Petition for Writ of Certiorari — Smith v. United States
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Supreme Court, U.S.
rt2u. ns VP
94 285 AUC - 8 199%
OFFICE OF THE CLERK
Supreme Court of the United States
October Term, 1993
BRENDA L. SMITH,
Petitioner,
VS.
UNITED STATES OF AMERICA,
Respondent.
Petition for Writ of Certiorari
To the United States Court of Appeals
for the Tenth Circuit
PETITION FOR WRIT OF CERTIORARI
James R. Wyrsch
(Counsel of Record)
Cheryl A. Pilate
WYRSCH ATWELL MIRAKIAN
LEE & HOBBS, P.C.
1101 Walnut, Suite 1300
Kansas City, MO 64106
Tel: (816) 221-0080
Fax: (816) 221-3280
Attorneys for Petitioner
Service Printing and Graphics, Inc.
(816) 842-9068 + FAX (816) 842-4763
I.
QUESTION PRESENTED
WHETHER A DEFENDANT IN A COMPLEX FRAUD
CASE CAN PROPERLY BE DENIED A GOOD FAITH
DEFENSE INSTRUCTION ON THE BASIS THAT HER
STATED GOOD FAITH BELIEFS DO NOT PERTAIN
TO ALL ACTS ALLEGED BY THE GOVERNMENT,
EVEN THOUGH THE DEFENDANT DENIED PAR-
TICIPATING IN SOME ACTS, AND STATED THAT
SHE OPERATED ON A GOOD FAITH BASIS WITH
REGARD TO OTHER ACTS; AND WHETHER SUCH
DENIAL VIOLATES THE FIFTH AND SIXTH AMEND-
MENTS TO THE U.S. CONSTITUTION.
ii
TABLE OF CONTENTS
Page
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TR Rai thnitenicrecetinrnnievinncttaiteninintaies ii
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CITIATIONS TO OFFICIAL REPORTS
CP Pe hncich dich iB cnccircsccstcresiesitividss Vv
STATEMENT OF JURISDICTION . 00.00.0000... cccceeeeeeeeeeeee 1
CONSTITUTIONAL PROVISIONS ...............cccccceeeeseeee 3
SE ree ae ee wileindiecaicirtenitnestnsecicnesccsecsnennscnsien 3
A. Procedural Statement of the Case..................... 3
B. Factual Statement of the Case...................:se000++ 6
REASONS FOR GRANTING THE WRIT................+- 10
I. WHETHER A DEFENDANT IN A COMPLEX FRAUD
CASE CAN PROPERLY BE DENIED A GOOD FAITH
DEFENSE INSTRUCTION ON THE BASIS THAT HER
STATED GOOD FAITH BELIEFS DO NOT PERTAIN TO
ALL ACTS ALLEGED BY THE GOVERNMENT, EVEN
THOUGH THE DEFENDANT DENIED PARTICIPATING
IN SOME ACTS, AND STATED THAT SHE OPERATED
ON A GOOD FAITH BASIS WITH REGARD TO OTHER
ACTS; AND WHETHER SUCH DENIAL VIOLATES THE
FIFTH AND SIXTH AMENDMENTS TO THE CONSTI-
TUTION
SE IED nccnniceresnccnncasennnenncnitiijadianienhaaadaiaaal 19
iii
TABLE OF AUTHORITIES
CASES: Page(s)
Cheek v. United States, 111 S.Ct. 604 (1991)... 18
Matthews v. United States,
485 U.S. 58 (1988) .............c.0000. 10, 11, 14, 15, 16, 18, 19
Arcoren v, United States, 929 F.2d 1235 (8th Cir. 1991),
cert. denied, 112 S.Ct. 312 (1991) ...........cceccccssseiseseoses 11
United States v. Allen, 798 F.2d 985 (7th Cir. 1986) ...... 17
United States v. Casperson,
FFE TIME BID sccc cxricosacovocecsscessioctedacssee 18
United States v. Cordova-Larios,
PEF Bem Rd RPA RE BN sc cass scsiccincinccinsevencccccecss 17
United States v. Cruz, 783 F.2d 1470 (9th Cir. 1986),
cert. denied, 476 U.S. 1174 (1986) .........c.cccsccccesesceseees 15
United States v. Demma, 523 F.2d 981 (9th Cir. 1975)... 14
United States v. Evans, 910 F.2d 790 (11th Cir. 1990)
cert. denied, 112 S. Ct. 1881 (1992) .......ccccscscsscscsseeeees 15
United States v. Haddock,
956 F.2d 1534 (10th Cir. 1992),
on rehearing in part, 961 F.2d 933 (10th Cir. 1992),
Cert, Gensed, T13 S.Ct. GB (1992) on... ..cccscsceccocececeosooess 15
United States v. Hopkins, 744 F.2d 716 (10th Cir. 1984) 18
United States v. Opdahl, 930 F.2d 1530
UA RD a chicteccicahkl tices soterersiccisekeecvesonoseimeies 17, 18
United States v. Pinalto, 771 F.2d 457 (10th Cir. 1985) .. 14
United States v. Scafe, 822 F.2d 928 (10th Cir. 1987) ......11
United States v. Smith,
Case No. 93-3159 .............00. 1,5, 10, 11, 12, 14, 17, 19
iv
United States v. Sullivan, 919 F.2d 1403
CRORE FP eth bs chcnis insitchseetoicnichipnaierniinsdtesactansobiawpinn 11
Whipple v. Duckworth, 957 F.2d 418 (7th Cir. 1992),
cert. denied, 113 S.Ct. 218 (1992)............... ronnmnnkl 12, 16
Womack v. United States,
SOG Fe Fa Rs, SA TOG aiisscisccecisccscesesonccsnersoveisone 16
United States ex rel. Everette v. Roth,
808 F. Supp. 1332 (N.D. Ill. 1992)... ceeeeseees 16, 18
United States ex. rel. Eaglin v. Welborn,
815 F Supp. 1181 (C.D. IID. 1993)... ceeeeeeeeseseeeees 16
OTHER AUTHORITIES
US. Cee: RY his accvcknideetdeiccsencablacons 3, 12, 16, 19
U0 ohs MI) PRM WR ecdcdeosccacsiccstded ctencastcnns 3, 12, 16, 19
BU ii inn eisai actin cktesaiciccotdonseesnbicdlasens nae 4
Be Rie I ci ssticnctnvacecssenitickacnerseepitiinitabinaiindantin 4
SE ie a alieditbttndaies ssciisihisnshcirmsnichinnacaadbasiobauiiond 4
ee seis ste dcsbesentdctcaclakicstoniabendcatancbbabaieoess 4
i cciinccissnsencieiisnnistesananinc ane 4,15
BD he PE ieicktitsidictniesocpentibdabinpdauaaabinia 4
A CE A ED eiiciissicicdtnssdnseantscahapiasndbiamenadbiadialaetias 4
IG ii ccicccaiss snithaestasstintiiee us 4
Vv
CITATIONS TO OFFICIAL REPORTS
OF OPINIONS IN CASE
The primary opinion of the United States Court of
Appeals for the Tenth Circuit whose review is sought by Peti-
tioner was decided and filed on January 6, 1994. The opinion
is reported as United States v. Smith, 13 F.3d 1421 (10th Cir.
1994), and is set forth in the Appendix at pages App. ii - App.
xix. Petitioner also seeks review of a related judgment issued
by the Tenth Circuit in which the Court held that because it
affirmed the Defendant's conviction in the opinion filed on
January 6, 1994, it also affirmed the District Court’s Final Or-
der of Forfeiture. That opinion is reported as United States v.
Smith, 19 F.3d 485 (10th Cir. 1994), and is set forth in the Ap-
pendix at pages App. xxiii. Smith’s case originated in the
federal District Court in the District of Kansas. United States
v. Smith, Case No. 92-20011-01 (D. Kan., final judgment en-
tered May 24, 1993). The opinion of the United States District
Court for the District of Kansas denying Petitioner’s Motion
for Judgment of Acquittal or, in the Alternative, for New Trial,
was decided and filed on April 28, 1993. That opinion, United
States v. Smith, Case No. 92-20011-01 (D. Kan. April 28, 1993),
is set forth in the Appendix at pages App. xxviii- xlvii. The
Final Order of Forfeiture entered by the District Court was
filed on September 16, 1993. That opinion is set forth in the
Appendix at pages App. xIviii - xlix.
STATEMENT OF JURISDICTION
The appeal of United States v. Smith, whose review Peti-
tioner seeks, was decided by a panel of the United States Court
of Appeals for the Tenth Circuit on January 6, 1994. United
States v. Smith, Case No. 93-3159 (10th Cir. Jan. 6, 1994). See
App. at ii-xix. Petitioner requested, and was granted, an ex-
tension of time in which to file her Petition for Rehearing. See
App. at xxv.! Said Petition, which requested rehearing by the
panel and rehearing en banc, was denied on May 13, 1994.
See App. at xxv. The U.S. Supreme Court has jurisdiction to
review this Petition for Writ of Certiorari, see 28 U.S.C. § 1254(1)
(1988).
Petitioner also seeks review of the opinion of the Tenth
Circuit filed on February 22, 1994, in which that Court affirmed
the criminal forfeiture in Petitioner’s case on the basis that it
had previously affirmed her conviction. United States v. Smith,
Case No. 93-3307 (10th Cir. Feb. 22, 1994) (hereinafter referred
‘o as “case number 93-3307”). See App. at xxiii. See Sup. Ct.
R. 12.2. The parties had, with the Court's approval, filed no
separate briefs in case number 93-3307, which the Tenth Cir-
cuit had earlier consolidated, for procedural purposes, with
Petitioner’s main appeal. See App. at xxvii.
This second appeal, case number 93-3307, was dock-
eted after Petitioner had filed a second notice of appeal, ap-
pealing the District Court's Final Order of Forfeiture. See App.
at xlvii. The forfeiture was final as to Petitioner when final
judgment was entered on May 24, 1994. However, the Court
entered the Final Order of Forfeiture after adjudication of third-
party interests. Petitioner filed her second Notice of Appeal
in the interest of caution and to preserve her position, stated
in her brief appealing her criminal conviction, that should the
’ All references to the Appendix contained with this Petition shall be to
“App. at :
2
appellate court reverse her conviction on the underlying
counts, it must necessarily reverse the criminal forfeiture as
well. Petitioner raised no separate issue as to the forfeiture.
After the Tenth Circuit issued its opinion on February
22, 1994, affirming the forfeiture on the basis that it had ear-
lier affirmed Petitioner’s criminal conviction, Petitioner did
not file a petition for rehearing as there was no issue to rehear.
As stated above, Petitioner h ed, however, a Peti-
tion for Rehearing with regard to the Opinion issued January
6, 1994. The Tenth Circuit denied that Petition on May 13,
1994. See App. at xxv.
Petitioner files this writ timely (within 90 days from
the denial of the rehearing petition, as permitted by Supreme
Court Rule 13) with regard to the January 6, 1994, opinion of
the Tenth Circuit. However, she is not within the 90-day time
period with regard to the opinion in case number 93-3307,
filed February 22, 1994. Petitioner nonetheless seeks review
of the February 22, 1994, opinion on the basis that it is closely
intertwined with the January 6, 1994, opinion, and Petitioner’s
petition is timely with regard to the latter opinion. Petitioner
also submits that the 90-day time period is not jurisdictional
in a criminal case, see, e.g., 28 U.S.C. § 2101(d). The forfeiture
at issue is a criminal forfeiture and was charged in the indict-
ment. Further, Petitioner represents that her counsel has spo-
ken with the attorney for the Government, Mr. Robin Fowler,
and he does not oppose her effort to seek review of both opin-
ions of the Tenth Circuit. If this Court were to grant this Peti-
tion for Writ of Certiorari and reverse Petitioner's conviction,
Petitioner asserts that the criminal forfeiture based on that
conviction similarly should be reversed as a matter of law. See
also, 18 U.S.C. § 982 (forfeiture dependent on other convic-
tion, which in this case is money laundering, which depends
on the mail fraud.)
CONSTITUTIONAL PROVISIONS
United States Constitution, Amendment V states:
No person shal) be held to answer for a capital, or oth-
erwise infamous crime, unless on a presentment or indict-
ment of a grand jury, except in cases arising in the land or
naval forces, or in the militia, when in actual service in time of
war or public danger; nor shall any person be subject for the
same offence to be twice put in jeopardy of life or limb; nor
shall be compelled in any criminal case to be a witness against
himself, nor be deprived of life, liberty, or property, without
due process of law; nor shall private property be taken for
public use, without just compensation.
United States Constitution, Amendment VI states:
In all criminal prosecutions, the accused shall enjoy
the right to a speedy and public trial, by an impartial jury of
the state and district wherein the crime shall have been com-
mitted, which district shall have been previously ascertained
by law, and to be informed of the nature and cause of the
accusations; to be confronted with the witnesses against him;
to have compulsory process for obtaining witnesses in his fa-
vor, ait »») have the assistance of counsel for his defense.
STATEMENT OF CASE
A. Procedural Statement of the Case
This prosecution concerned an alleged scheme to use
a travel agency to issue supposedly fraudulent tickets, refunds,
and exchange notices for the purpose of depriving the air-
lines of money that they claimed belonged to them. On April
22, 1992, the Government filed a Superseding Indictment
charging Defendant Brenda Lu Smith, along with four oth-
ers, with conspiring to fraudulently use the access or account
codes of Globemaster Travel to obtain more than $500,000.00
4
in airline tickets and refund checks, in violation of 18 U.S.C.
§§ 371 and 1029(b)(2). The Superseding Indictment also
charged Smith with two counts of mail fraud in violation of
18 U.S.C. § 1341, three counts of money laundering in viola-
tion of 18 U.S.C. §§ 1957 and 2, one count of criminal forfei-
ture pursuant to 18 U.S.C. § 982(b)(1), and one count of fail-
ure to file a corporate income tax return in violation of 26 U.S.C.
