 11-3044,

2012 U.S. App. LEXIS 18377, at *9-11 (7th Cir. Aug. 30,

2012) (explaining that the admission of a co-defendant’s

confession is permissible at trial if the admission is ac-

companied by a limiting instruction and does not

facially incriminate the defendant), and we, thus, move

on to Roy Jr.’s argument.

Roy Jr. maintains that the Consent Order he signed

should not have been admitted because it was highly

prejudicial and unnecessarily confusing to the jury,

inserting state civil procedure issues into a federal

criminal trial. The Government contends the informa-

tion was relevant, as it contained factual admissions

related to the fraud allegations, and not unfairly prejudi-

cial. We find that Roy Jr. has waived his ability to

contest the Consent Order’s admission.

“To preserve an issue for appellate review, a party

‘must make a proper objection at trial that alerts the

court and opposing party to the specific grounds for the

objection.’ ” Naeem v. McKesson Drug Co., 444 F.3d 593,

610 (7th Cir. 2006) (quoting United States v. Wynn, 845

F.2d 1439, 1442 (7th Cir. 1988)). “When a party fails

to timely and properly object at trial to the admission of

4

(...continued)

Fluker Jr. and Roy Fluker III” were deprived of a fair trial

and, later, that “Mr. Roy Fluker Jr.” previously argued that

the Consent Order’s admission was improper.

Nos. 11-1013, 11-3008 & 11-3082 15

evidence, the party is deemed to have waived the issue

on appeal.” Christmas v. City of Chi., 682 F.3d 632, 640

(7th Cir. 2012) (quoting Jones v. Lincoln Elec. Co., 188 F.3d

709, 727 (7th Cir. 1999)).

The Government and Roy Jr. stipulated to the

Consent Order’s admission. When the Government

asked at trial to publish portions of it to the jury, Roy

Jr.’s counsel stated that he had no objection. By

entering into a stipulation with the Government and

failing to object at trial to the Consent Order’s admission,

Roy Jr. made a strategic decision to abandon his

challenge of the Consent Order’s admissibility. See

United States v. Gaona, No. 12-2039, 2012 U.S. App. LEXIS

20787, at *11 (7th Cir. Oct. 5, 2012) (“The touchstone

of waiver is a knowing and intentional decision.”

(quoting United States v. Jaimes-Jaimes, 406 F.3d 845, 848

(7th Cir. 2005))). This decision precludes our review of

the issue on appeal.

2. Roy Jr.’s Prior Felony Convictions

Roy Jr. was convicted of larceny by conversion (failure

to return a rental car) on April 29, 1997, and “uttering

and publishing” a forged check (forgery) sometime in

2003. He filed a motion in limine, citing Rule 609(1), to

bar the admission of these convictions. At a pretrial

hearing, the district court ruled that the Government

could question Roy Jr. regarding the larceny conviction

if he testified at trial but deferred its ruling as to the

forgery conviction. At the next status date, the parties

discussed the forgery conviction and whether the Gov-

16 Nos. 11-1013, 11-3008 & 11-3082

ernment intended to introduce it during its case-in-chief.

The Government stated it did not, to which Roy Jr.’s

counsel responded, “End of the problem.” The district

court offered no further instructions regarding the

forgery conviction.

Roy Jr. contends these determinations amount to

an abuse of discretion because the offenses were

unduly prejudicial, but he encounters an insur-

mountable hurdle. During the Government’s case-in-

chief, the Government did not publish to the jury or

question any witnesses about either of Roy Jr.’s convic-

tions.5 It was not until Roy Jr. testified on direct exam-

ination that the jury heard about the two convictions.

Roy Jr. alone was responsible for putting the informa-

tion before the jury, and the Supreme Court has

provided us guidance for such a situation: “[A] defendant

who preemptively introduces evidence of a prior con-

viction on direct examination may not on appeal claim

that the admission of such evidence was error.” Ohler

v. United States, 529 U.S. 753, 760 (2000). Roy Jr.’s intro-

duction of his prior convictions during his direct exam-

ination may have removed their “sting,” but it also pre-

5

The Consent Order contained a reference to Roy Jr.’s forgery

conviction and his failure to disclose it to participants of the

Spend and Redeem Program. The fact that the Consent Order

was admitted during the Government’s case-in-chief does

not, however, affect our analysis because the Government

did not publish to the jury, or question anyone about, the

section of the Consent Order concerning Roy Jr.’s forgery

conviction until Roy Jr. testified.

