United States v. Thomas Michael White ( 2021 )

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 19-10783
________________________
D.C. Docket No. 0:18-cr-60174-BB-1
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
THOMAS MICHAEL WHITE,
Defendant - Appellant.
________________________
Appeal from the United States District Court
for the Southern District of Florida
________________________
(March 2, 2021)
Before JORDAN, JILL PRYOR and BRANCH, Circuit Judges.
PER CURIAM:
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We vacate our previous opinion, filed on January 29, 2021, and replace it
with the following opinion.
A jury convicted Thomas Michael White of one count of conspiracy to
commit mail fraud, in violation of 18 U.S.C. § 1349, and four counts of mail fraud,
in violation of 18 U.S.C. § 1341. The district court imposed a sentence of 168
months’ imprisonment. White appeals his convictions and his resulting sentence.
After careful review, and with the benefit of oral argument, we affirm.
I. BACKGROUND
This appeal arises out of an eight-day jury trial. In the interest of efficiency,
we recount only the facts necessary for the resolution of this appeal. On June 21,
2018, the grand jury returned a five-count indictment against White and two
codefendants, John Reech and Joseph Genzone, charging them with conspiracy to
commit mail and wire fraud from approximately December 2011 to November
2014 (Count 1) and mail fraud (Counts 2 through 5, with dates ranging from June
25, 2013 to October 6, 2014).1 The charges stemmed from the defendants’
involvement in a company called First Call Ventures, LLC (“FCV”), which
brokered residential moving services. White was co-founder, President, and Chief
Executive Officer of FCV; Reech and Genzone worked at FCV. White, together
with Reech and Genzone, solicited investors to fund operations at FCV. The
1
Count 6, wire fraud in violation of 18 U.S.C. § 1343, was dismissed.
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indictment charged that White and his codefendants conspired to—and did—
“misappropriate[e] [FCV] investor money for their personal use and benefit by
making material false and fraudulent representations, and concealing and failing to
state material facts concerning, among other things, the profitability and safety of
investing” in FCV. Doc. 3 at 3–4.2
A. Trial
White proceeded to a jury trial. Reech and Genzone pled guilty to Count 1
only; Reech testified against White. The government also offered testimony from
a cooperating witness, Steven Goldstein, and four FCV investors, Gary Treat,
Michael Niles, Mary Jane Adams, and Linda Elliot. Additionally, a financial
investigator, Jonathan Jackson, and an FBI agent, Justin Brannon, testified for the
government and prepared summary exhibits showing all the investments victims
made in FCV.
The following evidence was admitted at trial. FCV operated a call center
where employees booked moves on behalf of residential moving companies and
generated brokerage fees. The company also sought and obtained investors in the
business. White and his colleagues at FCV induced 15 investors to loan
$1,936,400 to FCV via convertible notes by misrepresenting FCV’s profitability
and the way in which investor funds would be used.
2
“Doc.” numbers are the district court’s docket entries.
3
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White, as co-founder, President, and CEO of FCV, was the “head person”
who led the “whole operation.” Doc. 132 at 61. He was joined by two “partners”:
cofounder and Chief Financial Officer Howard Markowitz and call center manager
Simon Itah. Doc. 143 at 80.
FCV sold investors “convertible notes”—loans to FCV, essentially—that
supposedly would provide investors with high monthly interest payments and the
opportunity either to convert the debt into equity in FCV or to recoup the
investor’s principal in a year’s time. Doc. 143 at 83. The company preferred that
investors take the equity option because it relieved FCV of its steep interest
payment obligations.
Both the initial investment and the loan conversion processes were part of
the fraudulent scheme. Reech, Genzone, an employee named Elizabeth Kipness,
and others acted as “fronters,” cold-calling potential investors. Reech and his
fellow fronters pitched the investment opportunity to potential investors using a
script that White created. The script told investors that FCV was very profitable
and a huge success and that investment in FCV was a safe option. Eventually,
Reech would turn interested potential investors over to White. White, as the closer
of the investment deals, told the same story as his fronters about the success and
profitability of FCV and the safety of investing in the company. White also told
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investors that money to pay interest on their convertible notes would come from
the business’s success.
According to Reech, none of that was true. By the time Reech began
attempting to convert current investors’ debt to equity, the company was failing.
Neither he nor White disclosed FCV’s financial peril to the company’s investors.
White and his colleagues continued soliciting money from current and potential
investors based on the same representations that the company was profitable and a
great success. White flew current investors in to visit FCV in an effort “to get
more money from them.” Id. at 127–28. Reech and White knew investors were
using retirement funds to invest in FCV.
In late July 2013, after being assured all along that FCV’s business was
booming, investors received notice that FCV was in a “crisis situation.” Doc.
170-7. FCV sent its investors a letter stating that “due to some recent negative
publicity and other unforeseen circumstances,” business had “dropped off
precipitously.” Id. FCV “stop[ped] all payments on investor notes,” including
interest, and gave investors an ultimatum of sorts: extend the maturity dates of
their notes for six months or risk losing everything if FCV went under. Id.Investors called White with questions, but he was evasive. One victim, Mary Jane
Adams, requested return of her principal and was denied. From September 2013
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onward, no victim received any additional interest payments or recovered any
principal.
