United States v. Hall ( 2003 )

[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR TH E ELEV ENTH C IRCUIT
FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
November 10, 2003
No. 01-14746
THOMAS K. KAHN
________________________ CLERK
D. C. Docket No. 99-00078-CR-T-25F
UNI TED STA TES OF A MER ICA,
Plaintiff- Appe llee,
versus
HAY WO OD E UDO N HA LL,
a.k.a. Do n Hall,
Defen dant-A ppellant.
________________________
Appeal from the United States District Court
for the Middle District of Florida
_________________________
(November 10, 2003)
Before BLACK and FAY, Circuit Judges, and HUCK *, District Judge.
FAY, Circuit Judge:
In Ma rch 199 9, Defe ndant, H aywoo d Eudon Ha ll (“Hall”), w as charg ed in
*
Honorable Paul C. Huck, United States District Judge for the Southern District of Florida,
sitting by designation.
17 counts of a 20 cou nt indictment along with six co-defend ants.1 The government
alleged that Hall and the co-defendants, as principals in Greater Ministries
International Church (GMIC), managed and promoted a fraudulent investment
scheme. Hall was subseq uently convicted of five counts: mail fraud consp iracy,
money laundering conspiracy, and three counts of mail fraud. In this appeal he
raises various challenges to both his convictions and sentencing. Hall first argues
that the dis trict court e rred in n ot requir ing the jury to find proof o f an ove rt act to
support his conviction for conspiracy to commit money laundering under 18
U.S.C. § 1956(h). Since we find that proof of an overt act is not an essential
element under § 1956(h), we affirm Hall’s money laundering conspiracy
conviction. Hall also claims that the district court erroneously applied a two-level
increase to his sentence pursuant to U.S.S .G. § 3B1.3 for abu se of position of trust
due to his status as a pastor. We conclude that Hall did not occupy a position of
trust under the Sentencing Guidelines, and therefore reverse this sentence
1
Two co-defendants, James R. Chambers and Andrew J. Krishak, accepted plea agreements for
their role in the crime. The other four co-defendants, Gerald Payne, Betty Payne, David
Whitfield, and Patrick Talbert, were found guilty on all counts charged against them (except that
Count Five was dismissed with respect to all defendants on a motion for judgment of acquittal).
These four defendants appeal their convictions and sentences on various grounds, and some have
also adopted issues raised by co-defendants; however, we find no merit to any of the issues not
discussed in this opinion and they do not warrant discussion.
2
enhanc ement. 2
I.
In early 1996, Hall joined GMIC as a director and pastor of the church, and
also became head of its World Missions program. When Hall came to GMIC, he
became involved in the “gifting” program that had been started by one of the co-
defendants, Gerald Payne. Though the name of the program changed from the
“Double Your Money Program,” to the “Double Your Blessings Program,” and
finally to th e “Faith P romises Progr am,” the g ifting pro gram re mained essentially
the same throug hout its life . Unde r the pro gram, in vestors w ould “gif t” mone y to
GMIC in increments of $250 and within 17 months the “giftors” were to get back
double their money in the form of “giftbacks.”
Hall and some of the other defendants held “roadshow” meetings across the
country to promote the program. Despite using religious rhetoric to encourage
participation in the program, the main focus of the meetings was on how much
money could be m ade. Although there w ere disclaimers on the “gifting forms”
stating that there were no guarantees of a return, the defendants expressly or
impliedly promised giftbacks. The defendants told the giftors that profits were
2
We are aware that Hall argues the government failed to present sufficient evidence to support
any of his convictions and that he has also adopted issues raised by co-defendants; however, we
find no merit in any of these issues and they do not warrant discussion.
3
generated through investments in mining for precious metals and gems, in offshore
comm odities an d drilling , and in o verseas b anks tha t paid hig h interest r ates.
Aside from being led to b elieve that they would get back doub le their money,
potential in vestors w ere also to ld that som e of the p rofits gen erated w ould go to
feed the homeless, rehabilitate drug addicts, and suppo rt missionaries.