Nos. 11-1013, 11-3008 & 11-3082 17

cluded him from appealing the district court’s decision

to admit the evidence as well. See Clarett v. Roberts, 657

F.3d 664, 670 (7th Cir. 2011).

3. Haywood Borders’ Emails

The Government introduced a number of emails at

trial to rebut Roy III’s defense that a mortgage

transaction was a personal undertaking that did not

involve MTE or the Housing Program. The group of

emails at issue includes five separate emails sent to, and

received by, Melvin and Jean Norwood—A-Buyers for a

Housing Program transaction—at their personal email

account. The emails were sent by a “Hayward Borders”

at “mte_123@hotmail.com,” and dated August 22,

2007; August 28, 2007; September 6, 2007; September 7,

2007; and September 10, 2007. The first email says that

MTE’s bank accounts will be unfrozen on January 1, 2008,

and, acknowledging the Norwood’s $108,000 equity

payment, gives the Norwoods four options they can

pursue regarding their participation in the Housing

Program. The second email says the Norwoods’ “account

and options” in the A-Buyer program are being

reviewed, while the third email discusses the Norwoods’

current status and rights under the A-Buyer program.

The fourth email asks for the Norwoods’ full participa-

tion regarding how to deal with the “renter” of the prop-

erty (collect rent from her or tell her she faces evic-

tion), and the fifth email explains how the “renter” will be

evicted. Roy III attacks the emails’ admissibility on

two grounds: (1) the emails were not properly authenti-

cated, and (2) the emails contained inadmissible hearsay.

18 Nos. 11-1013, 11-3008 & 11-3082

Rule 901(a) provides that email evidence is admissible

if authenticated by “evidence sufficient to support a

finding that the item is what the proponent claims it

is.” Fed. R. Evid. 901(a). “Authentication can be estab-

lished in a variety of ways, including by ‘testimony of

[a] witness with knowledge . . . that a matter is what

it claimed to be[,]’ Rule 901(b)(1), and by distinctive

characteristics such as ‘appearance, contents, substance,

[or] internal patterns . . . taken in conjunction with cir-

cumstances[,]’ Rule 901(b)(4).” United States v. Dumeisi,

424 F.3d 566, 574 (7th Cir. 2005) (alterations in original).

Only a prima facie showing of genuineness is required;

the task of deciding the evidence’s true authenticity

and probative value is left to the jury. United States

v. Harvey, 117 F.3d 1044, 1049 (7th Cir. 1997).

Borders purportedly authored the emails. At trial,

neither Borders nor anyone who saw Borders author the

emails testified that the emails were actually sent by

Borders. Authentication under Rule 901(b)(1) was, there-

fore, impossible. See Mark D. Robins, Evidence at the

Electronic Frontier: Introducing E-Mail at Trial in Com-

mercial Litigation, 29 R UTGERS C OMPUTER & T ECH. L.J.

219, 226 (2003) (“Where a written communication such

as an e-mail message is transmitted, only the author of

the e-mail message or anyone who saw the author

compose and transmit the message will truly ‘know’ the

message’s authorship, and be able to authenticate

it.” (citing 2 JOHN W. S TRONG, ET AL., M C C ORMICK ON

E VIDENCE § 219(a), 687-88 (5th ed. 1989))). Accordingly,

the Government attempted to authenticate the emails

using circumstantial evidence, which we think was suf-

ficient.

Nos. 11-1013, 11-3008 & 11-3082 19

Our conclusion is supported by a number of factors

present in the record. The emails sent to the Norwoods

had the email address “mte_123@hotmail.com,” with the

author identified as “Hayward Borders.” Even though

Melvin Norwood testified that he had never met

Borders before receiving the emails, the uncontroverted

testimony established that Borders was an MTE Board

Member. It would be reasonable for one to assume that

an MTE Board Member would possess an email address

bearing the MTE acronym and have the capacity to

send correspondence from such an address. Moreover,

the Norwoods’ email address, the address Borders’

emails were sent to, was the same address to which

Roy III had previously sent his email correspondence

regarding the Housing Program. It would also be rea-

sonable to assume that another MTE Board Member, in

this case Borders, would have the ability to discover

and send emails to the email addresses of Housing Pro-

gram participants.

The context of the emails further demonstrates

the emails’ author had significant knowledge of the

Norwoods’ involvement with the Housing Program

and MTE. The emails discuss MTE’s frozen bank

accounts, the purchased property being part of the A-

Buyer program, and the $108,900 of equity from the

Norwoods’ home that MTE received from the transaction.