Four victims to whom White and others made misrepresentations testified at
trial. Gary Treat, a small business owner, loaned FCV $139,430.61 of his
retirement money. Count 1 was based on a mailing FCV sent to Treat. Adams, a
retiree in failing health, withdrew funds from her retirement annuity and, after
paying a withdrawal penalty, invested $60,000 in FCV. Count 2 was based on a
mailing FCV sent to Adams. Michael Niles, a semi-retired retirement plan
administrator, loaned FCV a total of $250,000, at least some of which came from
his retirement account. He eventually converted his loan into an equity share in
FCV that turned out to be worthless. Counts 4 and 5 were based on mailings FCV
sent to Niles. Linda Elliott invested a total of $125,000 in FCV, money she drew
from her retirement account and a home equity line of credit.
According to Jackson, a certified fraud examiner, FCV operated at a loss of
roughly $1.3 million in 2012 and $480,000 in 2013 despite the investor funds it
raised. Although White, Markowitz, and Itah all provided funding for FCV at
startup, each received much more than his principal amount in direct
disbursements from FCV’s operating account. Together, Markowitz, Itah,
Genzone, and Reech received more than $2 million from FCV’s account.
Beginning in March 2012, White began making withdrawals from FCV’s account;
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within two months, he had paid himself more than his original principal investment
of only $20,000. White used funds directly from the FCV account to pay off his
personal credit card and car loan debt. He also generated over $200,000 in checks
made out to cash from FCV’s bank account, both authorizing the checks and
cashing most of them. All told, White drained from FCV’s bank account nearly
$840,000 over and above his initial investment.
The model White employed at FCV—inducing people to invest in a
company that sells a good or service by representing falsely that the company was
very profitable and that investment funds would go towards sales, marketing, and
working capital, rather than directly to him and his business partners—was one he
had participated in before. White met Reech, Markowitz, and Itah at a fraudulent
venture called Cinergy Health a few years before founding FCV. Cinergy, run by
a man named Daniel Touzier, sold low-cost health insurance plans administered by
other insurers but marketed as Cinergy products. Touzier was described as a serial
fraudster who started fraudulent ventures “one after the other.” Doc. 143 at 64.
Like FCV, Cinergy solicited investors, mainly retirees, and induced them to buy
convertible notes in the company by representing that their money would be used
for sales, marketing, and working capital when in fact it was being used to pay
interest payments to other investors, as well as exorbitant management salaries and
commissions beyond the amounts represented to investors. White served as
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“operations manager” of Cinergy’s call center, selling health insurance policies for
the company. Doc. 143 at 61. Reech was a fronter, just as he later was for FCV,
and Touzier closed the deals. While working for Cinergy, White admitted to
Reech that Touzier’s “businesses were put up to get investor[s’] money in a
fraudulent manner.” Id. at 65.
White also met Goldstein through Touzier and unsuccessfully attempted to
recruit him to work at FCV. White contacted Goldstein again in 2017 about a new
company, MD Call Connect, that White set up after FCV’s demise. At that point,
unbeknownst to White, Goldstein had become an informant for the FBI. Goldstein
secretly recorded several conversations he and White had while White attempted to
recruit Goldstein to work for MD Call Connect.
The government sought to introduce the recordings and their transcripts at
trial. White objected, arguing that the recordings and transcripts (the “Goldstein
recordings”) were unrelated to the charged offenses and too remote in time. The
district court overruled White’s objection, finding the evidence to be both
inextricably intertwined with the charged offenses and admissible as extrinsic
evidence under Federal Rule of Evidence 404(b). The court also gave the jury a
limiting instruction, admonishing that the jury “must not consider this evidence to
decide if [White] engaged in the activity alleged in the indictment” and could only
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consider it “to decide whether [White] had the state of mind or intent necessary to
commit the crime charged in the indictment.” Doc. 153 at 23.
In the recordings, White explained to Goldstein that he intended to run MD
Call Connect the same way he had run FCV, which was modeled after Cinergy: by
setting up a business to sell customers a good or service—which White and his
cohorts referred to as a “widget”—and backing the business with aggressive
pitches to investors, pitches that promised quick and massive returns on
investment. White himself directly tied his Cinergy experience to his decision to
start FCV, explaining that he did “the whole damn thing” at Cinergy when Touzier
was unavailable and got “acclimated with it and the ball of [wax]” before realizing
that he could simply do it himself by starting “another business.” Doc. 174-22 at
89.
White told Goldstein that for MD Call Connect, just like he had at FCV, he
planned to talk up the value of the investments his potential investors would be
making. White planned to target the same investors repeatedly, saying that if he
“g[o]t somebody in” he could “always load them,” meaning he could “go back at
them” for more money. Doc. 174-22 at 73. White also explained to Goldstein that
he used general statements about the use of investor money as “a way to hide
commissions or any expenses or money taken by the company.” Doc. 139 at 104
(trial testimony of Goldstein); see Doc. 174-22 at 76 (explaining that materials
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given to investors were “very general” so that investors couldn’t “come back” and
challenge the use of the money). In one specific example, White told Goldstein
that some investors asked “to see an operating agreement,” and he responded he
would “send it,” but the “operating agreement [listed] a far less commission” than
he promised to pay Goldstein. Doc. 174-22 at 79. White told Goldstein that he
could not tell investors he would be paying huge commissions, so he simply listed
a lower commission amount in the document he showed investors. He assured
Goldstein that he would “pay [him] the agreed amount” out of funds “for
advertising” or marketing, or even “[o]ffice space.” Id. at 79–80. 3
3
Besides his objection to admission of the Goldstein recordings, White raised several
other objections to trial testimony: First, he objected to Reech’s testimony that FCV was never
profitable and used investor money to pay salaries, arguing that Reech lacked personal
knowledge about these subjects and therefore the testimony was inadmissible under Federal Rule
of Evidence 602. See Fed. R. Evid. 602 (“A witness may testify to a matter only if evidence is
introduced sufficient to support a finding that the witness has personal knowledge of the matter.