However, GMIC never had any of the assets the defendants claimed to be
investing in. There is no record of GMIC or any one of the defendants having
gold, silver, or diamond mines in the United States from 1978 to the present. In
addition , the diam ond an d gold m ines GM IC wa s suppo sed to be operatin g in
Liberia never did fully get off the ground. Although a diamond mine there
produced tiny industrial grade diamonds of little value, the gold mines were never
even operational. GMIC, however, did buy gold and silver and then had a
compa ny mint g old and silver me dallions w ith the G MIC logo on them in o rder to
promote the gifting program to potential giftors and to appease already dissatisfied
investor s.
Furthermore, the GMIC office supposedly located in the Cayman Islands
never existed. Similarly, the Greater International Bank of N auru was merely a
storefront inside GMIC’s Tampa building. No money was ever deposited into the
Bank of Nauru, as giftbacks were deposited purely on paper by the giftors through
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couriers. Giftors were encouraged to make their gifts through these courier
services, and this made it especially easy for already participating investors to “re-
gift” their giftbacks, or deposit them in this “offshore bank,” without ever seeing
the cash, thus allowing the defendants to perpetrate their fraud. If a giftor,
however, still wanted to withdraw money from his account, the bank
representative, a GMIC gospel singer, would have to go directly to Defendant
Payne to get money or gold.
Notwithstanding the defendants’ promises of large amounts of money, many
investors received little or no return on their gifts. When giftors inquired about
their money, the defendants employed stalling techniques. Moreover, despite the
defendants’ claims that giftors’ investments were going to charity, only about one
percent of this money went to charitable purposes. In contrast, each director
received monthly “gas money,” which was a five percent commission of all money
gifted or re-gifted by an investor recruited by that director. All gas money was
paid in cash by Defendant Payne, and over the course of the fraud, Hall received
more than $539,00 0 of this money.
II.
Hall first claims that the district court erred in refusing to instruct the jury
that proof of an overt act was necessary to convict him under 18 U.S.C. § 1956(h)
5
for conspiracy to commit money laundering. Although this Court reviews a refusal
to give a r equested jury instru ction for abuse o f discretio n, United States v.
Condon, 132 F.3d 653, 656 (11th Cir. 1998), if the refusal was based on an error of
law, then it is by defin ition an ab use of d iscretion. United States v. Govan, 293
F.3d 1248, 1250 (11th Cir. 2002). While neither this Court nor the Supreme Court
has determined whether commission of an overt act is an essential element of a
convictio n unde r § 195 6(h), oth er circuits a re split on the issue. See United States
v. God win, 272 F.3d 659, 669 n.9 (4th Cir. 2001) (noting that 18 U.S.C. § 1956(h)
does no t explicitly re quire pr oof of a n overt a ct); United States v. Tam, 240 F.3d
797, 80 2 (9th C ir. 2001 ) (findin g that § 1 956(h ) does n ot requir e the indic tment to
allege an o vert act). But see United States v. Wilson, 249 F.3d 366, 379 (5th Cir.
2001) (finding proof of an overt act is required for a conviction under § 1956(h));
United States v. Hildebrand, 152 F .3d 756 , 762 (8 th Cir. 19 98) (fin ding tha t §
1956(h) requires proof of an overt act for conviction).
Those circuit courts that have found § 1956(h) to require proof of an overt
act have relied on case law interpreting the general conspiracy statute of 18 U.S.C.
§ 371. See Wilson, 249 F.3d at 379; Hildebrand, 152 F.3d at 762. Section 371
provides:
If two or more persons conspire either to commit any
offense against the United States, or to defraud the
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United States, or any agency thereof in any manner or for
any purpose, and one o r more of such person s do any act
to effect the object of the conspiracy, each shall be
fined under this title or imprisoned not more than five
years, or both.
18 U.S .C. § 37 1 (emp hasis add ed). It is im portant to note that § 371 ex pressly
requires proof of an overt act in furtherance of the conspiracy to establish violation
of the statu te. How ever, the m oney lau ndering conspir acy statute, 1 8 U.S .C. §
1956(h), does not contain this express language:
Any person who conspires to commit any offense defined
in this section or section 1957 shall be subject to the
same penalties as those prescribed for the offense the
commission of w hich was the object of the conspiracy.
18 U.S.C. § 1956(h). In this respect, the language of § 1956(h) is not like § 371,
but instea d is nearly identical to the drug conspir acy statute, 2 1 U.S .C. § 84 6. See
Tam, 240 F .3d at 80 2; United States v. T hreadg ill, 172 F.3d 357, 366 n.5 (5th Cir.