§ 7203.
Prior to trial, the District Court dismissed Count I on
the basis that it failed to state an offense because there was no
allegation that the defendants obtained the access devices or
account codes with fraudulent intent. After a four-week trial,
a jury convicted Smith of the remaining counts. The District
Court subsequently granted Smith an acquittal on the tax
count on the basis that the evidence was insufficient for a con-
viction. United States v. Smith, Case No. 92-20011-01 (D. Kan.
Apr. 28, 1993); App. at xxviii.
On May 20, 1993, the District Court sentenced Smith
to 48 months in prison, three years supervised release, and
imposed a special assessment of $250.00 and a fine of
$75,000.00. The Court entered final judgment on May 24, 1993,
and the Defendant filed a timely Notice of Appeal on that
same day.
After the Defendant filed her opening brief in the Tenth
Circuit, but before the appellate court issued any ruling, the
District Court entered a Final Order of Forfeiture on Septem-
ber 16, 1993. See App. at xlviii. The Final Order of Forfeiture
was entered pursuant to the provisions of 21 U.S.C. § 853(n)
and was issued after notice to third parties with a potential
interest in the $128,177.00 forfeited by the Defendant. (These
funds were forfeited via a criminal forfeiture count brought
as Count VII of the Superseding Indictment.) Because the
forfeiture was final as to the Petitioner at the time the District
Court entered its final judgment on May 24, 1994, Petitioner
believed that it was not necessary for her to file a second no-
tice of appeal stating her intent to appeal from the forfeiture
order. However, in the exercise of caution, she elected to filea
second notice of appeal. Petitioner thus had two appeals dock-
eted in the Tenth Circuit Court of Appeals. The Tenth Circuit
consolidated these appeals for procedural purposes. See App.
at xxvii.
On January 6, 1994, the Tenth Circuit entered its opin-
ion affirming the jury’s verdict. United States v. Smith, 13 F.2d
1421 (10th Cir. 1994); see App. at ii - xix. Petitioner timely
requested a two-week extension of time in which to file her
Petition for Rehearing. On February 2, 1994, she filed her
Petition for Rehearing by the panel and her suggestion for
rehearing en banc.
On February 22, 1994, the Tenth Circuit filed a second,
one-paragraph opinion, which affirmed the District Court's
Final Order of Forfeiture on the basis that the Tenth Circuit
had earlier affirmed the Petitioner’s conviction. See App. at
xxiii. The Petitioner did not file a Petition for Rehearing with
regard to the February 22, 1994, Order, as there was no issue
to rehear with regard to this opinion.
On May 13, 1994, the Tenth Circuit Court of Appeals
granted Petitioner’s Motion for Extension of Time in which to
File Her Petition for Rehearing with regard to the January 6,
1994, opinion. See App. at xxv. In this same order, the Tenth
Circuit denied Petitioner’s Petition for Rehearing by the panel
and her suggestion for rehearing en banc. See App. at xxv.
This order applied only to the opinion filed on January 6, 1994.
Petitioner submits this Petition for Writ of Certiorari
seeking review of both the January 6, 1994, and the February
22, 1994, opinions of the Tenth Circuit. Although she is within
the 90-day period allotted by Rule 13 with regard to the Janu-
ary 1994 opinion (as measured from the May 13, 1994, denial
of her Petition for Rehearing), she is not timely with regard to
the February 22, 1994, opinion. However, Petitioner seeks
review of both opinions because they are closely intertwined
and the decision in the February 22, 1994, opinion is, in fact,
dependent upon the decision rendered in the January 6, 1994,
opinion. For a fuller discussion of Petitioner’s reasons for
seeking a review of both opinions, she refers this Honorable
Court to the discussion that appears under the heading “State-
ment of Jurisdiction,” supra.
B. Factual Statement of the Case
The charges in this case arose from the Petitioner’s
operation of the Globemaster Travel Agency in Overland Park,
Kansas, and her alleged efforts to devise and direct a scheme
to defraud foreign and domestic airlines by purchasing nu-
merous airline tickets on a credit card or for cash, then claim-
ing multiple refunds for individual tickets. The evidence pre-
sented at trial showed that Petitioner purchased Globemaster
Travel in 1978 and sold the agency to local investors seven
years later. After the sale, she continued to manage the
agency’s affairs. Globemaster Travel was a member of the
Airline Reporting Corporation (ARC), an intermediary that
assists in the transmission of paperwork and funds between
the airlines and travel agencies. ARC provided Globemaster
with the items that it needed to sell tickets, including blank
ticket stock, access to reservations terminals, and an account
number with which to validate tickets. Each week,
Globemaster was required to mail to ARC a report of its cash
and credit sales, its refunds, ticket exchanges and earned com-
missions. From the documentation provided, ARC would de-
termine the net amount of money Globemaster owed to the
airlines. ARC was responsible for collecting and transmitting
the proceeds of cash transactions, but did not collect funds
7
for credit card sales, as credit transactions were handled by
the agency, the credit card company, and the airline. From
the weekly reports, ARC determined how much the agency
owed each airline, deducting from the total cash sales the
amount of total cash refunds and commissions. ARC would
then withdraw funds from the travel agency's bank account,
based on a weekly draft authorization provided with the re-
port to ARC. The net proceeds would then be distributed to
the various airlines whose tickets were sold by the agency.
At trial, the Government offered evidence seeking to
prove that Smith and Globemaster Travel employees acting
at her direction wrote fraudulent foreign airline tickets that
they subsequently claimed had been refunded. The Govern-
ment offered evidence showing that the amount of foreign
ticket refunds exceeded the amount of foreign ticket sales
claimed. The Government alleged that this was accomplished
by Globemaster employees who claimed multiple refunds for
each ticket. This created a so-called “pool of credits” in the
form of monies that should have been withdrawn by ARC
but were not. This “pool” was then supposedly tapped by
the writing and cashing in of fraudulent domestic airline tick-
ets.
In early May 1989, Smith purchased six foreign airline
tickets using her personal American Express card. These tick-
ets were issued in names other than Brenda Smith’s name.
The total gross purchase price of these tickets was $50,802.82.
Because these tickets were reported to ARC as credit card sales,
ARC did not withdraw money from the Globemaster account
and the airlines were paid directly by American Express.
Over the next four weeks, Globemaster Travel issued
12 foreign airline tickets, again in the name of fictitious pas-
sengers. These 12 tickets were reported to the ARC as cash
sales and, thus, were paid for when the ARC withdrew the
8
appropriate amount of funds from Globemaster’s bank ac-
count. The gross purchase price of the 12 tickets was
$105,694.62.
On the ARC weekly reports, these 18 tickets were sub-
sequently reported as cash refunds. In any particular week,
the amount of cash ticket sales reported to ARC would be
offset by the amount of reported refunds, and ARC would
thus withdraw less money to reflect the refunds. According
to evidence presented by the government, these original 18
conjunctive tickets were used to support the issuance of an
additional 78 foreign airline tickets. This was accomplished
by the alleged splitting of the original 18 tickets. For instance,
one multiple-coupon, multiple-leg ticket would be treated as
if it were several tickets and would be refunded multiple times,
each time for the total ticket price.
The government presented evidence showing that the
alleged splitting of tickets resulted in the creation of a “pool
of credits” in Globemaster Travel’ s account. This pool of credits
was then accessed by the issuance of domestic airline tickets
that were cashed in by persons who testified that they acted
at the direction of Petitioner. Tickets were issued by the travel
agency and were reported as cash sales; thus, ARC withdrew
money out of Globemaster Travel’s bank account and paid
the domestic airlines. These domestic airline tickets were
cashed at various domestic airline counters.
Up until the last two weeks of June 1989, the domestic
airlines were paid for all tickets issued by Globemaster. How-
ever, during the last part of June 1989, the ARC “reversed”
two weekly reports of Globemaster Travel, meaning that ARC
distributed no money to the airlines for any of the tickets re-
portedly sold by Globemaster during those two weeks and
collected no money from the airlines for any cash refunds re-
ported by Globemaster during those same two weeks.
The government alleged that the so-called scheme ex-
ecuted by Smith and others supposedly acting at her direc-
tion resulted in net losses of approximately $389,230.00 to the
foreign airlines and approximately $184,533.00 to the domes-
tic airlines.
Smith testified extensively in her own defense. She
stated that she was unaware of and had no involvement in
any plan to create a “pool” of credits in the Globemaster bank
account by claiming multiple refunds for foreign airline tick-
ets. She testified that she had authorized, however, the pur-
chase of several foreign airline tickets worth approximately
$100,000.00 on her American Express card, and the subsequent
claiming of cash refunds for those same tickets so that
Globemaster could obtain the benefit of a 60-day payment
period available for the use of the credit card. She stated that
when Globemaster began to experience cash flow problems
and owed money to two banks, she developed a plan to use
her American Express card to purchase tickets that would not
be used for travel and would be reported to ARC as cash re-
funds, with the refund amount being used to reduce the
weekly liability to ARC. The Petitioner testified that she did
not intend to steal any money, and simply intended to access
her American Express card to obtain a legitimate 60-day credit
float. Petitioner further testified that she kept proper records
for these tickets, that she considered herself a legitimate cus-
tomer of the airlines, and that she had intended to keep using
credit available through American Express until the agency’s
cash flow improved and she was able to pay the outstanding
balance on the credit card.
Petitioner offered a proper good faith defense instruc-
tion, which was denied by the district court on the basis that
her defense was more properly characterized as denial, rather
than good faith. See App. at xxviii, xii - xliii, | - li.
10
REASONS FOR GRANTING THE WRIT
I. WHETHER A DEFENDANT IN A COMPLEX FRAUD
CASE CAN PROPERLY BE DENIED A GOOD FAITH DE-
FENSE INSTRUCTION ON THE BASIS THAT HER
STATED GOOD FAITH BELIEFS DO NOT PERTAIN TO
ALL ACTS ALLEGED BY THE GOVERNMENT, EVEN
THOUGH THE DEFENDANT DENIED PARTICIPATING
IN SOME ACTS, AND STATED THAT SHE OPERATED
ON A GOOD FAITH BASIS WITH REGARD TO OTHER
ACTS; AND WHETHER SUCH DENIAL VIOLATES THE
FIFTH AND SIXTH AMENDMENTS TO THE CONSTI-
TUTION.
Granting of a Petition for Writ of Certiorari is proper,
inter alia, when a United States Court of Appeals has rendered
a decision that is in conflict with a decision of this Court or
has decided an important question of federal law which has
not been, but should be, settled by this Court. In this case,
Petitioner asserts that the Tenth Circuit, without authority or
precedent, has announced an extraordinary new rule that dra-
matically restricts the availability of the good faith defense in
complex fraud cases. See, United States v. Smith, 13 F.3d 1421
(10th Cir. 1994); App. at ii - xix. In essence, a panel of the
Tenth Circuit held that a defendant is not entitled to a good
faith defense instruction in a mail fraud case unless the
defendant's stated good faith beliefs pertain to all, or nearly
all, of the acts alleged by the Government. This rule necessar-
ily precludes a defendant from denying participation in some
of the alleged acts if he or she also wishes to rely on a good
faith defense.
Petitioner asserts that the Tenth Circuit’s decision is
inconsistent with this Court’s decision in Matthews v. United
States, 485 U.S. 58 (1988), which held that defendant raising
an entrapment defense is entitled to an instruction as to that
11
defense even if it is logically inconsistent with another de-
fense raised by the defendant. Id. at 63-66. If a defendant is
entitled to an instruction on a defense that is logically incon-
sistent with another defense he has raised, then he also must
be entitled to instructions on two separate defenses that go to
separate aspects of the Government's evidence. Petitioner
further submits that the Tenth Circuit's rule, as announced in
Smith, also transgresses a defendant's constitutional rights to
due process and a fair trial, in that it interferes with a
defendant's ability to mount a defense of his or her choosing.
It is unquestioned that the defendant has the right to
select a theory of defense and to present relevant evidence in
support of that theory. The defendant may even present in-
consistent defenses. See, e.g., Matthews, 485 U.S. at 64; Arcoren
v. United States, 929 F.2d 1235, 1245 (8th Cir. 1991), cert. denied,
112 S. Ct. 312 (1991). It also is unquestioned that the defen-
dant has the right to have the jury instructed on his theory of
defense, provided that he proffered a proper instruction and
the instruction finds some support in the evidence. Matthews,
485 U.S. at 63. See also United States v. Scafe, 822 F.2d 928, 932
(10th Cir. 1987). The defendant's entitlement to a proper in-
struction is so complete that this Court held in Matthews that
the defendant may obtain a proper instruction on a particular
theory of defense (entrapment) even when that theory is flatly
inconsistent with another defense (denial) raised by the de-
fendant. Matthews, 485 U.S. at 63-66. See also United States v.
Sullivan, 919 F.2d 1403, 1417-18 (10th Cir. 1990) (following
Matthews).
In direct conflict with basic, well-established principles,
the Tenth Circuit has declared, in essence, that a defendant
cannot obtain a good faith defense instruction unless the
defendant's stated good faith beliefs hew to the parameters
of the alleged fraudulent scheme — regardless of whether the
defendant admits participating in all aspects of the alleged
12
scheme. Specifically, the Tenth Circuit stated:
Implicit in our formulation of the good faith
defense to charges of mail fraud is the require-
ment that for there to be “‘sufficient’ evidence
to support the theory,” Hopkins, 744 F.2d at 717,
the quantum of evidence must embrace the
general contours of the fraudulent scheme al-
leged by the government.
United States v. Smith, 13 F.3d 1421 (10th Cir. 1994); App. at ix.