Evidence to prove personal knowledge may consist of the witness’s own testimony.”). Second,
White objected to Reech’s testimony that, after Reech left FCV, an FCV employee told him that
the company was receiving customer complaints about unprofessional movers. He argued that
the testimony was impermissible hearsay. Third, White objected to Jackson’s testimony, based
on FCV’s bank records, that the business suffered losses in 2012–2013, arguing that it was
impermissible expert testimony. Fourth, White challenged Jackson’s testimony on the additional
ground that the district court erred when it denied his request for re-cross on whether Jackson
was familiar with particular transactions. Fifth, White objected during the government’s rebuttal
closing argument to the replaying of a clip from one of the Goldstein recordings in which
Goldstein told White, “It’s cheaper than the bank because you never have to pay it [back],” and
White did not respond to Goldstein. Doc. 153 at 117. White argued that the government
insinuated it was White, not Goldstein, who made that statement. The district court rejected each
of these objections, and we discern no error in the court’s rulings on them.
On appeal White argues that these errors cumulatively require reversal; however,
“[w]here there is no error in any of the trial court’s rulings, the argument that cumulative error
requires that this Court reverse the defendant’s convictions is without merit.” Morris v. Sec’y,
Dep’t of Corr., 677 F.3d 1117, 1132 (11th Cir. 2012).
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White presented a case in his defense. Two former FCV employees testified
on White’s behalf: former sales manager and security guard Mark Goodman and
information technology specialist Ivan Gastaldo. FCV’s outside tax preparer,
Robert Manela, also testified. Goodman and Gastaldo testified that they had met
White at Cinergy and later worked for him at FCV. Goodman believed FCV was
“a real company doing real sales to consumers.” Doc. 138 at 37–38. Gastaldo
described legitimate business activities he observed at FCV: the use of moving-
industry software, shift work at the sales call center, and the departmentalizing of
staff. Manela, who prepared FCV’s tax returns in 2012 and 2013, testified that
FCV generated eight million dollars in sales during that period. He acknowledged
that FCV had more than $1.7 million in losses during that period; White and his
partners took out millions of dollars from FCV’s account for personal use,
including to gamble; and given FCV’s losses, the company was forced to borrow
money or seek new investors to pay interest due to current investors.
White testified in his own defense. He testified that FCV was a legitimate
business, which fell apart unexpectedly because of negative publicity the company
received due to a segment aired on The Today Show; investors knew the risks
when they got involved; and written statements about the use of investor proceeds
were not misleading. He testified that he did not intend to harm any investor;
rather, he hoped their investments would prove profitable.
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The jury returned a guilty verdict on all five counts of the indictment.
B. Motion for Judgment of Acquittal
At the close of the government’s case (with a standing objection for after the
close of all the evidence) and again after the jury returned a guilty verdict, White
moved for a judgment of acquittal, arguing that the June 21, 2018 indictment
should be dismissed because the counts in it were barred by the five-year statute of
limitations in 18 U.S.C. § 3282.4 He also argued that the government offered
insufficient evidence to prove he intended to harm his alleged victims, citing
United States v. Takhalov, 827 F.3d 1307 (11th Cir. 2016). The district court
denied the motions. In its post-trial written order, the district court rejected
White’s statute of limitations argument because Counts 2 through 5, relating to
representations or offers White made to Treat, Adams, and Niles, all occurred
within five years of the June 21, 2018 indictment date. And although Count 1
charged a conspiracy that began “in or around December 2011,” outside the five-
year mark, it alleged that the conspiracy ended “in or around November 2014,”
well within five years, and trial “[e]vidence established that the fraudulent
4
“Except as otherwise expressly provided by law, no person shall be prosecuted, tried, or
punished for any offense, not capital, unless the indictment is found or the information is
instituted within five years next after such offense shall have been committed.” 18 U.S.C.
§ 3282.
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misrepresentations and use of the proceeds continued through November 2014.”
Doc. 196 at 3.
As to White’s no-intent-to-harm argument, the district court distinguished
Takhalov, where the Court found that customers of a bar may have “received
exactly what they paid for”—a visit to a nightclub—even though the club had
failed to disclose a financial relationship between itself and women paid to pose as
tourists, locate visiting businessmen, and lure them into the club. See id. at 3–5.
By contrast, here, the district court said, “victims sustained losses based on
[White’s] misrepresentations as to how their money would be invested. . . .
[White], through his statements and actions, intended to defraud, and not merely to
deceive without intending harm, and he obtained the victims’ money by using
those false pretenses, misrepresentations, or promises.” Id. at 5. The
government’s evidence included the victims’ testimony that White “made
misrepresentations about their investment and the specific use of their money.” Id.C. Sentencing
In anticipation of sentencing, a probation officer prepared a presentence
investigation report (“PSR”). The PSR applied a base offense level of seven under
U.S.S.G. § 2B1.1(a)(1). The probation officer added a number of enhancements,
including: a 16-level enhancement under § 2B1.1(b)(1)(I) because the loss
exceeded $1.5 million but was less than $3.5 million, a 4-level enhancement under
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§ 2B1.1(b)(2)(B) because the loss resulted in substantial financial hardship to 5 or
more victims, a 2-level enhancement under § 3A1.1(b)(1) because White knew or
should have known he targeted a vulnerable victim, a 4-level leadership role
enhancement under § 3B1.1(a); and a 2-level enhancement under § 3C1.1 for
willfully obstructing or impeding justice. The PSR therefore calculated a total
offense level of 35. With a criminal history category of I, this offense level yielded
an advisory guidelines range of 168 to 210 months’ imprisonment.