This is all information Borders would be in a position

to know and discuss with the Norwoods. The Eleventh

Circuit has found these types of factors to be sufficient

to satisfy Rule 901(a)’s authentication requirements

for email evidence, see United States v. Siddiqui, 235 F.3d

20 Nos. 11-1013, 11-3008 & 11-3082

1318, 1322-23 (11th Cir. 2000), and we agree. Roy III’s

challenge to the authentication of the emails fails.

Directing our focus to Roy III’s contention that the

emails constituted inadmissible hearsay, this argument

is equally unavailing. He contends the emails were

“offered to show that Borders made [certain] assertions,”

but the touchstone of hearsay is that the evidence is

being used to prove the truth of the matter asserted. See

Fed. R. Evid. 801(c)(2); Smith v. Bray, 681 F.3d 888, 902

(7th Cir. 2012). These emails actually contained a

number of false assertions, so they were not offered

for their truth. 6 We concur with the Government that

these emails were offered to provide context and rebut

Roy III’s argument at trial that the Norwood transaction

was a personal undertaking; one that was separate and

apart from MTE. Therefore, the emails were properly

admitted.

B. Ostrich Instruction

Ronnanita challenges the district court’s decision to

provide the jury with an ostrich instruction. The

district court instructed the jury:

6

The email dated Friday, September 7, 2007, contained a

reference to a conversation that Hayward Borders had with

Roy III. The district court concluded that this reference consti-

tuted inadmissible hearsay and ordered that the reference to

Roy III be redacted, which the Government did before pub-

lishing the email to the jury.

Nos. 11-1013, 11-3008 & 11-3082 21

You may infer knowledge from a combination of

suspicion and indifference to the truth. If you find

that a person had a strong suspicion that things

were not what they seemed or that someone had

withheld some important facts, yet shut his or her

eyes for fear of what he or she would learn, you

may conclude that he or she acted knowingly, as

I have used that word. You may not conclude that

the defendant had knowledge if he or she was

merely negligent in not discovering the truth.

Ronnanita contends the record did not contain the

requisite evidence to support the instruction’s use. We

review a decision to give an ostrich instruction for an

abuse of discretion, viewing all evidence in the light

most favorable to the Government. United States v.

Green, 648 F.3d 569, 582 (7th Cir. 2011).

An ostrich instruction is provided to “explain that the

law expands the definition of ‘knowledge’ for purposes

of determining whether a defendant committed a

specific act. It equates actual knowledge with the

deliberate avoidance of knowledge.” United States v.

Craig, 178 F.3d 891, 896 (7th Cir. 1999) (internal citation

omitted). In other words, a defendant may not escape

criminal liability simply by pleading ignorance “if he

knows or strongly suspects he is involved in criminal

dealings but deliberately avoids learning more exact

information about the nature or extent of those deal-

ings.” United States v. Garcia, 580 F.3d 528, 536 (7th Cir.

2009) (quoting Craig, 178 F.3d at 896). An ostrich instruc-

tion may be given when: “(1) a defendant claims to

22 Nos. 11-1013, 11-3008 & 11-3082

lack guilty knowledge, i.e., knowledge of her conduct’s

illegality, and (2) the government presents evidence

from which a jury could conclude that the defendant

deliberately avoided the truth.” Green, 648 F.3d at 582

(emphasis removed) (quoting Garcia, 580 F.3d at 536).

Deliberate avoidance may involve physical effort,

United States v. Pabey, 664 F.3d 1084, 1092-93 (7th Cir.

2011), or be purely psychological—e.g., “a cutting off

of one’s normal curiosity by an effort of will.” United

States v. Giovannetti, 919 F.2d 1223, 1228-29 (7th Cir. 1990).