1999). Section 846 p rovides:
Any person who attempts or conspires to commit any
offense defined in this subchapter shall be subject to the
same penalties as those prescribed for the offense, the
commission of which was the object of the attempt or
conspiracy.
21 U.S .C. § 84 6. The Supreme Court, recognizing that the language of § 846 does
not call fo r an ove rt act, refus ed to infe r an ove rt act requ irement in to the statu te.
United States v. Shabani, 513 U.S. 10, 13 (1994). In reaching this conclusion, the
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Supre me Co urt com pared th e langua ge of 21 U.S.C . § 846 to that of 18 U.S.C . §
371:
[W]e find it instructive that the general conspiracy
statute, 18 U.S.C. § 371, contains an explicit requirement
that a conspirator “do any act to effect the object of the
conspiracy.” In light of this additional element in the
general conspiracy statute, Congress’ silence in § 846
speaks volumes.
Id. at 14. Sin ce the lang uage of the statute a t issue her e, 18 U .S.C. § 1 956(h ), is
nearly identical to 21 U.S.C. § 846, we are compelled to follow the Supreme
Court’s reasoning in Shabani. Given the absence of any language in § 1956(h)
requiring proof of an overt act, we find that an overt act is not an essential element
for conviction of conspiracy to commit money laundering. Accordingly, the jury
instructio ns appr oved b y the distric t court w ere indee d prop er.
III.
Hall next contends that the district court erroneously enhanced his sentence
under U .S.S.G . § 3B1 .3 for ab use of p osition o f trust du e to his statu s as a pasto r.
Pursuan t to the Sentenc ing Guidelines, this two-lev el increase is appro priate “[i]f
the defendant abused a position of public or private trust, ... in a manner that
significan tly facilitated th e comm ission or concealm ent of the offense .” U.S.S .G. §
3B1.3 . In orde r for the d istrict cour t to have a pplied th is increase , two elem ents
must have been established: (1) that the defendant occupied a position of public or
8
private tru st; and (2 ) that the d efendan t abused that positio n in a sign ificant w ay to
facilitate the c ommis sion or c oncealm ent of the offense . United States v. Garrison,
133 F.3d 831, 837 (11th Cir. 1998). “We review the district court’s fact findings
for clear error, but its determination whether the facts justify an abuse-of-trust
enhancement we review de novo.” United States v. Ward, 222 F .3d 909 , 911 (1 1th
Cir. 2000) (quotation marks and citation omitted). Although we accept the district
court’s fin ding of fact with regard to Hall’s statu s as a pasto r, we co nclude th at this
fact alone is insufficient to support a determination that Hall occupied a position of
trust with respect to the victims.
In finding that Hall’s status as a pastor put him in a position of trust, the
district court did not indicate whether it found Hall to have occupied a position of
public trust or of private trust. Nevertheless, it is of no consequence as to whether
we ana lyze this as a private o r public tr ust, for w e find the evidenc e in the rec ord to
be insufficient to support a finding that the relationships, if any, between Hall and
the victims were of the type to put Hall in any position of trust under the
Sentencing Guidelines. Within the context of fraud, this Court has found a
position of trust to exist in tw o instanc es: “(1) w here the d efendan t steals from his
employer, using his position in the company to facilitate the offense, and (2) where
a fiduciary or personal trust relationship exists with other entities, and the
9
defendant takes advantage of the relationship to perpetrate or conceal the offense.”
Garrison, 133 F .3d at 83 7-38 (q uotation s omitted ). This ca se can on ly fall with in
the second situation. However, since the government does not allege the existence
of a fiduciary relationship, to conclude that Hall occupied a position of trust we
must find a “personal trust relationship” between H all and the victims.
Hall’s status as a pastor does not necessarily create a personal trust
relationship between himself and the victims. 3 See Un ited States v. Mor ris, 286
F.3d 1 291, 12 97 (11 th Cir. 20 02). See also United States v. Caplinger, 339 F.3d
226, 236-38 (4th Cir. 2003) (finding that defendant’s representation as a physician
did not by itself mean he occupied a position of trust). In Morr is, though the
defendant was represented as an attorney to investors in an investment fraud
scheme , he was found not to ha ve abus ed a position of tru st. See id. at 1296 -97.