White objected to all five of the above-listed enhancements. Applying the
2018 Sentencing Guidelines Manual,5 the district court overruled White’s
objections and adopted the facts in the PSR and the probation officer’s calculation
of the guidelines range. The court sentenced White to 168 months’ imprisonment
5
White also objected to the probation office’s use of the 2018 Guidelines Manual, in
effect at the time of sentencing, over the 2014 Guidelines Manual, arguing that doing so violated
the Ex Post Facto Clause of the United States Constitution. The 2014 Manual, which was in
effect when the crimes were completed, did not include a 4-level enhancement for substantial
harm to five or more individuals.
The district court overruled his objection, explaining that White’s total offense level
would be 35 under either manual. Although the 2014 Manual did not include the enhancement
White had identified, it included a 2-level enhancement for 10 or more victims and a 2-level
enhancement for a “large number” of “vulnerable victims,” both of which the government
established White had. U.S.S.G. §§ 2B1.1(b)(2)(A)(i), 3A1.1(b)(1)–(2) (2014).
Without any specific argument as to how the district court erred, White makes passing
references to the district court’s application of the 2018 Guidelines Manual over the 2014
Guidelines Manual and argues summarily that the court imposed a substantively unreasonable
sentence. Because he did not “plainly and prominently” assert these challenges, we deem them
abandoned. United States v. Jernigan, 341 F.3d 1273, 1284 n.8 (11th Cir. 2003).
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followed by three years’ supervised release. The court also ordered White to pay
$1,936,400 in restitution.
This is White’s appeal.
II. STANDARDS OF REVIEW
We review evidentiary rulings for an abuse of discretion. United States v.
Muscatell, 42 F.3d 627, 630 (11th Cir. 1995). We review the denial of a motion to
dismiss an indictment based on a statute of limitations bar, too, for an abuse of
discretion. United States v. Torres, 318 F.3d 1058, 1061 n.6 (11th Cir. 2003).
Questions of law as to the statute of limitations are reviewed de novo. Id.We review the denial of a motion for judgment of acquittal based on
insufficiency of the evidence de novo. United States v. Hansen, 262 F.3d 1217,
1236 (11th Cir. 2001). “To uphold the denial of a motion for judgment of
acquittal, we need only determine that a reasonable fact-finder could conclude that
the evidence established the defendant’s guilt beyond a reasonable doubt.” Id.(internal quotation marks omitted). When considering the sufficiency of the
evidence, we must “view the facts and draw all reasonable inferences therefrom in
the light most favorable to the government.” United States v. Slocum, 708 F.2d
587, 594 (11th Cir. 1983).
With respect to Sentencing Guidelines issues, we review a district court’s
legal determinations de novo and its application of the guidelines to the facts for
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clear error. United States v. Rodriguez-Lopez, 363 F.3d 1134, 1136–37 (11th Cir.
2004). For a factual finding to be clearly erroneous, we “must be left with a
definite and firm conviction that a mistake has been committed.” Id. at 1137(internal quotation marks omitted). A factual finding cannot be clearly erroneous
when the factfinder has chosen between two permissible views of the evidence.
United States v. Saingerard, 621 F.3d 1341, 1343 (11th Cir. 2010).
III. DISCUSSION
On appeal, White advances several challenges to his convictions and
sentence. We address the challenges pertaining to White’s convictions first;
second, we examine the challenges relating to his sentence.
A. White’s Convictions
White argues that each of his convictions should be overturned. He
contends that the district court abused its discretion in admitting the Goldstein
recordings and erred in denying his motions for judgment of acquittal on statute of
limitations and sufficiency grounds. For the reasons set forth below, we disagree.
1. The Goldstein Recordings
White argues that the district court abused its discretion in admitting the
Goldstein recordings over his objection. He contends that the recordings contained
evidence neither admissible as intrinsic evidence nor as extrinsic evidence under
Federal Rule of Evidence 404(b). We discern no abuse of discretion.
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Uncharged crimes, wrongs, or acts may be admissible either as intrinsic or
extrinsic evidence, provided evidence of the conduct meets certain criteria.
Intrinsic evidence may be admitted as follows:
Evidence, not part of the crime charged but pertaining to the chain of
events explaining the context, motive and set-up of the crime, is
properly admitted if linked in time and circumstances with the charged
crime, or forms an integral and natural part of an account of the crime,
or is necessary to complete the story of the crime for the jury.
United States v. McLean, 138 F.3d 1398, 1403 (11th Cir. 1998) (internal quotation
marks omitted); see United States v. Baker, 432 F.3d 1189, 1205 n.9 (11th Cir.
2005) (“[I]n this Circuit ‘evidence of other crimes, wrongs, or acts’ falls outside
the scope of Rule 404(b) when it is: ‘(1) an uncharged offense which arose out of
the same transaction or series of transactions as the charged offense, (2) necessary
to complete the story of the crime, or (3) inextricably intertwined with the evidence
regarding the charged offense.’” (quoting United States v. Veltmann, 6 F.3d 1483,
1498 (11th Cir. 1993))), abrogated on other grounds by Davis v. Washington, 547
U.S. 813, 821 (2006).