(citation omitted). The Tenth Circuit further stated:
To be entitled to a good faith defense instruc-
tion in a mail fraud prosecution, therefore, the
defendant’s evidence, if believed, must have
the capacity to rebut all evidence of false and
misleading conduct, all failures to disclose that
which should have been disclosed and all mat-
ters that deceive and were intended to deceive
another. A benign explanation of only some of
the acts is insufficient... ..
App. at xii.
These statements directly and necessarily collide with
bedrock principles of constitutional jurisprudence. Implicit
in the Fifth and Sixth Amendment's guarantees of due pro-
cess and a fair trial is the defendant's right to present his de-
fense theory to the jury and to obtain an instruction on any
recognized defense if that defense has some support in the
evidence, even though that support may be insubstantial. See,
e.g., Whipple v. Duckworth, 957 F.2d 418, 423 (7th cir. 1992), cert.
denied, 113 S. Ct. 218 (1992). A defendant cannot be deprived
of the right to have the jury instructed on a particular defense
on the basis that this defense extends only to some of the acts
alleged by the government. Particularly in a complex case,
13
such as one involving mail fraud, the defendant may deny
involvement with certain acts, while admitting to his good
faith participation in other acts. Certainly, it is not inconceiv-
able in such a case that a defendant could truthfully deny
participation in certain aspects of an alleged scheme. There is
simply no basis for an appellate court to single out the de-
fense of good faith and subject it to a requirement that does
not apply to any other defense.
The constitutional infirmity of the Tenth Circuit's hold-
ing is most graphically illustrated in a case such as Smith’s, in
which the jury could have convicted the defendant purely on
the basis of the acts in which she admitted participation, if it
concluded that her participation was with fraudulent intent.
In sum, Smith’s defense was two-pronged: (1) that
the multiple refunding of tickets, if it occurred, was the work
of others at the agency; and (2) that she did nothing more
than use her American Express card in good faith to obtain a
legitimate credit “float” to improve cash flow and never in-
tended to do anything illegal. Under the instructions given
— which correctly informed the jury that the government, to
prove mail fraud, need not prove that the scheme caused ac-
tual loss — the jury could have set aside the extensive and
complex evidence on the airlines’ losses and convicted Smith
simply on the basis of the acts in which she admitted partici-
pation, if it concluded that her participation was with fraudu-
lent intent.
Although Smith's intent was squarely at issue, the
Tenth Circuit held that because her good faith beliefs did not
pertain to all acts alleged, she was not entitled to a good faith
defense instruction. The appeals court further explained its
reasoning:
—_————_- -se- war -C s ———
14
If the only evidence presented by the govern-
ment was the use by Smith of her American
Express card in the purchase of six foreign con-
junctive tickets, she probably would have been
entitled to the good faith defense instruction
to the mail fraud charges. But the government
presented more evidence, much more. The
government's evidence showed that Smith’s
plan, if believed by a jury, included purchase
of 12 of the 18 foreign conjunctive tickets with
cash from Globemaster’s bank account. This
use of cash to buy 12 tickets was in no way
explained, excused, or mitigated by the use of
a credit card to purchase six tickets. Thus, even
if the jury would have accepted the Appellant's
reasons for the use of the credit card, her evi-
dence would not have negated the accusations
of misrepresentation in the obtaining of 12 of
the 18 tickets.
App. at xi. In this paragraph, the Tenth Circuit includes a
critical phrase — “if believed by the jury” — but neglects its
import. The jury, of course, was free to believe the testimony
of Government witnesses or to believe Smith’s testimony that
she was not involved in the cash purchase of 12 of the 18 for-
eign conjunctive tickets. It is the essence of a jury trial that
matters of credibility are left for the jury, and not the court, to
decide. United States v. Pinalto, 771 F.2d 457, 459 (10th Cir.
1985). Significantly, in Matthews, this Court cited an appellate
case stating that even when inconsistent testimony by a de-
fendant claiming entrapment seriously impairs or destroys
his credibility, the jury should still be instructed as to the in-
consistent defense of entrapment if enough evidence supports
it. 485 U.S. at 65-66 (citing United States v. Demma, 523 F.2d
981, 985 (9th Cir. 1975) (en banc)).
The Tenth Circuit’s new rule restricting the availabil-
ity of the good faith defense not only raises serious constitu-
15
tional concerns, but also cannot be reconciled with extensive
case law. It is widely recognized that a defendant's good faith
beliefs may pertain to one count but not another, see, e.g., United
States v. Haddock, 956 F.2d 1534, 1546 (10th Cir. 1992), on re-
hearing in part, 961 F.2d 933 (10th Cir. 1992), cert. denied, 113
S. Ct. 88 (1992), or that the defendant's claims of entrapment
may run to one count but not others, see, e.g., United States v.
Cruz, 783 F.2d 1470, 1473 (9th Cir. 1986), cert. denied, 476 U.S.
1174 (1986). Courts have explicitly approved instructions that
permitted the jury to find that the defendant was entrapped
as to certain transactions but not as to others. See Cruz, 783
F.2d at 1473; see also United States v. Evans, 910 F.2d 790, 801
(11th Cir. 1990) (district court justified in refusing to give an
entrapment instruction with regard to a tax fraud count al-
though it had given one with regard to an extortion count),
aff'd, 112 S. Ct. 1881 (1992).
The observation that a particular defense may apply
to certain alleged acts but not to others logically should ex-
tend to cases in which multiple acts are alleged under the ru-
bric of “fraudulent scheme” and are charged in a single count.
In a mail fraud case, individual counts are charged not on the
basis of separable fraudulent acts but on the basis of indi-
vidual mailings made in furtherance of the alleged scheme.
See 18 U.S.C. § 1341. Just as a defendant may rely on entrap-
ment as to one count but not another, a defendant in a mail
fraud case may deny involvement in certain acts that are part
of the alleged scheme while also admitting his good faith par-
ticipation in other acts. Certainly, there is no inconsistency
here, logical or otherwise.
As stated above, courts have permitted the defendant
to obtain instructions on the inconsistent defense. In Matthews,
this Court held that a defendant was entitled to an entrap-
ment instruction even though a jury could not logically con-
16
clude that the defendant had both failed to commit the ele-
ments of the offense and been entrapped. 485 U.S. 63-66. This
Court observed that federal appellate cases have permitted
the raising of inconsistent defenses. Id. at 64 (citing Johnson v.
United States, 426 F.2d 651, 656 (D.C. Cir. 1970); Womack v.
United States, 336 F.2d 959 (D.C. Cir. 1964)). Although the
raising of inconsistent defenses may be a grave strategic error
and may seriously impair the defendant's credibility, the va-
lidity of the defendant's testimony is a matter for the jury,
and not the court, to decide. See Matthews, 485 U.S. at 65.
“We are simply not persuaded by the government's arguments
that we should make the availability of an instruction on en-
trapment where the evidence justifies it subject to a require-
ment of consistency to which no other such defense is sub-
ject.” Id. at 66. See also United States ex. rel. Eaglin v. Welborn,
815 F. Supp. 1181, 1183-84 (C.D. Ill. 1993).
If a defendant is entitled to an instruction on his en-
trapment defense even when that defense is inconsistent with
his denial of one or more elements of the crime, then certainly
Smith, whose version of the facts contained no logical incon-
sistency, was entitled to an instruction on good faith.
When a trial court refuses to give an instruction ona
defense that is supported in the evidence the result is “‘trial
by the judge, rather than trial by ajury.’” United States ex. rel.
Everette v. Roth, 808 F. Supp. 1332, 1337 (N.D. Ill. 1992). The
refusal dilutes the defendant's jury trial by removing the is-
sue from the jury's consideration, Whipple, 957 F.2d at 423,
and thus may violate the Fifth and Sixth Amendments. Id.;
Roth, 808 F. Supp. at 1337.
The Tenth Circuit attempts to reinforce its holding by
referring to other acts that Smith committed which it labels as
fraudulent. See App. at xi - xii. These activities included issu-
ing domestic airline tickets under false names and authoriz-
17
ing weekly reports to the Airline Reporting Corporation that
contained false information regarding customer purchases and
refunds. Id. In fact, Smith testified extensively that she per-
formed these acts in good faith as she viewed herself as a
legitimate customer of the airlines entitled to purchase the
tickets that she bought. Again, Smith’s testimony concerns
her good faith and lack of fraudulent intent.
When the Tenth Circuit cited these acts in support of
its conclusion that Smith was not entitled to a good faith de-
fense instruction, it simply begged the ultimate question. It
is the jury’s role, not the court’s, to decide whether the defen-
dant formulated and executed a fraudulent plan. To contend
that the defendant does not deserve a good faith instruction
because she committed fraud assumes the very fact the jury
is there to decide. See United States v. Opdahl, 930 F.2d 1530,
1535 (11th Cir. 1991).
The Tenth Circuit also erred in applying the wrong
standard by which to view the evidence. In essence, the ap-
pellate court appears to have viewed the evidence in the light
most favorable to the verdict. However, the law is clear that
in determining the defendant's entitlement to a theory-of-de-
fense instruction, the court is to view the evidence in the light
most favorable to the defendant. See, e.g., United States v. Allen,
798 F.2d 985, 1005 (7th Cir. 1986) (to merit instruction on de-
fense of coercion, defendant “need only meet a minimal show-
ing and [his/her] evidence should be taken as true”). Numer-
ous cases establish that a defendant seeking a theory-of-de-
fense instruction does not face a formidable task. As long as
there is “some” or “any” foundation to support a proffered
defense instruction that correctly states the law, the District
Court must give the instruction. Opdahl, 930 F.2d at 1535;
United States v. Cordova-Larios, 907 F.2d 40, 42 (5th Cir. 1990)
(defendant entitled to theory of defense instruction if there is
18
“any foundation” in the evidence); United States v. Casperson,
773 F.2d 216, 223 n.12 (8th Cir. 1985) (defendant entitled to
theory-of-defense instruction even if supporting evidence is
“weak, inconsistent, or of doubtful credibility”); Roth, 808 F.
Supp. at 1338. See also United States v. Hopkins, 744 F.2d 716,
717-18 (10th Cir. 1984).
The focus of a good faith defense is on the defendant's
actual good faith beliefs, not what reasonable persons might
have believed, or what such persons might believe with the
benefit of hindsight as to the practicality of the scheme or plan.
See Hopkins, 744 F.2d at 718; see also Cheek v. United States, 111
S. Ct. 604, 611 (1991). A review of the record establishes that
Smith adduced adequate evidence of her good faith beliefs to
support a good faith instruction.
Smith submits that her entitlement to the good faith
instruction was clear. She further submits that the Tenth
Circuit's conclusion that she did not deserve a good faith de-
fense instruction because her good faith beliefs did not en-
compass all acts alleged by the government transgresses her
constitutional rights and cannot be squared with extensive
case law, including this Court's opinion in Matthews. A de-
fendant in a fraud case should not be forced to admit to all
acts alleged in order to obtain the benefit of a good faith de-
fense instruction.
In sum, Smith submits that this Court should grant
her Petition for Writ of Certiorari because wf: (1) the excep-
tional importance of this issue in federal fraud prosecutions;
and (2) the fact that the Tenth Circuit's opinion runs afoul of
constitutional guarantees and cannot be squared with
Matthews and other case law.
19
CONCLUSION
In this Petition for Writ of Certiorari, Petitioner respect-
fully requests that this Court determine whether a defendant
in a complex fraud case can properly be denied a good faith
defense instruction on the basis that her stated good faith be-
liefs do not pertain to all acts alleged by the government, even
though the defendant denied participation in some acts and
stated that she operated on a good faith basis with regard to
other acts. By submitting this Petition for Writ of Certiorari,
Petitioner respectfully requests that this Court resolve the in-
herent conflict that exists between the Tenth Circuit’s opinion
in United States v. Smith and this Court's opinion in Matthews
v. United States. Petitioner also asserts that this issue is an
important question of federal law that implicates the Fifth and
Sixth Amendments of the Constitution.
WHEREFORE, for the foregoing reasons, Petitioner
respectfully requests this Court grant her Petition for Writ of
Certiorari as to both decisions of the Tenth Circuit Court of
Appeals, case numbers 93-3159 and 93-3307, as described in
her Statement of Jurisdiction.
Respectfully submitted,
WYRSCH ATWELL MIRAKIAN LEE
& HOBBS, P.C.
JAMES R. WYRSCH (MO # 20730)
(Counsel of Record)
CHERYL A. PILATE ( MO # 42266)
1101 WALNUT, SUITE 1300
KANSAS CITY, MISSOURI 64106
(816) 221-0080 TEL
(816) 221-3280 FAX
App. i
INDEX TO APPENDIX
Page
United States v. Smith, Case No. 93-3159
(10th Cir. Jan. 6, 1994), Opinion ...............ccscceeeeeees ii
United States v. Smith, Case No. 93-3159
(10th Cir. Jan. 6, 1994), Judgment .............ccccscseseeeee xx
United States v. Smith, Case No. 93-3307
(10th Cir. Feb. 22, 1994) Order and Judgment .... xxiii
United States v. Smith, Case No. 93-3159
(10th Cir. May 13, 1994)
Onder Demyinig RenGartng: .......0.0.cceceseccaseceseseseceseses XXV
United States v. Smith, Case Nos. 93-3159, 93-3307
(10th Cir. Sept. 29, 1993)
Order Consolidating Cases ...........:.ccccccssescssseseeees XxVii
United States v. Smith, Case No. 92-20011-01
(D. Kan. April 28, 1993)
Memorandum and Order ..........:ccccccccssssesseesceneee XXxViii
United States v. Smith, Case No. 92-20011-01
(D. Kan. Sept. 16, 1993)
PPE CONTI OF POUGINAIIO ona cicccccecacoeccsncensnsonsisess xI viii
App.ii
PUBLISH
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
[FILED: 1/6/94]
UNITED STATES OF AMERICA, )
Plaintiff-Appellee, )
)
v. )
BRENDA LU SMITH, )
)
Defendant-Appellant. )
Appeal from the United States District Court
For the District of Kansas
(D.C. No. 92-20011-01)
Julie A. Robinson, Assistant United States Attorney (Randall
K. Rathbun, United States Attorney, with her on the brief),
Kansas City, Kansas for Appellee.