Ronnanita has maintained throughout that she had

no knowledge of the scheme being a sham; element one

is easily satisfied. The testimony presented at trial

satisfied the second element as well: Ronnanita was

described as being “second in command” to Roy Jr. and

the person to go to with questions or concerns. She was

intimately familiar with the 200% returns promised to

participants as well as MTE’s expenses, both necessary

(rent) and extravagant (trips and cars). Ronnanita

opened bank accounts for Roy Jr. and MTE and made

monetary transfers between the accounts. She also

knew when the Housing Program had difficulties

meeting its payment obligations. Based on Ronnanita’s

access to this information, she could have chosen at

any point to investigate what investments MTE was

making and what returns MTE was generating. This

would have immediately demonstrated the fraudulent

nature of the schemes. Ronnanita claims she simply

followed Roy Jr.’s orders, but her failure to inquire

further in light of the information she possessed is evi-

dence that could lead a reasonable jury to conclude she

Nos. 11-1013, 11-3008 & 11-3082 23

deliberately avoided learning the truth about MTE’s

programs. See Craig, 178 F.3d at 897-98; see also United

States v. Leahy, 464 F.3d 773, 796 (7th Cir. 2006) (holding

that “red flags” and a failure to ask questions

about them demonstrates deliberate avoidance). This is

precisely the type of situation that warrants an ostrich

instruction. See United States v. Paiz, 905 F.2d 1014, 1022

(7th Cir. 1990) (“Such a scenario, one in which ‘the de-

fendant acknowledges [her] association with the group

but, despite circumstantial evidence to the contrary,

denies knowledge of the group’s illegal activity,’ is a

paradigm case for use of the ‘ostrich’ instruction.” (quoting

United States v. Diaz, 846 F.2d 544, 550 (7th Cir. 1988))). We

find the district court appropriately gave the ostrich

instruction.

C. Sentencing Calculations 7

Having addressed the Appellants’ complaints about the

trial, we turn our attention to Ronnanita and Roy III’s

sentencing objections. We review the district court’s

application of the Sentencing Guidelines de novo and

its findings of fact for clear error. United States v. McCauley,

659 F.3d 645, 652 (7th Cir. 2011). Findings of fact are

clearly erroneous only when, “after considering all the

evidence, the reviewing court is left with the definite

and firm conviction that a mistake has been made.”

7

The Appellants’ PSR offense level calculations were deter-

mined pursuant to the November 2009 edition of the Guide-

lines Manual.

24 Nos. 11-1013, 11-3008 & 11-3082

United States v. Rice, 673 F.3d 537, 540 (7th Cir. 2012)

(quoting United States v. Cruz-Rea, 626 F.3d 929, 938

(7th Cir. 2010)).

1. Ronnanita

Over Ronnanita’s objection, the district court accepted

the PSR’s findings, which included several sentencing

enhancements. After the application of these enhance-

ments, the district court determined Ronnanita’s final

offense level to be 36 and her criminal history category

to be II, resulting in an advisory Guidelines range of

210 to 262 months’ imprisonment. The district court

went below the advisory range and sentenced

Ronnanita to 96 months’ imprisonment and two years’

supervised release on each count to be served concur-

rently. Ronnanita challenges her sentence, contending it

would have been less had her guideline range been lower.

a. Role in the Scheme Enhancement

Ronnanita first argues that the district court erred

in applying U.S.S.G. § 3B1.1(b), which calls for a three-

level enhancement if “the defendant was a manager or

supervisor . . . and the criminal activity involved five

or more participants or was otherwise extensive[.]” (em-

phasis added). The Sentencing Guidelines define “partici-

pant” as “a person who is criminally responsible for the

commission of the offense, but need not have been con-

victed.” § 3B1.1 cmt. n.1. We have explained that this

means a participant “could have been charged,” even if only

Nos. 11-1013, 11-3008 & 11-3082 25

as an accessory; but “mere knowledge of a conspiracy” is

insufficient to establish that a person was “criminally re-

sponsible.” United States v. Pabey, 664 F.3d 1084, 1097 (7th

Cir. 2011). Ronnanita claims five people were not “crimi-

nally responsible” for the scheme, so the three-level

enhancement was inappropriate.

The parties agree that the Appellants were each “partici-

pants” in the scheme; that makes three. The dispute

between them focuses on whether other individu-

als—Jacqueline Hawkins and Jennifer Washington

(MTE employees) and Phillip Rowe, Eric Blount, and

Clarence Jones (mortgage company employees)—qualify

as participants under Section 3B.1(b). We decline

to decide whether these other individuals qualify as

participants because we believe the entire scheme

easily satisfies the “otherwise extensive” provision, so

the number of “participants” does not matter. See

United States v. Hussein, 664 F.3d 155, 162 (7th Cir. 2011).