This C ourt exp lained:
[I]t simply is not the case that an attorney holds a
position of trust with respect to all people with whom he
comes into contact solely by virtue of his status as an
attorney. Morris did not have an attorney-client
relationship with any of the victims. Although Morris’
3
The district court cites the Seventh Circuit case, United States v. Lilly, 37 F.3d 1222 (7th Cir.
1994), as being instructive in determining that Hall occupied a position of trust by virtue of his
status as a pastor. Although Lilly dealt with an investment fraud scheme by a pastor, the Lilly
court specifically found that “regardless of the position Pastor Lilly held with respect to the non-
Church member investors, the Pastor undoubtedly held a position of trust within the Church.”
Id. at 1227. However, since all the victims presented by the government in this case were non-
church member investors, the district court’s reliance on Lilly is misplaced.
10
status as an attorney may have been used to develop the
trust of the victims, there are no facts to support the
conclusion that as an attorney Morris occupied a position
of trust in relation to these victims.
Id. at 1297. As in Morr is, the government concedes that there is no evidence in the
record in dicating th at Hall ha d a pasto r-clergy r elationsh ip with a ny of the victims.
Although Hall may have used his status as a pastor to develop the trust of
investor s, this doe s not dem onstrate th at Hall cre ated a per sonal tru st relations hip
with any of the victims. The government claims that evidence of Hall espousing
religious rhetoric a t the road show meeting s is sufficie nt to estab lish this
relationship. However, w e must be careful to “distinguish between those ar ms-
length com mercial relationsh ips where tru st is created by the d efendant’s
person ality or the v ictim’s cred ulity, and r elationsh ips in w hich the v ictim’s trus t is
based on defendant’s position in the transaction.” Garrison, 133 F.3d at 838(citations omitted). Since Hall and the other elders traveled across the coun try,
these meetings were not regularly held in one locality, and listening to a meeting
over the course o f a few h ours is n ot enou gh to esta blish the ty pe of rela tionship
contem plated by the Sen tencing G uidelines . The go vernm ent attemp ts to equa te
Hall’s sp eeches at th ese meetin gs with the type o f preach ing a pas tor enga ges in
with members of h is church at regular church services. These ro adshow meetings,
however, were not regular church services, and the government concedes that there
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is no evid ence in th e record to indicate Hall pre ached ab out the g ifting pro gram to
victims at r egular ch urch ser vices w here he p resided a s a pastor .
Most im portantly , in determ ining w hether H all occup ied a pos ition of tru st,
we must focus on the relationship between Hall and the victims from the
perspec tive of the victims. Garrison, 133 F.3d at 837. Th us, Hall’s status as a
pastor and his involvement in the roadshows are only as significant as the victims
indicate. It was the government’s burde n during sentencing, to show , by a
preponderance of the evidence, that Hall occupied a position of trust with respect
to his victim s. See United States v. Kummer, 89 F.3 d 1536 , 1545 ( 11th C ir. 1996 ).
How ever, inste ad of pr esenting any evid ence to in dicate that th ere was in fact a
personal trust relationship between Hall and even one victim, the government
relied solely on Hall’s status as a pastor. During trial, the government called
multiple victims as witnesses. None of these victims came to the roadshows for
spiritual guidance; rather, all of them testified that they came to invest money, not
because Hall was a pastor, but because they wanted to “double their money.” The
govern ment did not even present e vidence that Hall spoke o f the giftin g prog ram to
church members during regular church services, much less evidence that even one
church memb er was a victim of his fraud . Now the gov ernmen t asks this C ourt to
assume that at least one of the victims was a member of Hall’s church and
12
considered Hall to be his pastor. We decline to assume facts that the government
had ample opportun ity to establish during either trial or sentencing. When these
victims d ecided to invest the ir mone y, they trus ted that this was a leg itimate
investm ent prog ram as re presente d by the d irectors, in cluding Hall; ho wever , this
relationship between Hall and his victims is no different than the relationship that
exists in ev ery succe ssful frau d. See id. at 838. With respect to the victims that the
govern ment pr esented, th ere was no pers onal trus t relationsh ip with H all so as to
place him in a position of trust under the Sentencing Guidelines, and therefore the
two-level enhancement under U.S.S.G. § 3B1.3 was in error. We are therefore
obliged to vacate the sentence imposed and remand for resentencing.
AFFIRMED in part; REVERSED in part; Sentence Vacated and
remanded for resentencing.
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