James R. Wyrsch (Ronald D. Lee, Cheryl A. Pilate, with him
on the brief), of Wyrsch, Atwell, Mirakian, Lee & Hobbs, P.C.,
Kansas City, Missouri, for Appellant.
eae nee tia
= nah aetna nisn/ mea
App.iii
Before: BALDOCK, ALDISERT“, and BRORBY, Circuit Judges.
ALDISERT, Circuit Judge.
In this appeal by Brenda Lu Smith from her convic-
tion for mail fraud and money laundering, the major ques-
tion for decision is whether she was entitled to a “good faith”
jury instruction as a defense to charges of using the mails to
defraud. We hold that she was not.
We must decide also whether the district court erred
in including the word “attempt” in the mail fraud jury in-
struction, in failing to dismiss several counts of the indict-
ment for lack of specificity and in failing to properly apply
the Sentencing Guidelines’ grouping requirements and pro-
hibition against double counting. We will affirm the judg-
ment of the district court in all respects.
Jurisdiction was proper in the trial court based on 18
U.S.C. § 3231. This court has jurisdiction pursuant to 28 U.S.C.
§ 1291. The appeal was timely filed under Rule 4(b) of the
Federal Rules of Appellate Procedure.
* Ruggero J. Aldisert, United States Circuit Judge for the United States
Court of Appeals for the Third Circuit, sitting by designation.
App.iv
Appellant Smith was indicted for her participation in
a scheme to defraud foreign and domestic airlines of thou-
sands of dollars. She was charged with two counts of mail
fraud in violation of 18 U.S.C. § 1341, three counts of money
laundering in violation of 18 U.S.C. § 1957 and one count of
forfeiture pursuant to 26 U.S.C. § 7203. Several other counts
were dismissed prior to trial.
The Appellant's arrest and conviction stemmed from
her operation of Globemaster Travel, a travel agency in Lenexa,
Kansas. Globemaster Travel was originally owned by Smith
and later sold to local investors, although she stayed on as
manager. Globemaster was a member of the Airline Report-
ing Corporation, an intermediary organization that assists in
the transmission of paperwork and funds between the air-
lines and travel agencies.
Globemaster was required to mail to Airline Report-
ing each week a report of its cash and credit sales, credit card
refunds, cash refunds, ticket exchanges and earned commis-
sions. From the documentation provided, Airline Reporting
would determine the net amounts due Globemaster or owed
by it to the various airlines. Thus, the reporting of ticket re-
funds by a travel agency to Airline Reporting created a credit
in favor of the agency tantamount to a bank deposit. Simi-
larly, the reporting of a ticket sale was equivalent to a debit or
withdrawal.
Evidence was presented at trial showing that between
May 8, 1989 and June 7, 1989, Smith purchased eighteen air-
line tickets in names other than her own for multiple-leg travel
in foreign countries. These tickets consisted of several ticket
coupons printed in two or more ticket booklets. These multi-
leg tickets are known in the trade as “conjunctive tickets.”
App.v
Smith and several employees under her direction re-
ported as refunded each coupon of these conjunctive tickets.
Globemaster was credited with the entire purchase price each
time a coupon from the conjunctive ticket was reported as
refunded. Asa result, each foreign ticket was refunded mul-
tiple times, creating a pool of credits in Globemaster’s bank
account far exceeding the actual value of the conjunctive tick-
ets originally issued and far exceeding the credit to which
Globemaster was entitled. For example, if a conjunctive ticket,
issued for a total cost of $3,000, contained five separate ticket
coupons, by redeeming each coupon for the total amount of
$3,000, Globemaster stood to receive $15,000 as credit refunds
for a conjunctive ticket for which it was entitled to only $3,000.
This was a classic case of “cooking the books.”
In addition, some of the original eighteen conjunctive
tickets were exchanged for additional conjunctive tickets,
which were then split and either reported as refunded or ex-
changed for still more multi-leg tickets.
In the second stage of the scheme, the Appellant or
her employees drew upon the pool of credits created by the
multiple refunding of conjunctive tickets by issuing tickets
for travel in the United States on domestic airlines. These
domestic tickets were reported as cash sales, and Airline Re-
porting debited the pool of credits in Globemaster’s account
to show payment for the domestic tickets. Subsequently, the
Appellant, together with some friends and various employ-
ees operating under her direction, redeemed these domestic
tickets at airline ticket counters located in various airports
throughout the United States, receiving cash or refund checks.
The government presented evidence at trial that the
Appellant’s scheme resulted in a loss of approximately
$389,230.22 to the foreign airlines and approximately
$184,533.50 to the domestic airlines. Evidence was also pre-
a sn ip a one nr ra tg Spe ete
;
¥
}
i
App.vi
sented that the Appeilant used the mails to effectuate her
scheme. Each week, she had her employees mail to Airline
Reporting’s processing center in El Paso, Texas, Globemaster
Travel’s report which contained the fraudulent tickets, refund
notices and exchange notices.
On June 28, 1989, after discovering the fraudulent ac-
tivity at Globemaster Travel, Airline Reporting dispatched
representatives to the travel agency to seize their ticket stock
and access plates. On that same day, the Appellant instructed
one of her employees, Joann Gustin, to move money out of
two of Globemaster’s bank accounts. Ms. Gustin withdrew
$12,683 from one and $115,494 from the other and deposited
funds totalling $128,177 into her own account. On July 3, 1989,
Gustin and the Appellant opened a bank account at First Na-
tional Bank of Overland Park under a new name, LeShoppe
Ltd., and deposited the entire $128,177. Within a four month
period, the Appellant allegedly used the funds to pay per-
sonal debts.
At trial, Smith testified in her own defense. She said
that she was unaware of any plan to create an inflated pool of
credits in the Globemaster bank account by claiming multiple
refunds of foreign airline tickets. She testified that she autho-
rized the purchase of only six foreign airline tickets worth
approximately $100,000 on her American Express card and
the subsequent refund of those same tickets so that
Globemaster could obtain the benefit of a 60-day float through
the use of her credit card. She contended that Globemaster
was suffering from cash flow problems and that she had de-
veloped the American Express card plan in order to reduce
Globemaster’s weekly liability to Airline Reporting. She tes-
tified that she did not intend to steal money, but to use her
American Express card to obtain a legitimate credit float
App.vii
Significantly, the government noted that, at best,
Smith’s testimony explained only six of the 18 conjunctive
tickets which formed the basis of the prosecution. The re-
maining 12 tickets were purchased with cash from
Globemaster’s account.
The Appellant was tried before a jury which returned
a verdict of guilty on December 3, 1992 on all six counts and a
special verdict ordering forfeiture on the remaining count. The
court sentenced Smith to 48 months in prison, 3 years super-
vised release, imposed a special assessment of $250 and im-
posed a fine of $75,000.
After her trial, Smith unsuccessfully moved for a judg-
ment of acquittal or, in the alternative, for a new trial on sev-
eral grounds, some of which she has raised again on appeal.
Il.
On appeal, Smith contends that the district court com-
mitted reversibie error by failing to give her requested good
faith instruction concerning the mail fraud counts; that it com-
mitted plain error by including the word “attempt” in certain
ins*ructions dealing with mail fraud and by failing to give a
specific unanimity instruction; that it erred by failing to dis-
miss Counts Two and Three of the indictment for failure to
state an offense or, in the alternative, for failure to grantanew
trial; and that it erred when it applied the sentencing guide-
lines by failing to group the mail fraud and money launder-
ing offenses pursuant to U.S.S.G. § 3D1.2and by double count-
ing.
The appropriate standard of review for challenges to
jury instructions is whether the jury, considering the instruc-
tions as a whole, was misled. United States v. Mullins, 4 F.3d
898, 900 (10th Cir. 1993). Only where the reviewing court has
“substantial doubt that the jury was fairly guided” will the
App.viii
judgment be disturbed. Id. We apply a de novo standard of
review to determine the propriety of an individual jury in-
struction to which objection was made at trial. United States v.
Sasser, 974 F.2d 1544, 1551 (10th Cir. 1992), cert. denied, 113 S.
Ct. 1063 (1993).
Where no objection was made to the giving of a jury
instruction or its contents, we review only under the plain
error standard. United States v. Uresti-Hernandez, 968 F.2d 1042,
1046 (10th Cir. 1992). Plain error, in this context, is error that
affects the defendant's right to a fair and impartial trial. Id.
Similarly, we review a court's failure to instruct a jury for plain
error if the defendant fails to raise the contention at trial. Linited
States v. Brown, 996 F.2d 1049, 1052 (10th Cir. 1993). In order
to constitute plain error, the district court’s error must have
been both “obvious and substantial.” Id. at 1053.
We review a district court’s order granting or denying
a motion to dismiss an indictment for abuse of discretion.
United States v. Strayer, 846 F.2d 1262, 1265 (10th Cir. 1988).
Under the Federal Sentencing Guidelines, we review
the district court's findings of fact under the clearly errone-
ous standard and disputed legal issues under the de novo
standard. United States v. Levy, 992 F.2d 1081, 1083 (10th Cir.
1993).
III.
We have concluded that the district court did not err
by refusing to give a “good faith” instruction to the jury, be-
cause the Appellant did not present sufficient evidence to
warrant the instruction. According to the district court:
[Defendant's proffered defense is not analo-
gous to a good faith defense. Defendant basi-
cally argues that she was merely trying to float
a loan though the use of her American Express
SDT ABN CN NC OR ta
App.ix
card, and was not involved with the scheme as
alleged by the governmentat all (or that in fact
the scheme alleged by the government never
existed).
App. of Appellant at 79.
In United States v. Hopkins, 744 F.2d 716, 717 (10th Cir.
1984) (en banc), we explained that “good faith” is a defense to
charges of using the mails to defraud and that “if the defense
of good faith has been interposed the defendant is entitled to
an instruction directly on the issue provided there is suffi-
cient evidence to support the theory and such an instruction
is requested.” Id.
Smith contends that her extensive testimony as to her
good faith belief that she was not doing anything illegal and
that she was simply trying to access credit legitimately avail-
able on her American Express card is sufficient evidence to
warrant a good faith instruction. We disagree. Implicitin our
formulation of the good faith defense to charges of mail fraud
is the requirement that for there to be “‘sufficient’ evidence to
support the theory,” Hopkins, 744 F. 2d at 717, the quantum of
evidence must embrace the general contours of the fraudu-
lent scheme alleged by the government. See Sparrow v. United
States, 402 F.2d 826, 828 (10th Cir. 1968).
A.
Our analysis must begin with a reference to the vari-
ous components of the offense of fraud. Although fraud cov-
ers a proverbial multitude of sins, it is generically defined as:
[a]n intentional perversion of truth for the pur-
pose of inducing another in reliance upon it to
part with some valuable thing belonging to [the
other] or to surrender a legal right. A false rep-
resentation of a matter of fact, whether by
A ne ee nee iene Parmar gem -
App.x
words or by conduct, by false or misleading
allegations, or by concealment of that which
should have been disclosed, which deceives
and is intended to deceive another so that he
[or she] shall act upon it to his [or her] legal
injury.... “Bad faith” and “fraud” are syn-
onymous....
Black's Law Dictionary (5th ed. 1979).
Intent is a necessary ingredient in proving the charge
of fraud. Whether as generally construed or as specifically
applied in the case before us, the “perversion of the truth”
component has been equated with intentional misrepresenta-
tion, at least since 1889 when the House of Lords in the lead-
ing case of Derry v. Peek, 14 A.C. 337 (1889), redefined the tort
of deceit and required this specific intent:
The intent which underlies an intentional mis-
representation is a more complex matter than
the relatively simple intention in the case of
assault and battery. It involves the intent that
a representation shall be made, that it shall be
directed to a particular person or class of per-
sons, that it shall convey a certain meaning,
that it shall be believed, {] that it should be acted
upon in a certain way . . . [and that it] accom-
plish an ultimate purpose, as to benefit the [ac-
ae
W. Page Keeton, Dan B. Dobbs, Robert E. Keeton & David G.
Owen, Prosser and Keeton on the Law of Torts, § 107 (5th ed.
1984).
The good faith defense seeks to demonstrate that there
was no such intent: no misrepresentation, no intentional per-
version of the truth. Accordingly, the essence of the defense
is that the evidence presented by the defendant, if believed
by the fact finder, would completely rebut evidence that he or
she intended to defraud.
App.xi
The cumulative experience of the judiciary discloses
that the defendant charged with mail fraud is entitled to the
defense and the concomitant jury instruction only when her
evidence, if believed, demonstrates that she in good faith ac-
tually believed (1) that the plan, howsoever visionary and im-
practical, would succeed, (2) that promises made would be
kept and (3) that representations made would be fulfilled.
Hopkins, 744 F.2d at 718; United States v. Roylance, 690 F.2d 164,
168 (10th Cir. 1982); Steiger v. United States, 373 F.2d 133, 135
(10th Cir. 1967). The good faith defense was intended as a
complete defense to a charge of using the mails to defraud.
Sparrow, 402 F.2d at 828.