Section 3B1.1, commentary note 3 states, “In assessing

whether an organization is ‘otherwise extensive,’ all

persons involved during the course of the entire offense

are to be considered. Thus, a fraud that involved only

three participants but used the unknowing services of

many outsiders could be considered extensive.” In deter-

mining whether a scheme is otherwise extensive, we

have considered: (1) the monetary benefits obtained

during the scheme; (2) the length of time the scheme

continued; (3) the number of people utilized to operate

the scheme; and (4) the scheme’s geographic scope. See,

e.g., United States v. Figueroa, 682 F.3d 694, 696 (7th Cir.

26 Nos. 11-1013, 11-3008 & 11-3082

2012); Pabey, 664 F.3d at 1097; Hussein, 664 F.3d at 162;

United States v. Knox, 624 F.3d 865, 874 (7th Cir. 2010).

We have also held that a scheme is otherwise extensive

if the number of participants plus outsiders who unwit-

tingly advance a conspiracy is greater than five. See, e.g.,

United States v. Tai, 41 F.3d 1170, 1174-75 (7th Cir. 1994).

At the bare minimum, the participation of the Appel-

lants, plus at least Hawkins, Washington, and one other

MTE Board Member, satisfies this “greater than five”

standard, regardless of whether Hawkins and Wash-

ington were “criminally responsible.” See Pabey, 664 F.3d

at 1097 (citing Tai, 41 F.3d at 1174-75). This number does

not even include the additional MTE Board Members,

the other MTE employees who helped organize venue

meetings in numerous states, the mortgage company

employees, or the numerous A-Buyers used to further

the Housing Program. We believe the scheme was also

extensive with respect to the amount of money obtained

(over $18 million), the intended geographic scope (at

least six states), the number of people affected (over

3,000), and the overall complexity (using straw buyers

to facilitate Housing Program transactions). Thus, the

scheme qualifies as “otherwise extensive” under U.S.S.G.

§ 3B.1(b), and the three-level enhancement was correct.

b. Assignment of Criminal History Category

Ronnanita next contests the district court’s calculation

of her criminal history category. The PSR assessed one

criminal history point to Ronnanita pursuant to U.S.S.G.

§ 4A1.1(c) for a conviction of larceny by conversion

Nos. 11-1013, 11-3008 & 11-3082 27

on July 18, 2005. Ronnanita received a twelve-month

probation sentence, plus a fine, for that conviction.

Section 4A1.1(d) states that two points should be added

“if the defendant committed the instant offense while

under any criminal justice sentence, including proba-

tion[.]” Accordingly, the PSR applied two additional

criminal history points because Ronnanita’s criminal

charges were committed while Ronnanita was still on

probation for the larceny conviction, which she was not

discharged from until May 15, 2006. A criminal history

category II was thus designated, which corresponds to

the three criminal history points assigned to Ronnanita.

Ronnanita claims this criminal history category was

incorrect because four of the eight counts on which she

was convicted occurred after she was discharged from

probation on May 15, 2006. We first note Ronnanita’s

failure to object to her criminal history calculation in

the district court, so we only review for plain error. See

United States v. Vasquez, 673 F.3d 680, 684 (7th Cir. 2012).

But regardless of the standard applied, Ronnanita’s

argument easily fails because all that is required under

U.S.S.G. § 4A1.1(d) is for “any relevant conduct” of the

offense to have been committed while the defendant

was on probation, see § 4A1.1 cmt. n.4, not the instant

offense “in its entirety” as Ronnanita claims. Therefore,

because the evidence at trial established that Ronnanita’s

participation in the overall scheme began in early 2005

and continued at least into 2007, Ronnanita engaged in

conduct related to her convictions while on probation,

and the district court did not err in calculating her

criminal history category.

28 Nos. 11-1013, 11-3008 & 11-3082

c. Loss Calculation

Ronnanita also contests the district court’s calculation

of the loss attributable to her offenses. The PSR calculated

the loss suffered by the individuals involved in the

Spend and Redeem Program and the Housing Program

to be between $8,579,052 and $10,783,961. Under the

Sentencing Guidelines, a loss in excess of $7,000,000

but less than $20,000,000 corresponds to a twenty-level

increase in the defendant’s offense level, see U.S.S.G.

§ 2B1.1(b)(1)(K); Ronnanita’s offense level was, therefore,

increased by twenty levels.

Ronnanita did not provide the Probation Office or

the district court with any information regarding a

loss figure. Her challenge to the calculation is nonethe-

less two-fold: (1) her participation and responsibilities

were almost entirely related to the Housing Program,

so she should only be attributed losses related to the

Housing Program (roughly $2,600,000); and (2) the losses

attributed to Roy III at his sentencing hearing on

August 16, 2011, eight months after she was sentenced,

were only $7,336,957.49, so the amount attributed to

her was approximately $3,400,000 too high. We address

each argument in turn.