If the evidence does not qualify as intrinsic, it may nevertheless be
admissible as extrinsic evidence: “Evidence of any other crime, wrong, or act . . .
may be admissible” for purposes other than as character evidence, “such as proving
motive, opportunity, intent, preparation, plan, knowledge, identity, absence of
mistake, or lack of accident.” Fed. R. Evid. 404(b). We undertake a three-part
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inquiry to determine whether evidence of other crimes, wrongs, or acts is
admissible under Rule 404(b): “(1) the evidence must be relevant to an issue other
than the defendant’s character; (2) the probative value must not be substantially
outweighed by its undue prejudice; [and] (3) the government must offer sufficient
proof so that the jury could find that the defendant committed the act.” United
States v. Ramirez, 426 F.3d 1344, 1354 (11th Cir. 2005) (internal quotation marks
omitted). “The list provided by the rule is not exhaustive and the range of
relevancy outside the ban is almost infinite.” United States v. Stephens, 365 F.3d
967, 975 (11th Cir. 2004) (internal quotation marks omitted). The rule favors
inclusion unless the evidence “tends to prove only criminal propensity.” Id.Regardless of whether evidence is characterized as intrinsic or extrinsic
404(b) evidence, it must not run afoul of Federal Rule of Evidence 403, which
provides that a court “may exclude relevant evidence if its probative value is
substantially outweighed by a danger of . . . unfair prejudice, confusing the issues,
misleading the jury, undue delay, wasting time, or needlessly presenting
cumulative evidence.” Fed. R. Evid. 403.
We conclude that the Goldstein recordings contained both intrinsic evidence
and extrinsic Rule 404(b) evidence; all of the recordings’ contents were
admissible.
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Evidence in the recordings about FCV, such as why White started FCV and
how he operated it, was inextricably intertwined with the charged acts in this case
because it “form[ed] an integral and natural part of an account of the crime[s]” for
which White stood trial. McLean, 138 F.3d at 1403. White, citing our decision in
United States v. Cancelliere, protests that the evidence is inadmissible because it
neither “concerns the context, motive, and set-up of the crime” nor “is linked in
time and circumstances with the charged crime.” 69 F.3d 1116, 1124 (11th Cir.
1995) (internal quotation marks omitted). Our caselaw, however, makes clear that
intrinsic evidence is admissible under broader circumstances than the two White
isolates. See id. at 1124–25 (permitting admission of evidence that is “necessary to
complete the story” of the crime); McLean, 138 F.3d at 1403–04 (permitting
admission of evidence that “forms an integral and natural part of an account of the
crime” or that is necessary to complete the story of the crime). We therefore reject
his narrow reading of our intrinsic-evidence precedent and conclude that this
evidence was necessary to complete the story of the crime.
We also conclude that the district court was within its discretion not to
exclude under Rule 403 intrinsic evidence about FCV’s operation. The probative
value of White’s candid discussions about FCV’s operations was not outweighed
by any of the reasons for exclusion in that rule. The evidence was not cumulative,
misleading, or confusing, nor were the conversations about FCV so prejudicial as
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to require exclusion. See United States v. Cross, 928 F.2d 1030, 1048 (11th Cir.
1991) (“Rule 403 is an extraordinary remedy which should be used sparingly, and
the trial court’s discretion to exclude evidence as unduly prejudicial is narrowly
circumscribed.” (internal quotation marks omitted)). Importantly, the district court
gave the jury a limiting instruction, which we presume it followed. See
Richardson v. Marsh, 481 U.S. 200, 211 (1987) (“[J]uries are presumed to follow
their instructions . . . .”).
Evidence of the other ventures in which White was involved—Cinergy and
MD Call Connect—was properly admitted as extrinsic Rule 404(b) evidence.
Rather than proving “only criminal propensity,” Stephens, 365 F.3d at 975, this
evidence showed how White gained knowledge of the type of fraudulent business
model he used at FCV, created a plan to start FCV, and seized an opportunity to
put his plan into action, see Fed. R. Evid. 404(b). Citing a former Fifth Circuit
decision, United States v. Beechum, 582 F.2d 898 (5th Cir. 1978) (en banc), 6 White
argues that the recordings were too remote in time and unrelated to his case and
therefore were unduly prejudicial. That is, he challenges only the second part of
our three-part Rule 404(b) test—whether the probative value of the evidence is
substantially outweighed by undue prejudice. See Ramirez, 426 F.3d at 1354. “In
6
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), we
adopted as binding precedent all decisions of the former Fifth Circuit handed down before
October 1, 1981.
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measuring the probative value of the evidence, the judge should consider the
overall similarity of the extrinsic and charged offenses.” Beechum, 582 F.2d at
915. If the offenses “are dissimilar except for the common element of intent, the
extrinsic [evidence] may have little probative value to counterbalance the inherent
prejudice of this type of evidence.” Id. “The judge should also consider how
much time separates the extrinsic and charged offenses: temporal remoteness
depreciates the probity of the extrinsic offense.” Id.White argues that the evidence in the Goldstein recordings is insufficiently
probative to outweigh the undue prejudice that arose from its admission into
evidence. As to the probative value, White contends that the time lag between the
alleged fraud and conspiracy involving FCV and the MD Call Connect-related
Goldstein recordings—nearly four years—severely depreciates the probity of the
evidence. He further contends that the evidence from the recordings relating to
Cinergy and MD Call Connect was “unrelated to FCV.” Appellant’s Br. at 28. On
the prejudice side of the ledger, White argues that the recordings painted him as a
serial fraudster despite the fact that he was never charged for any conduct relating
to MD Call Connect.