If the only evidence presented by the government was
the use by Smith of her American Express card in the pur-
chase of six foreign conjunctive tickets, she probably would
have been entitled to the good faith defense instruction to the
mail fraud charges. But, the government presented more evi-
dence, much more. The government's evidence showed that
Smith’s plan, if believed by the jury, included purchase of 12
of the 18 foreign conjunctive tickets with cash from
Globemaster’s bank account. This use of cash to buy 12 tick-
ets was in no way explained, excused or mitigated by the use
of a credit card to purchase six tickets. Thus, even if the jury
would have accepted the Appellant’s reasons for the use of
the credit card, her evidence would not have negated the ac-
cusations of misrepresentation in obtaining 12 of the 18 tick-
ets.
Moreover, the uncontroverted evidence disclosed that
the Appellant not only used false names for the foreign tick-
ets purchased with her American Express card, but after Air-
line Reporting credited her with the refunds of these tickets,
she also issued domestic tickets under false names and had
those tickets refunded. Subsequently, she authorized weekly
reports containing false information regarding customer pur-
App.xii
chases and refunds. These activities in themselves were
fraudulent. See, United States v. White, 673 F.2d 299, 304-05
(10th Cir. 1982) (“even if a defendant charged with fraud be-
lieved the business plan would ultimately succeed, that belief
would not justify false or baseless representations”).
To be entitled to the good faith defense instruction in
a mail fraud prosecution, therefore, the defendant's evidence,
if believed, must have the capacity to rebut all evidence of
false and misleading conduct, all failures to disclose that which
should have been disclosed and all matters that deceive and
were intended to deceive another. A benign explanation of
only some of the acts is insufficient and that is all that Brenda
Lu Smith presented. Accordingly, we conclude that the dis-
trict court did not err in refusing the instruction.
iV.
The Appellant next contends that the district court
committed plain error by including the word “attempt” in
the three instructions pertaining to mail fraud, because no
scheme involving attempt was charged in the indictment. No
objection to the instructions were made at trial. The Appel-
lant presented this contention before the district court for the
first time in her motion for a new trial. In rejecting the argu-
ment, the court noted:
The language in Instructions 8 and 9 does not
allow a jury to convict on the grounds that the
defendant “attempted” to commit mail fraud.
Rather, the instructions state that the govern-
ment must prove that the defendant knowingly
devised a scheme to obtain “or attempt to ob-
tain” money or property. This language is in
keeping with the well settled law that actual
loss is not an element of mail fraud. See United
States v. Aigbevbolle, 827 F.2d 664, 666 (10th Cir.
1987).
App.xiii
App. of Appellant at 76.
We agree. The federal mail fraud statute reads in per-
tinent part:
Whoever, having devised or intending to de-
vise any scheme or artifice to defraud, or for
obtaining money or property by means of false
or fraudulent pretenses, representations, or
promises, . .., for the purpose of executing
such scheme or artifice or attempting so to do,
places in any post office or authorized deposi-
tory for mail matter, any matter or thing what-
ever to be sent or delivered by the Postal Ser-
vice...
18 U.S.C. § 1341 (emphasis added).
The instructions are not at variance with the indict-
ment. The indictment does not state that Smith obtained or
attempted to obtain money, but that her purpose was to ob-
tain money. Having sucha purpose is consistent with devis-
ing a scheme to obtain or to attempt to obtain money. The
district court's instructions tracked the language of the stat-
ute. Accordingly, we determine that the court committed no
error.
In a related argument, the Appellant contends that the
general jury instructions requiring that the jury return a unani-
mous verdict were insufficient in this case. She admits that
general unanimity instructions “such as those given by the
district court” often suffice, but she suggests that in a case
involving mail fraud, the jurors should be instructed that they
must all agree on the existence of, and defendant's participa-
tion in, the same scheme to defraud. Brief of Appellant at 33.
Not only has the Appellant not made a specific showing of
prejudice, she cites no authority for her position, except an
article in a professional publication written by her appellate
App. xiv
counsel.! There was no request for such an instruction at trial.
Considering that the district court did provide a general una-
nimity instruction, we are persuaded that the court’s failure
to have read sua sponte Appellant counsel's interesting article
and not to have accepted its observations was not an obvious
and substantial omission and thus did not constitute plain
error.
\
\
V.
The Appellant contends also that Counts Two and
Three of the indictment lacked the specificity necessary to al-
lege a “scheme or artifice to defraud” and “obtain money or
property by false pretenses.” Her argument is anchored in
the proposition that the factual averments of these counts had
been contained in Count One, a count that was later dismissed.
The mail fraud counts incorporated by reference the factual
averments found in Count One. From this the Appellant ar-
gues that the counts on which she was convicted were infirm
because they lacked the necessary factual specificity.
The Supreme Court put this argument to rest almost a
century ago. In Crain v. United States, 162 U.S. 625, 633 (1896),
overruled on other grounds by Garland v. Washington, 232 U.S.
642 (1914), the Court held:
One count may refer to matter in a previous
count so as to avoid unnecessary repetition;
and, if the previous count be defective or is re-
jected, that circumstance will not vitiate the
remaining counts, if the reference be sufficiently
full to incorporate the matter going before with
that in the count in which the reference is made.
‘ James R. Wyrsch & Jacqueline Cook, Jury Unanimity: A Requirement of
Due Process, The Champion 18 (June 1992) (Suggesting the use of special
interrogatories to find elements of the charged offense and noting that spe-
cific “issues regarding jury unanimity may be addressed through jury in-
structions”).
App.xv
The Appellant attempts to distinguish Crain on the ground
that the trial court in that case did not dismiss certain counts
in the indictment until after the trial, whereas here Count One
was dismissed prior to trial. At least one Court of Appeals
has found this to be a distinction without a difference. United
States v. Weiner, 578 F.2d 757, 776 (9th Cir.) (dismissal of one
count of an indictment prior to trial which is referred to in the
remaining counts does not vitiate the remaining counts where
the reference is sufficient), cert. denied, 439 U.S. 981 (1978). We
agree.
We are satisfied that the government has met the two-
part test to review the sufficiency of an indictment:
“First, the indictment must contain the ele-
ments of the offense and sufficiently apprise
the defendant of what he must be prepared to
meet; second, it must be such as to show to
what extent he may plead a former acquittal
or conviction as a bar to further prosecution
for the same cause.”
United States v. Darrell, 828 F.2d 644, 647 (10th Cir. 1987) (quot-
ing United States v. Radetsky, 535 F.2d 556, 562 (10th Cir.), cert.
denied, 429 U.S. 820 (1976)). This test is based upon the provi-
sions of Rule 7(c)(1) of the Federal Rules of Civil Procedure,
which provides that an indictment “shall be a plain, concise
and definite written statement of the essential facts constitut-
ing the offense charged.” Rule 7(c)(1) also states that
“[a]llegations made in one count may be incorporated by ref-
erence in another count.”
VI.
Finally, the Appellant contends that the district court
committed two errors in computing her sentence: in failing to
group the mail fraud and money laundering offenses pursu-
ant to U.S.S.G. Section 3D1.2 and in improperly enhancing,
App. xvi
by impermissible double counting, Smith’s offense level un-
der both Section 2F1.1(b)(2) and Section 3B1.1(a).?_ We are not
persuaded by either argument.
A.
Section 3D1.2 provides in pertinent part:
All counts involving substantially the same
harm shall be grouped together into a single
Group. .. . Counts involve substantially the
same harm within the meaning of this rule:
(c) When one of the counts embodies conduct
that is treated as a specific offense characteris-
tic in, or other adjustment to, the guideline
applicable to another of the counts.
The Appellant argues that the mail fraud and money
laundering offenses should be grouped together under sub-
section (c) because the mail fraud count was used as a “spe-
cific offense characteristic” in the application of the guideline
section applicable to money laundering, Section 251.2(b)(1)(B).
The application notes to subsection (c) provide that “when
conduct that represents a separate count, e.g., bodily injury or
obstruction of justice, is also a specific offense characteristic
in or other adjustment to another count, the count represented
by that conduct is to be grouped with the count to which it
constitutes an aggravating factor.” Section 2S1.2 entitled “En-
gaging in Monetary Transactions in Property Derived from
Specified Unlawful Activity” provides for a two level enhance-
ment if the “defendant knew that the funds were the pro-
ceeds of: (B) any other specified unlawful activity.”
? The district court applied the 1988 Sentencing Guidelines in their entirety
to the instant sentencing. App. of Appellant at 208.
App.xvii
The Appellant contends that because the money laun-
dering offense level was adjusted based on her mail fraud,
the two offenses must be grouped together, and she analo-
gizes to United States v. Riviere, 924 F.2d 1289, 1306 (3d Cir.
1991). In Riviere, the court held that the district court should
have grouped the three firearm offenses of which the defen-
dant was convicted under Section 3D1.2. Riviere was con-
victed of possession of firearms by a felon, delivery of fire-
arms to a common carrier and possession of altered firearms.
The court reasoned that the guidelines had already provided
for an enhanced penalty for possession of a firearm by a felon
if that firearm was altered and to enhance further for posses-
sion of an altered firearm would violate Section 3D1.2.
We believe that Riviere is not applicable to the present
case and that the district court properly followed the teach-
ings of United States v. Johnson, 971 F.2d 562 (10th Cir. 1992),
where we concluded that money laundering counts should
not be grouped with wire fraud counts because there are dif-
ferent victims and separate and distinct losses. The Appel-
lant attempts to distinguish Johnson on the grounds that the
court did not address subsection (c) or the provisions of Sec-
tion 2S1.2.
We are not impressed by this argument but for the
sake of completeness we now observe that Section 251.2 re-
fers to the knowledge of the perpetrator; it does not relate to
the commission of a crime. It would seem that application of
the enhancement would be possible even if the Appellant
herself had not actually committed the mail fraud, but instead
had mere knowledge of the money's origins. The critical char-
acteristic of the money laundering offense was not the com-
mission of mail fraud, but Smith’s knowledge of it.
The district court did not err in declining to group the
money laundering and mail fraud offenses under the Sen-
tencing Guidelines.
App.xviii
B.
Finally, the Appellant contends that the district court
erred by enhancing her offense level under both Section
2F1.1(b)(2) and Section 3B1.1(a) of the Sentencing Guidelines.
She says that relying on the same acts to support two sepa-
rate guideline enhancements constitutes double counting.
Section 2F1.1(b)(2), the sentencing guideline for crimes
involving fraud or deceit, provides for a two level enhance-
ment if the offense involves “more than minimal planning.”
Section 3B1.1(a) provides a four level enhancement “|i}f the
defendant was an organizer or leader of a criminal activity
that involved five or more participants or was otherwise ex-
tensive.” The district court concluded that application of both
of these guideline enhancements was not double counting
because the “’more than minimal planning’ guideline focuses
on the nature of the offense, while the role in the offense guide-
line focuses on the size of the organization and the defendant's
relative culpability compared to others involved.” App. of
Appellant at 209.
We do not write on a clean slate here. In United States
v. Chichy, 1 F.3d 1501, 1506 (6th Cir. 1993), the court held that
a two-level enhancement for doing more than minimal plan-
ning and being organizer, leader, manager or supervisor con-
stituted impermissible double counting. The court reasoned
that once certain conduct is used to enhance a defendant's
sentence under one enhancement provision, the defendant
should not be penalized for the same conduct under a sepa-
rate provision. Id. Although Chichy supports the Appellant's
position, this holding is the minority, if not isolated, view of
the many Courts of Appeals that have also addressed this
issue. We are not persuaded to follow it.
Contrary to the holding of the Sixth Circuit Court of
Appeals, in United States v. Wong, 3 F.3d 667, 671 (3d Cir. 1993),
App. xix
the court decided that the sentencing guideline enhancements
for more than minimal planning and for acting as organizer,
leader, manager or supervisor could be applied in tandem
without constituting impermissible double counting. The
court reasoned that by doing so they were effectuating the
intent of the Sentencing commission in enacting these two
guideline provisions, Id. On the one hand, the adjustment
for more than minimal planning is “a specific offense charac-
teristic which was intended to distinguish between relatively
simple crimes and more sophisticated ones.” Id. On the other
hand, the adjustment for role in the offense “addresses con-
cerns about the relative responsibilities of those involved in
the commission of the offense, punishing those more harshly
who assume a leadership role.” Id. at 672. We believe that the
reasoning of the Third Circuit Court of Appeals is sound and
so do the other courts of Appeals who have addressed this
issue. See United States v. Balogun, 989 F.2d 20, 24 (1st Cir.
1993); United States v. Willis, 997 F.2d 407, 418 (8th Cir. 1993);
United States v. Kelly, 993 F.2d 702, 705 (9th Cir. 1993); United
States v. Boula, 932 F.2d 651, 655 (7th Cir. 1991). Accordingly,
in the view we accept, the district court did not engage in
impermissible double counting.
VII.
We have considered all contentions presented by the
Appellant. To the extent not discussed herein, any other ar-
guments must be deemed considered and rejected.
We AFFIRM the judgment of the district court.
App.xx
UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT
UNITED STATES OF AMERICA, _)
)
Plaintiff - Appellee, )
) No. 93-3159
v. (D. C. No. 92-20011-01)
BRENDA LU SMITH, )
)
Defendant - Appellant. )
JUDGMENT
Entered January 6, 1994
Before BALDOCK, ALDISERT*, and BRORBY, Circuit Judges.
"The Honorable Ruggero J. Aldisert, United States Circuit
Judge for the United States Court of Appeals for the Third
Circuit, sitting by designation.
This cause came on to be heard on the record on ap-
peal from the United States District Court for the District of
Kansas, and was argued by counsel.
Upon consideration whereof, it is ordered that the judg-
ment of that court is affirmed.