From the outset, Ronnanita’s argument that the

evidence demonstrated she only had “tangential conduct

with the Spend and Redeem Program” is completely

without merit. As discussed above, Ronnanita actively

facilitated participation in both the Spend and Redeem

Program and the Housing Program. She was “second in

command” and the person to go to with problems. She

Nos. 11-1013, 11-3008 & 11-3082 29

also transferred money between numerous accounts,

and that money was connected to both programs. The

evidence presented at trial established that Ronnanita

was fully involved with both the Spend and Redeem

Program and the Housing Program; the district court

properly attributed the losses of both programs to her.

Generally, because Ronnanita did not raise her second

contention—that the losses attributed to Roy III for the

same programs were $3,400,000 less—until her reply

brief, her argument would be waived. See Griffin v. Bell,

No-11-3389, 2012 U.S. App. LEXIS 18599, at *9 (7th Cir.

Sept. 4, 2012) (“[A]rguments raised for the first time in

a reply brief are deemed waived.”). However, we have

stated that “exceptional circumstances” may allow us to

consider arguments that would otherwise be waived. See

In re Busson-Sokolik, 635 F.3d 261, 268-69 (7th Cir. 2011).

This issue is one of those rare situations. Ronnanita

filed her amended brief with this Court on June 1, 2011;

Roy III was not sentenced until August 16, 2011. It

would have been impossible for Ronnanita to know

what the loss amount attributed to Roy III would be two

months into the future, so we will reach the merits of

Ronnanita’s second contention.

Ronnanita correctly points out that the loss amounts

attributed to her and Roy III were inconsistent, but she

fails to explain why this difference is consequential. Even

if we assume that Ronnanita had been sentenced on the

same day as Roy III and the district court accepted the

same loss calculation given to Roy III ($7,336,957.49), that

amount is still greater than the $7,000,000 threshold of

30 Nos. 11-1013, 11-3008 & 11-3082

U.S.S.G. § 2B1.1(b)(1)(K). Ronnanita’s loss calculation

would still result in a twenty-level increase of her

offense level. “To find clear error we must be persuaded

that the sentencing court made a fundamental error

which resulted in a complete miscarriage of justice.”

United States v. Schaefer, 384 F.3d 326, 332 (7th Cir. 2004)

(quoting United States v. Hatchett, 31 F.3d 1411, 1423-24

(7th Cir. 1994)). Ronnanita has not put forth any

support for the proposition, and we perceive no reason

to believe, that this difference had any effect on the ad-

ministration of justice, so we find that no clear error

occurred.

d. Calculation of Victims

The PSR concluded that approximately 3,000 indi-

viduals participated in the programs and approximately

1,900 individuals lost money in the scheme. Pursuant

to U.S.S.G. § 2B1.1(b)(2)(C), the PSR applied a six-level

increase because the offense involved more than

250 victims. Ronnanita again claims the number of

victims apportioned to her is erroneous because she

was only actively involved in the Housing Program. For

the same reasons we believe the losses allocated to

her were correct, we believe the calculation of victims

was also appropriate.

2. Roy III

The district court accepted a loss calculation of

$7,336,957.49 before it sentenced Roy III to, among other

Nos. 11-1013, 11-3008 & 11-3082 31

conditions, ninety-six months’ imprisonment. Roy III

contends he did not have “the requisite mens rea” to be

held liable for the losses from either the Spend and

Redeem Program or the Housing Program because he

was fooled just like the investors. In his eyes, he should

not be held accountable for any of the losses. The

problem for Roy III is the evidence demonstrates that

the overall scheme he was convicted of participating

in included both programs. As the district court stated

at Roy III’s sentencing, “[The Spend and Redeem and

Housing Programs] were not two separate operations.

They were interrelated components of the same MTE,

More Than Enough, operation.” We think the evidence

regarding Roy III’s participation at venue meetings,

involvement with the Norwood transaction, and knowl-

edge of the “inherent implausibility” of the promised

returns (for both programs) amply support a finding

that Roy III knew both programs were fraudulent, yet

continued to actively participate in their operation.

There was no error in the calculation of the losses attrib-

uted to Roy III.

III. CONCLUSION

Finding that the Appellants’ contentions lack merit,

we A FFIRM the Appellants’ convictions and sentences.

10-26-12