Although a lag of nearly four years is significant, the evidence in the
recordings demonstrated that FCV, Cinergy, and MD Call Connect were closely
related. The recordings showed that MD Call Connect was just another venture
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run in a similar manner as FCV and Cinergy, with White and others he recruited
seeking investors by overstating the profitability of the businesses. There was also
overlap in the players: Reech in Cinergy and FCV; Goldstein, whom White had
met while working at Cinergy, in MD Call Connect; and White in all three
businesses. And White sought to entice Goldstein into working for him at MD
Call Connect by touting the experience he had gotten at Cinergy and FCV. In one
recorded conversation White told Goldstein that he did “the whole damn thing” at
Cinergy and got “acclimated with it and the ball of [wax]” before realizing he
could do it himself and starting “another business”—FCV. Doc. 174-22 at 89.
Thus, the probative value of this evidence was high despite the temporal gap
between the charged conduct and the recordings.
The danger of unfair prejudice, conversely, was low. The jury knew about
Cinergy from other testimony. The jury knew White had learned the investor-
seeking process at Cinergy and had recruited Cinergy employees to work for him.
Goldstein also testified. The recordings contained discussions about how White
set up his businesses, but they contained nothing flagrantly prejudicial. And, as we
have mentioned, the district court gave the jury an instruction addressing the limits
on the jury’s use of this evidence. See Richardson, 481 U.S. at 211. For these
reasons, the district court was within its discretion to admit the Goldstein
recordings as Rule 404(b) evidence.
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2. Statute of Limitations
White next argues that the district court should have granted him a judgment
of acquittal on all counts because the charges in the indictment were beyond the
five-year statute of limitations. In addition to the conspiracy, which the indictment
stated ran from about December 2011 to November 2014, the substantive counts
stemmed from mailings sent in 2013 and 2014:
• Count 2: June 25, 2013 – FCV “Confidential Equity Offer” sent to
Treat via the United States Postal Service (“USPS”),
• Count 3: June 25, 2013 – FCV “Investor Report” sent to Adams via
USPS,
• Count 4: August 1, 2013 – FCV “Letter regarding First Call Notes”
sent to Niles via USPS,
• Count 5: October 6, 2014 – “Uncollectible Unsecured Note Form
for Self-Directed Accounts,” executed by Niles and sent via USPS
to Equity Trust Company, in which Niles documented a letter FCV
sent to him.
White does not dispute that the government proved these mailings, but he submits
that that government “produced no evidence that, after January 2013, there was a
purchase of any investment,” so “there could be no misrepresentations or
omissions to support fraudulent conduct” after that date. Appellant’s Br. at 37.
We disagree.
“The elements of mail and wire fraud are: (1) intentional participation in a
scheme to defraud, and, (2) the use of the interstate mails or wires in furtherance of
that scheme.” United States v. Maxwell, 579 F.3d 1282, 1299 (11th Cir. 2009).
The elements of conspiracy to commit mail and wire fraud are (1) the existence of
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an agreement to execute a scheme to defraud and (2) use of the mail or wire
systems to further the scheme. United States v. Smith, 934 F.2d 270, 274 (11th Cir.
1991).
White has failed to explain how the mailings identified in the substantive
counts were not made “in furtherance of” the fraud. Maxwell, 579 F.3d at 1299.
He focuses instead on the fact that the use of the mail was not for a specific
financial transaction. White has provided no support for such a narrow reading of
the mail fraud statute, however, and we see none. Indeed, the Supreme Court has
defined the offense broadly:
Mail fraud . . . occurs whenever a person, having devised or intending
to devise any scheme or artifice to defraud, uses the mail for the purpose
of executing such scheme or artifice or attempting so to do. The
gravamen of the offense is the scheme to defraud, and any mailing that
is incident to an essential part of the scheme satisfies the mailing
element, even if the mailing itself contains no false information.
Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639, 647 (2008) (citations
omitted) (internal quotation marks omitted). We are convinced that the mailings
that form the basis of Counts 2 through 5 were at least incident to an essential part
of White’s scheme to defraud because they advanced the objective of the
conspiracy: to defraud investors out of money by misrepresenting FCV’s
profitability.
White’s argument about the Count 1 conspiracy fails for much the same
reason. As the facts underlying the substantive counts show, White used the
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mailings in furtherance of his fraud well into 2013. And nothing supports White’s
suggestion that the entirety of a conspiracy must be committed within the five-year
limitations period; rather, the plain language of the statute indicates that it is the
completion date that matters. See 18 U.S.C. § 3282 (requiring prosecution to
commence “within five years next after such offense shall have been committed”
(emphasis added)).
We therefore agree with the district court that the crimes charged in the
indictment fell within the statute of limitations and should not have been dismissed
on that ground.
3. Sufficiency of the Evidence
White renews here his other argument in favor of a judgment of acquittal:
that the government failed to prove the element of intent to defraud. See Takhalov,
827 F.3d at 1312 (“[T]o defraud, one must intend to use deception to cause some
injury.”). We reject White’s argument.
Perhaps most fundamentally, White testified at trial that he did not intend to
harm his investors. When a defendant testifies in his defense after the government
has presented “some corroborative evidence of guilt,” his testimony, “if
disbelieved by the jury, may be considered as substantive evidence of the
defendant’s guilt.” United States v. Brown, 53 F.3d 312, 314 (11th Cir. 1995); see
id. (explaining that a jury can “conclude the opposite of [the defendant’s]
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testimony is true”). White argues that although the government may have
presented evidence that he intended to deceive his investors, it failed to present any
corroborative evidence that he intended to harm—that is, defraud—them. He
bases his argument on our decision in Takhalov, in which we explained: “That a
defendant merely induced the victim to enter into a transaction that he otherwise
would have avoided is . . . insufficient” to prove fraud because “deceiving does not
always involve harming another person; defrauding does.” 827 F.3d at 1310
(alterations adopted) (internal quotation marks omitted). We remain unconvinced.