Entered for the Court
ROBERT L. HOECKER, Clerk
By: /s/ PATRICK FISHER
Patrick Fisher
Chief Deputy Clerk
App.xxi
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
OFFICE OF THE CLERK
C404 UNITED STATES COURTHOUSE
DENVER, COLORADO 80294
(303) 844-3157
ROBERT L. HOECKER PATRICK FISHER
CLERK CHIEF DEPUTY
June 7, 1994
Mr. Ralph L. DeLoach
United States District Court for the District of Kansas
122 U.S. Courthouse
812 N. Seventh Street
Kansas City, KS 66101
Re: 93-3159, USA v. Smith
Lower docket: 92-20011-01
Dear Clerk:
In accordance with Fed. R. App. P. 41, I enclose a certi-
fied copy of the judgment and a copy of the court's opinion,
which constitute the mandate in the subject case. By direc-
tion of the court, the mandate shall be filed immediately in
the records of the trial court or agency.
The clerk will please acknowledge receipt of this man-
date by file stamping and returning the enclosed copy of this
letter. Any original record will be forwarded to you at a later
date.
App.xxii
Please call this office if you have questions.
Sincerely,
ROBERT L. HOECKER
Clerk
By: /s/
Deputy Clerk
RLH:kce
cc: Cheryl A. Pilate
Ronald D. Lee
James R. Wyrsch
Julie A. Robinson
App.xxiii
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
(FILED: 2/22/94]
UNITED STATES OF AMERICA, _)
Plaintiff-Appellee, ) No. 93-3307
) (D.C. No. 92-20011-01)
) (D. Kansas)
V.
)
BRENDA LU SMITH, )
Defendant-Appellant. )
ORDER AND JUDGMENT
Before BALDOCK, ALDISERT*, and BRORBY, Circuit Judges.
Brenda Lu Smith appeals the district court’s special
verdict ordering forfeiture following her conviction for two
counts of mail fraud in violation of 18 U.S.C. § 1341 and three
counts of money laundering in violation of 18 U.S.C. § 1957.
The Appellant raised this issue on appeal in.order to preserve
her position that, should we reverse the underlying criminal
conviction, we must necessarily reverse the forfeiture order.
Accordingly, because we affirmed her conviction in United
States v. Smith, No. 93-3159 (10th Cir. filed January 6, 1994),
we will also affirm the order of forfeiture.
*Ruggero J. Aldisert, United States Circuit Judge for the United States Court
of Appeals for the Third Circuit, sitting by designation.
App.xxiv
Entered for the Court
/s/ RUGGERO J. ALDISERT
Ruggero J. Aldisert
Senior Circuit Judge
App.xxv
UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT
UNITED STATES OF AMERICA, _)
Plaintiff - Appellee, )
¥ No. 93-3159
BRENDA LU SMITH, )
Defendant - Appellant. )
ORDER
Entered May 13, 1994
Before BALDOCK, ALDISERT*, and BRORBY, Circuit Judges.
“The Honorable Ruggero J. Aldisert, United States Circuit
Judge for the United States Court of Appeals for the Third
Circuit, sitting by designation.
This matter comes on for consideration of appellant's
motion for extension of time to file a petition for rehearing
and appellant's petition for rehearing and suggestion for re-
hearing in banc.
Upon consideration whereof, the motion for extension
of time is granted and the petition for rehearing is denied by
the panel that rendered the decision.
In accordance with Rule 35(b), Federal Rules of Ap-
pellate Procedure, the suggestion for rehearing in banc was
transmitted to all of the judges of the court who are in regular
active service. No member of the panel and no judge in regu-
lar active service on the court having requested that the court
App.xxvi
be polled on rehearing in banc, Rule 35, Federal Rules of Ap-
pellate Procedure, the suggestion for rehearing in banc is de-
nied.
Entered for the Court
ROBERT L. HOECKER, Clerk
By: /s/
Deputy Clerk
App.xxvii
UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
V. 93-3307
BRENDA LU SMITH,
)
)
) Nos. 93-3159
)
)
Defendant-Appellant. )
ORDER
Filed: September 29, 1993
This matter comes on for consideration on the court's
own motion.
Upon consideration thereof it is ordered that the cap-
tioned appeals are consolidated for procedural purposes only.
It is further ordered that the appellant's opening brief
in 93-3307 shall be served and filed within 20 days of the date
of this order. The appellee shall file its answer brief within 20
days of the date of service of the appellant's opening brief.
The appellant may serve and file a reply brief by November 8,
1993. If the appellant files a reply brief, the brief must re-
ceived by the clerk’s office of this court by November 8 and
received by the appellee by November 9.
Appeal No. 93-3307 shall be submitted on the briefs to
the same panel scheduled to hear oral argument on Novem-
ber 12, 1993 of appeal No. 93-3159.
Entered for the Court
/s/ ROBERT L. HOECKER
ROBERT L. HOECKER, Clerk
App.xxviili
UNITED STATES DISTRICT COURT
DISTRICT OF KANSAS
[FILED: 4/28/93]
UNITED STATES OF AMERICA,
Plaintiff,
Case No. 92-20011-01
BRENDA LU SMITH,
Defendant.
)
)
)
)
)
)
)
MEMORANDUM AND ORDER
This matter is before the court on the post-trial mo-
tions of defendant Brenda Lu Smith for judgment of acquittal
or, in the alternative, for a new trial (Doc. #218)'; for reconsid-
eration of order of forfeiture (Doc. #222)"; and alternative
motion for extension of time to file notice of appeal (Doc.
#223). For the reasons set forth below, defendant’s motion
for acquittal is granted as to Count 8 due to insufficiency of
the evidence and it and her new trial motions are denied on
all other grounds.
’ Defendant was represented by counsel Cenobio Lozano from the incep-
tion of this case through the trial and filing of the motion for judgment of
acquittal. Mr Lozano has subsequently withdrawn as defendant’s coun-
sel and James Wyrsch has been retained by defendant. Mr. Wyrsch has
filed a supplemental memorandum in support of motion for acquittal (Doc.
# 247) and a second supplemental memorandum in support of motion for
judgment of acquittal (Doc. # 260). The court has considered the argu-
ments’ contained in the supplemental memorandums in this order.
? The court has reviewed the arguments contained in defendant’s motion
for reconsideration of order of forfeiture and found them to be without
merit. Accordingly, this motion shall be denied.
3 The court has determined this motion to be moot.
App.xxix
On April 22, 1992, the defendant was indicted by the
grand jury. Count 1 of the indictment charged the defendant,
along with four other co-defendants, with a conspiracy to use
unauthorized access devices obtained with intent to defraud
in violation of 18 U.S.C. § 1029(a)(2). Counts 2 and 3 of the
indictment charged the defendant with mail fraud in viola-
tion of 18 U.S.C. § 1341. Counts 4, 5 and 6 charged the defen-
dant with money laundering in violation of 18 U.S.C. §§ 1957
and 2. Count 7 was a forfeiture count brought against the
defendant pursuant to 18 U.S.C. § 982(b)(1). Count 8 charged
the defendant with willful failure to file a corporate income
tax return in violation of 26 U.S.C. § 7203. Count 9 charged
three other defendants with a criminal conspiracy to obstruct
the collection of income tax.
Prior to trial the defendant, along with the other de-
fendants charged in the conspiracy set forth in Count 1 of the
indictment, moved for dismissal of that count. The court found
that the facts as presented in Count 1 of the indictment did
not affect a credit transaction as contemplated by 18 U.S.C. §
1029, and therefore the court dismissed Count 1 as to the vari-
ous defendants. Subsequently, the government voluntarily
dismissed the conspiracy charge contained in Count 9 of the
indictment.
The case was tried on the remaining counts to a jury,
which on December 3, 1992 returned a verdict of guilty on
Counts 2 through 6 and 8 and a special verdict ordering for-
feiture under Count 7. Defendant has moved for a judgment
of acquittal pursuant to Federal Rule of Criminal Procedure
29(c) or, in the alternative, for a new trial pursuant to Rule 33.
Defendant has also brought motions to reconsider the order
of forfeiture and to extend the time to file notice of appeal.
The government has responded to the defendant’s motions.
The parties orally argued the motions to the court at a hear-
ing on April 19, 1993, and the court is now prepared to rule.
App.xxx
I. Motion for Judgment of Acquittal or,
in the Alternative, for a New Trial
A. Sufficiency of the evidence
The defendant seeks a judgment of acquittal or, in the
alternative, a new trial because of insufficient evidence. “A
verdict in a criminal case is sustained only when there is ‘rel-
evant evidence from which the jury could properly find or
infer, beyond a reasonable doubt,’ that the accused is guilty.”
American Tobacco Co. v. United States, 328 U.S. 781, 787 n.4
(1946)(citing Mortensen v. United States, 322 U.S. 369, 374 (1944)).
“(T]he issue is whether, taken in the light most favorable to
the government, there is substantial evidence from which a
reasonable jury might properly find the defendant guilty be-
yond a reasonable doubt.” United States v. Johnson, 911 F.2d
1394, 1399 (10th Cir. 1990), cert. denied, 111 S.Ct. 761 (1991).
The government is entitled to the benefit of all reasonable in-
ferences consistent with the evidence at trial. United States v.
Dickey, 736 F.2d 571, 583 (10th Cir. 1984), cert. denied, 469 U.S.
1188 (1985). “The court should enter a judgment of acquittal
only if the evidence that the defendant committed the crime
is nonexistent or so meager that no reasonable jury could find
guilt beyond a reasonable doubt.” United States v. White, 673
F.2d 299, 301 (10th Cir. 1982).
1. Counts 2 and 3
Counts 2 and 3 charged the defendant with mail fraud
in violation of 18 U.S.C. § 1341. The essential elements of a
mail fraud violation are: (1) the act of having devised or de-
vising a scheme or artifice to defraud or attempt to defraud,
and (2) use of the mails willfully to carry out an essential step
of the scheme to defraud. United States v. Aigbevbolle, 827 F.2d
664, 666 (10th Cir. 1987), citing United States v. Curtis, 537 F.2d
1091, 1095 (10th Cir.), cert. denied, 429 U.S. 962 (1976).
App.xxxi
The government presented voluminous evidence at
trial regarding defendant's scheme to defraud the airlines.
Evidence was presented that between May 8, 1989 and June
7, 1989, defendant purchased eighteen foreign airline tickets.
These were conjunctive tickets, which resulted in the tickets
being printed on several different coupons. Further evidence
showed that defendant and employees under defendant's
direction reported refunds to the Airline Reporting Commis-
sion (“ARC”) for each coupon of these conjunctive tickets.
This resulted in each foreign ticket being refunded multiple
times, each time refunded for the total ticket price, creating a
pool of credits in the Globemaster Travel bank account. Fur-
ther evidence was presented that some of the original eigh-
teen tickets were exchanged for still more conjunctive tickets,
which were then split and either reported as refunded or ex-
changed for still more conjunctive tickets.
The government then presented evidence that in the
second stage of her scheme defendant or employees under
her direction accessed the pool of credits created by the mul-
tiple refunding of conjunctive tickets by issuing tickets for
travel in the United States on domestic airlines. These do-
mestic tickets were reported to the ARC as cash sales, which
meant the ARC would debit the pool of credits created dur-
ing the foreign ticket phase to pay for the domestic tickets.
The government then presented evidence that defendant,
various employees under defendant's direction and friends
of defendant cashed these domestic tickets at airline ticket
counters located in various airports throughout the United
States, receiving cash or refund checks. Further evidence was
presented by the government that when the ARC discovered
the defendant's fraudulent activity, they reversed the reports
of Globemaster Travel for the weeks of June 18, 1989 and June
25, 1989. The evidence presented by the government showed
that defendant's scheme resulted in a loss of approximately
App.xxxii
$389,230.22 to the foreign airlines and approximately
$184,533.50 to the domestic airlines.
The government presented further evidence at trial that
defendant utilized the United States mails in effectuating her
scheme. Evidence was presented that each week defendant
caused her employees to mail to the ARC processing center
in El Paso, Texas, the weekly report of Globemaster Travel
which contained the fraudulent tickets, refund notices and
exchange notices. Defendant was convicted of two counts of
mail fraud for the May 14 weekly report, mailed on May 16,
and the June 11 report, mailed on June 13.
The court finds that the government presented sub-
stantial relevant evidence from which the jury could find or
infer, beyond a reasonable doubt, that defendant was guilty
of the mail fraud charges contained in Counts 2 and 3 of the
indictment.
2. Counts 4,5 and 6
Counts 4, 5 and 6 charged the defendant with aiding
and abetting money laundering in violation of 18 U.S.C. §§
1957 and 2. The elements of a § 1957 violation are that: (1) the
defendant engage or attempt to engage; (2) in a monetary
transaction; (3) in criminally derived property that is of a value
greater than $10,000; (4) knowing that the property is derived
from unlawful activity; and (5) the property is, in fact, de-
rived from “specified unlawful activity.” United States v.
Johnson, 971 F.2d 562, 567 n. 3 (10th Cir. 1992).
The government presented evidence at trial that the
ARC sent representatives to Globemaster Travel on June 28 to
seize Globemaster’s ticket stock and access plates. Evidence
was presented that on that same day Joann Gustin was in-
structed by defendant to move money out of two Globemaster
bank accounts, one at Mercantile Bank and one at Valley View
App.xxxiii
State Bank. Ms. Gustin, at the direction of defendant, with-
drew $12,683 from the Mercantile account and $115,494 from
the Valley View account.* Evidence was presented that Ms.
Gustin took the funds from these accounts in the total amount
of $128,177 and put them in her own account, at First Na-
tional Bank of Shawnee Mission, for several days. Further
evidence was presented that on July 3, 1989 Gustin and de-
fendant opened a bank account at First National Bank of Over-
land Park under a new name, LeShoppe Ltd., and deposited
the $128,177. Thereafter, within a four month period, defen-
dant spent the funds.
The court finds that the government presented sub-
stantial relevant evidence from which the jury could find or
infer, beyond a reasonable doubt, that defendant was guilty
of the money laundering charges contained in Counts 4, 5
and 6 of the indictment.
3. Count 7
The jury returned a special verdict forfeiting the
$128,177 in the money laundering counts. The defendant
objects that there was insufficient evidence that she had re-
tained the proceeds. The court finds that there was substan-
tial evidence, in the form of bank records, American Express
records and the testimony of witnesses, from which the jury
could find that defendant used the $128,177 to pay personal
debts.
4. Count 8
Count 8 charged the defendant with wilful failure to
file a corporate income tax return in violation of 26 U.S.C. §
7203. The essential elements of a § 7203 violation are: (1) that
* The government presented evidence that during the course of the mail
fraud scheme, defendant had deposited substantial funds into these two
bank accounts by way of ticket refund checks.
App.xxxiv
the defendant was a person required by law or regulation to
file a corporate return; (2) that the defendant failed to file such
return at the time required by law; and (3) that the defendant's
failure to file such return was wilful. See United States v. Dawes,
874 F.2d 746, 749 (10th Cir. 1989).
Defendant argues that there was insufficient evidence
at trial to show that defendant was a “person” required by
law or regulation to file Globemaster’s corporate income tax
return. The term “person” is defined in the Internal Revenue
Code as including “an officer or employee of a corporation . .
. who as such officer or employee . . . is under a duty to per-
form the act in respect of which the violation occurs.” 26 U.S.C.
§ 7343.
The government contends that three separate areas of
evidence were sufficient to establish that defendant had a duty
to file the corporate tax return for Globemaster. These are: (1)
that defendant, by filing an application for extension of time
to file a corporate income tax return for GMT Tours, Inc., ac-
knowledged her duty to file a corporate income tax return on
its behalf; (2) that several Globemaster employees testified at
trial that defendant was a signatory on the corporate bank
accounts and had full control of the financial affairs of the
business; and (3) that Abe Gustin, the owner of Globemaster,
testified that he was not involved in the day to day opera-
tions of Globemaster.
The court finds that the evidence was insufficient to
support the jury’s verdict on Count 8. The government pre-
sented no historical evidence that defendant had prepared the
corporate tax returns in the past or that she had been respon-
sible for their preparation. See United States v. Ettorre, 387
F.Supp. 582 (E.D. Pa. 1975); United States v. Jasper, 352 F. Supp.
254 (D.Del. 1972). There was no job description evidence pre-
sented, nor did defendant ever admit that she was the one
App.xxxv
responsible for filing the tax returns. Id. The court does not
find the testimony of the former employees that defendant
was in charge of the financial affairs to be helpful to the gov-
ernment on this issue. That general responsibility, if she pos-
sessed it, is not enough to give rise to an inference of the very
particular duty at issue here. Morever, several of these same
employees testified that they believed defendant was the
owner of Globemaster, which was not the case. Their lack of
knowledge regarding whether defendant was the owner of
Globemaster further diminishes the reasonableness of any
inference of duty to file tax returns on her part. The
government's strongest evidence regarding whether defen-
dant had a duty to file the corporate tax return is the fact that
defendant filed the application for extension for the return.
However, the government presented no factual background
as to the preparation of that application. The court finds that
the mere fact defendant's signature appears on the applica-
tion for extension is not sufficient to establish that defendant
had a duty to file the return absent some sort of historical
evidence she was responsible for the return or a more fully
developed evidentiary record that defendant had indeed taken
it upon herself to manage all the business and financial affairs
of Globemaster.
The court finds that even looking at the evidence in
the light most favorable to the government, the evidence was
insufficient to support the jury's verdict as to Count 8. Thus,
the defendant's motion for acquittal is granted as to Count 8.°
* Defendant has made several other arguments throughout her motion for
judgment of acquittal attacking various aspects of Count 8. Because we
find that the defendant is entitled to a judgment of acquittal based on the
insufficiency of evidence, we need not reach these other issues.
App.xxxvi
B. Effect of Dismissal of Count 1
Count 1 of the indictment alleged a conspiracy by de-
fendant, along with four other co-defendants, to use unau-
thorized access devices obtained with intent to defraud in vio-
lation of 18 U.S.C. § 1029(a)(2). Prior to trial the defendant,
along with the other defendants charged in the conspiracy
charged in Count 1 of the indictment, moved for dismissal of .
that count. The court found that the facts as presented in
Count 1 of the indictment did not affect a credit transaction as
contemplated by 18 U.S.C. § 1029, and therefore the court dis-
missed Count 1, without prejudice, as to the various defen-
dants.
The first paragraph of Count 1 charged the defendant
with a violation of 18 U.S.C. § 1029(a)(2). That paragraph was
followed by sections, labeled A, B, C and D, which set forth
the factual averments of the government regarding the con-
spiracy. Counts 2 and 3 of the indictment, the mail fraud
counts, incorporated the factual averments of sections A, B, C
and D of Count 1 by reference for the purpose of setting forth
the alleged scheme and artifice to defraud and the obtaining
of money or property by false pretenses of the mail fraud
counts. Defendant argues that due to the dismissal of Count
1 of the indictment, the factual averments contained in Count
1 in effect disappeared, rendering Counts 2 and 3 invalid for
failure to state an offense.
An indictment must state the elements of the offense
charged with enough particularity that the defendant receives
fair notice of the charge and would be able to assert an acquit-
tal or conviction in order to prevent being placed in jeopardy
twice for the same offense. United States v. Staggs, 881 F.2d
1527, 1530 (10th Cir. 1989). it is well settled that material from
one count can be used in determining the sufficiency of an-
other count if the material in the first count is expressly in-
3
9
tc
App.xxxvii
corporated into the other count. See United States v. Hooker,
841 F.2d 1225, 1231 (4th Cir. 1988). The Tenth Circuit takes an
even broader approach to determining the sufficiency of indi-
vidual counts. It permits “the entire document [to be] consid-
ered” in determining the sufficiency of a particular count in
the indictment. United States v. Staggs, 881 F.2d at 1531-32.
There is no question that Counts 2 and 3, with the factual
averments properly incorporated from Count 1, gave defen-
dant fair notice of the mail fraud charges against her.®
Defendant's sole argument is that the court's dismissal
of Count 1 somehow had a “magic scissors” effect, causing
the factual averments in Count 1 to disappear. Defendant
cites no authority for this proposition. The court does not be-
lieve that the dismissal of Count 1 without prejudice some-
how made the factual averments in Count 1 no longer avail-
able for incorporation by reference into Counts 2 and 3.
In its order dismissing Count 1 without prejudice, the
court did not find that any of the facts as stated in Count 1 of
the indictment were improperly included in the indictment,
or that any of the factual averments should be stricken from
the indictment. The court merely held that the facts as pre-
sented in Count 1 did not affect a credit transaction as con-
templated by 18 U.S.C. § 1029, and thus the conspiracy charge
of using unauthorized access devices with the intent to de-
fraud ina credit transaction was dismissed without prejudice
as to the various defendants. It simply does not logically fol-
* In fact, defendant conceded at oral argument that Counts 2 and 3, with
the incorporated language from Count 1, were sufficient to give her notice
of the crimes charged, did not prejudice her in any way, and that she did
not have any type of double jeopardy argument with the indictment as
written with the incorporated language.
App.xxxviii
low,’ nor does defendant point to any authority in support,’
that the result of such a dismissal should be that the factual
averments in Count 1 are no longer available for incorpora-
tion by reference in Counts 2 and 3.
The court finds that the factual averments in Count 1
were properly incorporated into Counts 2 and 3 notwithstand-
ing the fact that the court dismissed the conspiracy charge
contained in Count 1 without prejudice. Defendant was put
on fair notice of the mail fraud charges contained in Counts 2
and 3 of the indictment, has no double jeopardy argument,
and was not prejudiced in any manner.
C. Jury Instructions
Defendant argues that numerous jury instructions
were given in error. Jury instructions are to be reviewed in
their entirety to determine whether, when examined in the
light of the whole record, they fairly, adequately, and correctly
state the governing law to provide the jury with “an ample
” When questioned at oral argument, counsel for defendant stated his be-
lief that the government could have corrected his perceived flaw in the
indictment simply by retyping the factual averments originally contained
in Count 1 of the indictment into Count 2. Given the fact that the factual
averments were originally properly incorporated in Counts 2 and 3, de-
fendant had fair notice of the mail fraud charges against her, and defen-
dant was not prejudiced in any manner, the court sees no logical reason
why Counts 2 and 3 of the indictment should be dismissed on these
grounds.
* The only authority the court has found on point is directly contrary to
defendant's position. In Crain v. United States, 162 U.S. 625 (1986), the
Supreme Court held that one count may, to avoid repetition, refer to mat-
ter in a previous count and, if the reference is sufficient to incorporate such
matter into the count, the count will not be vitiated, even where the previ-
ous count is held defective or is rejected. Defendant argues that the Crain
case is distinguishable because in Crain the dismissal of the count took
place after trial, whereas the count was dismissed prior to trial in this case.
While defendant is correct that this is a factual distinction between Crain
and this case, distinguishing Crain in such a manner does nothing to sup-
port defendant’s argument.
eT ee,
App.xxxix
understanding of the applicable principles of law and factual
issues confronting them.” United States v. Denny, 939 F.2d 1449,
14545 (10th Cir. 1991). An error in jury instructions will cause
a new trial only when the error is “prejudicial in light of the
entire record.” Id.
Defendant contends that Instruction No. 2, which con-
tained a recitation of nearly the entirety of the indictment,
was prejudicial. Defendant contends this instruction consti-
tuted “free advertising” for the government and that this “ex-
tra reinforcement” of the government's position prejudiced
the defendant. The court disagrees. The court believes that
far from being prejudicial to the defendant, the reading of the
indictment in fact protects the defendant by allowing the jury
to know precisely what the defendant is on trial for allegedly
doing.’ Additionally, the court gave a cautionary instruction
that the indictment is merely the government's formal accu-
sation, is not evidence of any kind against a defendant, and
does not create any presumption or permit any inference of
guilt.
Defendant contends that Instruction No. 6, dealing
with the presumption of innocence, was not sufficient and
the court should have given her proposed instruction. A de-
fendant is not entitled to a new trial simply because the par-
ticular wording preferred by him or her was not employed.
See United States v. DeSoto, 950 F.2d 626, 631 (10th Cir. 1991);
United States v. Irwin, 654 F.2d 671, 677 (10th Cir. 1981), cert.
denied 455 U.S. 1016 (1982). Instruction No. 6, especially when
read in conjunction with Instruction No. 4, which advises the
jury that the defendant's plea of not guilty creates a burden
on the government to prove every material ingredient of the
crime beyond a reasonable doubt, was sufficient to apprise
the jury of the presumption of innocence standard.
* The court did strike argumentative language from the indictment (in-
cluding the words “bogus” and “cover their tracks”).
App.xl
Defendant next argues that the inclusion of the lan-
guage “attempt to obtain” in the elements of mail fraud in
Instructions No. 8 and 9 was in error.’° Defendant argues that
the language impermissibly broadened the indictment by al-
lowing the jury to convict defendant for “attempting” to de-
vise a scheme or artifice to defraud and created a jury una-
nimity problem.
The language in Instructions 8 and 9 does not allow a
jury to convict on the grounds that the defendant “attempted”
to commit mail fraud. Rather, the instructions state that the
government must prove that the defendant knowingly de-
vised a scheme to obtain “or attempt to obtain” money or
property. This language is in keeping with the well settled
law that actual loss is not an element of mail fraud. See United
States v. Aigbevbolle, 827 F.2d 664, 666 (10th Cir. 1987). The
defendant need not have actually obtained money or prop-
erty in order to be convicted. The instruction correctly states
this element of 18 U.S.C. § 1341 and in no way expands,
amends or varies from the language of the indictment, which
charges the defendant with devising a scheme for the pur-
” The pertinent language in Instruction No. 8 is as follows:
One: The defendant, Brenda Lu Smith, knowingly devised a scheme or
artifice to obtain or attempt to obtain money or property by means of false
or fraudulent pretenses or representations substantially as detailed in In-
struction No. 2;
Two: The defendant, Brenda Lu Smith, did so with intent to defraud; and
Three: In advancing or furthering, or carrying out this-scheme to obtain or
attempt to obtain money or property by means of false or fraudulent pre-
tenses or representations, the defendant, Brenda Lu Smith, used the mails
or caused the mails to be used.
App. xli
pose of obtaining money." The language in the indictment
and in Instructions 8 and 9 is internally consistent and in ac-
cordance with the statutory elements of 18 U.S.C. § 1341.
Defendant next contends that Instruction No. 10, which
gives the definition of “false or fraudulent pretenses or repre-
sentations,” is erroneous due to the inclusion of the terms
“reckless indifference” and “half-truths.” The instruction as
given is taken directly from Devitt, Blackmar & O’Malley, Fed-
eral Jury Practice and Instructions, Vol. 2, § 40.13 (1990). The
Tenth Circuit has expressly approved the inclusion of reck-
less indifference in the definition of fraud and false statements.
United States v. Mackay, 491 F.2d 616 (10th Cir. 1973). Defen-
dant has cited no authority that indicates this circuit would
not approve of the language as given in Instruction No. 10 as
a proper definition of “false or fraudulent pretenses” in the
mail fraud context.
With respect to the money laundering counts, defen-
dant contends that Instructions 14 and 15 were erroneous due
to the inclusion of the jurisdictional element contained in the
statutory language. The court finds that inclusion of the statu-
tory jurisdictional element in the instructions was proper, and
that the money laundering instructions as a whole made clear
the required elements the jury must find to sustain a convic-
tion.