In Takhalov, “the defendants . . . tricked men to come into the defendants’
clubs” by hiring “Bar Girls,” or “B-girls,” to “pose as tourists, locate visiting
businessmen, and lure them into the defendants’ bars and nightclubs.” Id. The
defendants admitted this, “believ[ing] this scheme was a perfectly legitimate
business model.” Id. But that is all they admitted. The government’s theory was
that “[o]nce inside the clubs, employees would pour vodka in the men’s beer to get
them drunker, misrepresent the prices of drinks, hide menus, cover up prices, and
even forge the men’s signatures on credit-card receipts.” Id. The defendants said
they had no knowledge of such practices. Id. The defendants asked for and were
denied a jury instruction that the jury must acquit if it found “that the defendants
had tricked the victims into entering a transaction but nevertheless gave the victims
exactly what they asked for and charged them exactly what they agreed to pay.”
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Id. Based on the court’s refusal to give the requested instruction, even if the jury
believed the defendants’ argument that they knew nothing about the swindling that
went on inside the club, it could have convicted based on the Bar Girls’
misrepresentations alone.
We held that the district court abused its discretion in denying the
defendants’ requested jury instruction. That is because “deceiving is a necessary
condition of defrauding but not a sufficient one.” Id. at 1312. “[I]f a defendant
does not intend to harm the victim—to obtain, by deceptive means, something to
which the defendant is not entitled—then he has not intended to defraud the
victim.” Id. at 1313 (alteration adopted) (internal quotation marks omitted). “[A]
schemer who tricks someone to enter a transaction has not schemed to defraud so
long as he does not intend to harm the person he intends to trick. And this is so
even if the transaction would not have occurred but for the trick.” Id. (internal
quotation marks omitted). When the “misrepresentation goes to the value of the
bargain,” or “the nature of the bargain itself,” there is “a scheme to defraud.” Id.
“That lie can take two primary forms: the defendant might lie about the price (e.g.,
if he promises that a good costs $10 when in fact it costs $20) or he might lie about
the characteristics of the good (e.g., if he promises that a gemstone is a diamond
when it is in fact a cubic zirconium.).” Id. at 1313–14. If, conversely, the alleged
victims “received exactly what they paid for,” then there is no fraud. Id. at 1314
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(internal quotation marks omitted). In Takhalov, because the jury could have
concluded that the defendants were unaware of what went on once the victims
were inside the club and were only responsible for the Bar-Girl deception, and the
jury could have believed that this was mere deception, not fraud, we reversed.
Here, by contrast, the government offered evidence that White presented
exactly the kind of lie that Takhalov made clear is fraud: he lied “about the
characteristics” of the investments. Id. He said that the investments were safe, but
they were not. He said the investments were valuable because the business was
profitable, but it was not. The government showed that although White’s investors
thought they were investing in a diamond, in fact they were investing in a cubic
zirconium. And, as we discussed above, the jury was entitled to disbelieve White’s
testimony. We affirm the district court’s denial of the motions for judgment of
acquittal on sufficiency-of-evidence grounds.
B. White’s Sentence
White also challenges the 168-month sentence the district court imposed,
arguing specifically that the court should not have applied five enhancements
under the Sentencing Guidelines: a 16-level enhancement for total loss amount
under U.S.S.G. § 2B1.1(b)(1)(I), a 2-level enhancement for having vulnerable
victims under U.S.S.G. § 3A1.1(b)(1), a 4-level enhancement for the substantial
financial hardship to five or more victims under U.S.S.G. § 2B1.1(b)(2)(B), a 4-
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level enhancement for White’s role as leader or organizer of the scheme under
U.S.S.G. § 3B1.1(a), and a 2-level enhancement for White’s obstruction of justice
under U.S.S.G. § 3C1.1. As we explain below, we find no error.
1. Loss Amount
The district court did not clearly err in determining the loss amount of
$1,936,400. See United States v. Cavallo, 790 F.3d 1202, 1232 (11th Cir. 2015)
(explaining that a loss calculation is reviewed for clear error). “‘Actual loss’ is the
reasonably foreseeable pecuniary harm that resulted from the offense.” Id. (citing
U.S.S.G. § 2B1.1 cmt. n.3(A)(i)). The Guidelines do not require that a sentencing
court make a precise determination of loss; rather, “a sentencing court need only
make a reasonable estimate of the loss, given the available information.” Id.
(alteration adopted) (internal quotation marks omitted).
White argues that the loss calculation should have been limited to losses
sustained by Adams, Niles, Elliot, and Treat, the testifying victims, and not include
all 15 victims about which the government presented evidence at trial. And, he
argues, the loss was not foreseeable to White, who was running a booming
business until the negative segment ran on The Today Show.7 We disagree. In
7
White further argues that the evidence upon which the district court relied “proved
nothing more than investors lost their principal amount not that they had been defrauded.”
Appellant’s Br. at 51. This argument is simply a repackaging of the sufficiency argument he
raised in his motions for judgment of acquittal, an argument we have rejected.
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arriving at the loss amount, the district court relied on multiple sources of evidence
the government supplied, including victim testimony, bank records, and fraud
examiner Jackson’s testimony and summary exhibits. Specifically, Jackson
testified, based upon a review of FCV’s bank records, that 15 investors paid a total
of $1,936,400 to FCV. The government admitted into evidence an exhibit showing
the amount of each investor’s payments. There is no support for White’s
proposition that the court’s calculation should have been confined to the losses of
the four victims who testified at trial.