” Defendant argues that because the government charged in the indict-
ment that defendant devised a scheme “to obtain” money, it is foreclosed
from a jury verdict based on a finding defendant had devised a scheme “to
attempt to obtain” money. Such an argument ignores the established law
that the success of a fraudulent scheme is not an element of § 1341. See
Linited States v. Aigbevbolle, 827 F.2d 664, 666 (10th Cir 1987). The court can
find no authority for the proposition that the government, by using the
words “to obtain” money in the indictment, is thereafter forced to prove
that a defendant did actually succeed in obtaining money. In Aigbevboile,
the indictment charged that appellant “did devise and did intend to devise
a scheme and artifice to defraud, and to obtain money .. .” Id. at 665.
Defendant's conviction for mail fraud was upheld even though he did not
actually obtain any money, and in fact it would have been factually impos-
sible for him to obtain money through his alleged scheme.
- App.xlii
Defendant objects to instruction No. 28 because it ad-
vises the jury to first decide whether the 404(b) evidence is
accurate before considering the evidence for the specified lim-
ited purposes. Defendant claims the limiting instruction
“forced the jury to focus specifically on the 404(b) evidence in
derogation of its general ability to pick and choose the evi-
dence it will rely upon, thus, elevating the 404(b) evidence to
a special status when compared with other evidence presented
in the case.” The court disagrees. The instruction given by
the court is a common sense approach. It tells the jury to
ignore the evidence if they do not find it accurate, and if they
do find it accurate it instructs them to consider it only for the
listed limited purposes. The instruction further cautions the
jury that they cannot convict a defendant simply because they
believe she committed uncharged bad acts. Instruction No.
28 read in its entire context and considered as part of the en-
tire charge was appropriate.’
Defendant alleges that it was error for the court not to
give defendant's proposed good faith instruction. United States
v. Hopkins, 744 F.2d 716 (10th Cir. 1984) provides that if the
defense of good faith has been interposed, the defendant is
entitled to an instruction directly on the issue provided there
is sufficient evidence to support the theory and such an in-
struction is requested. The court stated that “in mail fraud
cases there is sufficient evidence when the jury could reason-
ably find from such evidence that the defendant in good faith
believed that the plan would succeed, that the promises would
be kept and the representations carried out.” Id. at 718.
The suggested instruction given by defendant in her supplemental memo-
randum instructs the jury that “where proof of an alleged earlier act of a
like nature is established by evidence” the jury may draw inference from
it. This does not differ materially from the instruction given by the court.
ee eee batag tie
App.xliii
The evidence presented at trial did not warrant a good
faith instruction. In fact, the court finds that defendant's prof-
fered defense is not analogous to a good faith defens». De-
fendant basically argues that she was merely trying tc float a
loan through the use of her American Express card, and was
not involved with the scheme as alleged by he government at
all (or that in fact the scheme alleged by the government never
existed). The good faith defense cases involve situations where
the defendant embarks on a plan, without fraud at the incep-
tion, and in good faith believes that the representations made
would be kept and carried out. See United States v. Hopkins,
744 F.2d at 718. The defense propounded by defendant is
simply not analogous to that situation.
Defendant also contends the court erred in its failure
to give the jury a specific instruction regarding the credibility
of a drug and alcohol abuser as to the testimony of witness
Paul Helms. The court found that there was not sufficient
evidence to classify Mr. Helms as an addict, nor was there
any evidence that he was addicted to or using drugs during
the time of the events he testified about. It is the court's belief
that a specific instruction should not be given every time an
allegation of drug or alcohol abuse is made, but only upon an
evidentiary showing as to the seriousness of the addiction
and its propensity to affect credibility. No such evidentiary
showing was made by defendant. Additionally, given the
cross-examination of Mr. Helms regarding his drug use, the
court finds that the witness credibility instructions given were
sufficient to prevent prejudice to the defendant.
D. Governmental Misconduct
Defendant for the first time raises a governmental
misconduct argument, relating to a case agent's interview of
JoAnn Gustin during the investigative phase of the case. The
court finds the articulated basis for this motion to be so specu-
App.xliv
lative, vague and ambiguous that it does not meet the stan-
dard that the misconduct be “grossly shocking and so outra-
geous as to violate the universal sense of justice.” Linited States
v. Restrepo, 930 F.2d 705, 712 (9th Cir. 1991). Accordingly,
defendant's motion for a new trial on the grounds of govern-
mental misconduct is denied.
E. Spoliation of Evidence
In her post-trial motion defendant for the first time
makes an argument that she was prejudiced in her ability to
develop her theory of the defense by the fact that
Globemaster’s computer-generated weekly sales reports were
destroyed by the ARC. Defendant contends that her inability
to analyze and present those reports, which contained excul-
patory material, prejudiced her ability to construct a defense
and, thus, denied her a fair trial.
The court believes that such an argument is misplaced
based on the evidence presented in the case. The evidence
was that the “weekly report” submitted to ARC consisted of:
the agent's ticket coupon for sold tickets; the complete ticket
coupons for tickets refunded or exchanged; cash refund and
exchange notices; and a calculator tape of total sales, refunds
and remittances. The evidence was that ARC acted as a clear-
inghouse and sent the tickets and associated documents on
to the respective airlines. These original documents were
maintained by the airlines and admitted into evidence. With
respect to any computer generated reports that were prepared
by Globemaster, the evidence was that ARC would consider
this to be surplusage because ARC was required by contract
to create its own computer generated report based upon the
original documentation provided by the travel agent. Thus,
any work product materials prepared by the travel agency on
its own computer were of no use to the ARC or the airlines.
ARC did not deviate from its normal practice by not retaining
App.xlv
any such work product material, ifin fact it ever received such
material in the first place.
F. Ineffective Assistance of Counsel
Defendant has also raised an ineffective assistance of
counsel argument in her post-trial motions. Defendant ar-
gues that her trial counsel made certain prejudicial errors in-
cluding his failure to object to the indictment, failure to attack
the credibility of certain witnesses, and the failure to raise and
object to certain jury instructions. Defendant contends that
as a result of trial counsel's ineffective assistance the defen-
dant was deprived of her rights to counsel and a fair trial.
Counsel for defendant has requested guidance from
the court as to the proper procedural method to pursue
defendant's ineffective assistance of counsel claim. This case
is somewhat unique factually in that defendant has made a
change of attorneys immediately following trial and prior to
the court's ruling on post-trial motions and sentencing of the
defendant. Thus, defendant is making an ineffective counsel
argument at the post-trial motion stage of the proceedings.
In a normal situation, a defendant will not realize that he or
she has a potentially meritorious ineffectiveness claim until a
later point, such as when he or she has retained new counsel
on appeal.
The Tenth Circuit has quoted with approval the gen-
eral rule that “a claim of ineffective assistance of counsel can-
not be resolved on direct appeal when the claim has not been
raised before the district court.” Beaulieu v. United States, 930
F.2d 805, 807 (10th Cir. 1991), quoting United States v. Higdon,
832 F.2d 312, 313-14 (5th Cir. 1987), cert. denied 484 U.S. 1075
(1988). The circuit court has noted that this “encourages de-
velopment of a record on the tactical reasons for trial counsel’s
decisions, the extent of trial counsel's alleged deficiencies, and
the asserted prejudicial impact on the outcome of the trial.”
App.xlvi
Beaulieu, 930 F.2d at 807.
The Tenth Circuit has also stated that the preferred
avenue for challenging the effectiveness of defense counsel in
a federal criminal trial is by collateral attack under 28 U.S.C. §
2255. Id. at 806. However, if post-trial proceedings develop a
factual record of sufficient depth and detail for review of “the
tactical reasons for trial counsel’s decisions, the extent of trial
counsel's alleged deficiencies, and the asserted prejudicial
impact on the outcome of the trial,” the court may resolve the
matter on direct appeal. U.S. v. Maxwell, 966 F.2d 545, 547
(10th Cir. 1992).
The court finds that due to the present factual posture
of the case, defendant's ineffective assistance of counsel argu-
ment should be pursued by collateral attack under 28 U.S.C.
§ 2255. Although defendant's new counsel has raised the in-
effective assistance of counsel argument, defendant’s new
counsel notes in the post-trial motions that he has “not had
the opportunity to review the record in sufficient detail to ad-
equately identify the nature and scope of this issue.”
Defendant's new counsel has also stated that resolution of
this issue will require the court to conduct an evidentiary hear-
ing. The court finds that it is not possible to develop a factual
record of sufficient depth and detail through these post-trial
proceedings to allow this court to make a proper ruling on
the issue and have such decision be ripe for possible review
by the circuit court. Therefore, the court finds that defendant
should pursue her ineffective assistance of counsel argument
by means of collateral attack under 28 U.S.C. § 2255.
IT IS, THEREFORE, ORDERED BY THE COURT
THAT defendant's motion for judgment of acquittal or, in the
alternative, for new trial (Doc. # 218) is granted in part and
denied in part. Defendant's motion is granted as to Count 8
of the indictment, which charged defendant with wilful fail-
App.xlvii
ure to file a corporate income tax return. Count 8 is dismissed
due to insufficiency of the evidence. Defendant’s motion is
denied on all other grounds. The court declines to consider
defendant's ineffective assistance of counsel argument at this
time. Such argument may properly be made pursuant to 28
U.S.C. § 2255.
IT IS FURTHER ORDERED that defendant's motion
for reconsideration of order of forfeiture (Doc. # 22) is denied
and defendant's alternative motion for extension of time to
file notice of appeal (Doc. # 223) is moot.
IT IS SO ORDERED.
Dated this 27th day of April, at Kansas City, Kansas.
/s/ JOHN W. LUNGSTRUM
John W. Lungstrum
United States District Judge
App xlviii
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
[FILED: 9/16/93]
UNITED STATES OF AMERICA, _ )
Plaintiff, )
)
v. ) No. 92-20011-01
)
BRENDA LU SMITH, )
Defendant. )
FINAL ORDER OF FORFEITURE
WHEREAS, on December 17, 1992, this Court entered
an Order of Forfeiture pursuant to the provisions of 18 U.S.C.
§§ 1957 and 982 and 21 U.S.C. § 853(n) based upon the trial
jury's Guilty Verdict against the above defendant on Counts
4, 5 and 6, and the trial jury’ s Special Verdict forfeiting all of
the property alleged to be subject to forfeiture in Count 7 of
the Superseding Indictment;
AND WHEREAS, on June 23, June 30 and July 7, 1993,
the United States published in a newspaper of general circu-
lation notice of this forfeiture and of the intent of the United
States to dispose of the property in accordance with the law
and further notifying all third parties of their right to petition
the Court within thirty (30) days for a hearing to adjudicate
the validity of their alleged legal interest in the property;
AND WHEREAS, the Court has been advised that the
Airlines Reporting Corporation filed a timely petition assert-
ing a legal interest in $128,177.00 and that the United States
will recognize the interest of the Airlines Reporting Corpora-
tion as the victim of the mail fraud in Counts 2 and 3 and
whose funds were laundered in Counts 4, 5 and 6, the basis
for Count 7 of the Superseding Indictment.
ST
App.xlix
Accordingly, it is hereby ORDERED, ADJUDGED and
DECREED that the United States Marshal forthwith release
$128,177.00 to the Airlines Reporting Corporation.
It is further ORDERED, ADJUDGED and DECREED:
a That the right, title and interest to the
$128,177.00 that the Court ordered forfeited on December 17,
1992, is hereby condemned, forfeited and vested in the United
States of America, and pursuant to 18 U.S.C. § 982(b)(1)(A)
and 21 U.S.C. § 853(i)(1) is restored and remitted to the Air-
lines Reporting Corporation.
The Clerk is hereby directed to send copies of this
Order to all counsel of record and the United States Marshal.
SO ORDERED this 16th day of September, 1993.
JOHN W. LUNGSTRUM
U.S. DISTRICT JUDGE
App.|
INSTRUCTION NO.
The good faith of the defendant, Brenda Lu Smith, isa
complete defense to the charge of mail fraud contained in
Counts 2 and 3 of the indictment because good faith on the
part of the defendant is, simply, inconsistent with the intent
to obtain money or property by means of false or fraudulent
pretenses or representations alleged in that charge.
A person who acts, or causes another person to act,
on a belief or an opinion honestly held is not punishable un-
der this statute merely because the belief or opinion turns out
to be inaccurate, incorrect, or wrong. An honest mistake in
judgment or an error in management does not rise to the level
of intent to defraud.
A defendant does not act in “good faith” if, even
though she honestly holds a certain opinion or belief, that
defendant also knowingly makes false or fraudulent pretenses
or representations to others.
The mail fraud statute is written to subject to criminal
punishment only those people who knowingly obtain money
or property by means of false or fraudulent pretenses or rep-
resentations.
While the term “good faith” has not precise defini-
tion, it means, among other things, a belief or opinion hon-
estly held, an absence of malice or ill will, and an intention to
avoid taking unfair advantage of another.
In determining whether or not the government has
proven that the defendant acted with an intent to defraud
and to obtain money or property by means of false pretenses
or representations or whether the defendant acted in good
faith, the jury must consider all of the evidence in the case
bearing on the defendant's state of mind.
App.li
The burden of proving good faith does not rest with
the defendant because the defendant does not have any obli-
gation to prove anything in this case. It is the government's
burden to prove to you, beyond a reasonable doubt, that the
defendant, Brenda Lu Smith, acted with the intent to defraud
and to obtain money or property by means of false pretenses
or representations.
If the evidence in the case leaves the jury with a rea-
sonable doubt as to whether the defendant acted with an in-
tent to defraud and obtain money or property by means of
false pretenses or representations or in good faith, the jury
must acquit the defendant.
Devitt, Blackmar, and O’Malley, Federal Jury Practice and Instructions,
Sec. 40.16, pp. 531-532 (1990).
United States V. Hopkins, 744 F.2d 713 (10th Cir 1984) (evidentiary sup-
port requires submission)
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.