The district court also expressly found that the victims’ losses were
foreseeable to White because he “was the CEO and the owner of” FCV. Doc. 206
at 50. According to the district court: “He designed the company, he executed the
scheme, and he actively recruited the investors and was the highest-level operative
in this scheme. He knew and was aware of each of the fronters’ activities. He
provided the scripts. He shared information about potential victims and he was the
closer.” Id. In arguing that the losses were a sudden result of unforeseen bad
publicity, White asks us to reverse the district court because there was another
plausible explanation. That we cannot do. See Saingerard, 621 F.3d at 1343.
Based on the evidence admitted at trial and sentencing, we discern no clear error in
the district court’s loss determination.
2. Vulnerable Victim
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White challenges the district court’s imposition of the vulnerable victim
enhancement, arguing that the court applied the enhancement based solely on the
age of his victims. The record, however, demonstrates otherwise.8
The Guidelines provide for a two-level enhancement if the defendant knew
or should have known that a victim of the offense was a vulnerable victim.
U.S.S.G. § 3A1.1(b)(1). A “vulnerable victim” is a person “who is a victim of the
offense of conviction and any relevant conduct for which the defendant is
accountable” and “who is unusually vulnerable due to age, physical or mental
condition, or who is otherwise particularly susceptible to the criminal conduct.”
Id. cmt. n.2. “The increase applies when a defendant selected his victim to take
advantage of that victim’s perceived susceptibility to the offense.” United States v.
Moran, 778 F.3d 942, 978 (11th Cir. 2005); see United States v. Bradley, 644 F.3d
1213, 1288 (11th Cir. 2011) (applying the enhancement when the victims’
vulnerability was “essential to the defendant’s choice to victimize them”).
Regardless of whether age alone can justify application of the vulnerable-
victims enhancement, see United States v. Lewis, 842 F.3d 467, 476–77 (7th Cir.
2016) (agreeing that “age alone can be insufficient to justify” the enhancement),
we have held that age, in combination with the repeated targeting of victims, “a
8
“[A] district court’s factual finding that the victim is vulnerable may be reversed only if
it is clearly erroneous.” United States v. Mathews, 874 F.3d 698, 706 n.4 (11th Cir. 2017).
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practice called ‘reloading,’ constitutes evidence that the defendant knew the victim
was particularly vulnerable to the fraud scheme,” United States v. Day, 405 F.3d
1293, 1296 (11th Cir. 2005). Here, the government presented evidence that White
knew he was targeting retired victims, as well as evidence that White intended to
and did target his victims repeatedly. White explained to Goldstein that if he
“g[o]t somebody in” to invest, he could “always load them,” or “go back at them.”
Doc. 174-22 at 73. In combination, this was ample evidence from which the
district court could conclude that White’s victims were vulnerable. 9
3. Substantial Financial Hardship to Five or More Victims
White next argues that application of the substantial hardship enhancement
was clearly erroneous because the government failed to “present any evidence
regarding the percentage of any retirement funds an investor lost or how it
impacted their retirement security in any substantial way.” Appellant’s Br. at 52–
53. Again, we disagree.
The Guidelines provide for a four-level enhancement if an offense results “in
substantial financial hardship to five or more victims.” U.S.S.G. § 2B1.1(b)(2). A
9
White suggests that the government was tasked with proving that 10 or more victims
were vulnerable. Not so: both the 2014 and 2018 Guidelines Manuals permit a two-level
increase if any victim is vulnerable. The 2014 Guidelines Manual permits a four-level increase if
a “large number” of the defendant’s victims were vulnerable. The PSR noted that “numerous
victims” in the scheme were vulnerable. PSR ¶ 12. Thus, even if the district court should have
applied the 2014 Guidelines Manual, a four-level enhancement would have been warranted. See
supra note 5.
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victim is defined as “any person who sustained any part of the actual loss
determined.” Id. cmt. n.1. In determining whether this enhancement applies, the
district court should consider, among other factors, whether the offense resulted in
the victim’s: becoming insolvent; filing for bankruptcy; suffering substantial loss
of a retirement, education, or other savings or investment fund; making substantial
changes to his employment, such as postponing his retirement plans; making
substantial changes to his living arrangements, such as relocating to a less
expensive home; and suffering substantial harm to his ability to obtain credit. Id.
cmt. n.4(F).
The district court did not clearly err by finding that White had five or more
victims who suffered substantial financial hardship. First, White does not
challenge the facts set forth in the PSR that all the victims, except for two
(including Niles), suffered a substantial financial hardship. These victims included
(1) Adams, who lost money from her individual retirement account (“IRA”), was
in the process of losing her house, and was on government assistance to make ends
meet; (2) Elliott, who lost money from her IRA, had to mortgage her home, and
afterward had to work two jobs to get by; (3) G.E., who lost money from his IRA
and had to mortgage his home; (4) Treat, who lost money from his IRA and cannot
retire as planned; and (5 and 6) R.W. and D.W., who were unable to pay off their
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ranch, were forced to drive a high-mileage, dated car, and had little to spend on
clothing.
White attempts to undercut the substantial losses of Treat and Adams. He
admits that Treat “might have to wait a little bit longer to retire” but emphasizes
that Treat “owned a well-established retail clothing store.” Appellant’s Br. at 53.
White argues that Adams has managed to stay in her home and continued investing
with Reech until 2017. Even accepting White’s assertions, however, these victims’
losses were sufficiently substantial to satisfy U.S.S.G. § 2B1.1(b)(2). The district
court did not err in applying the enhancement for substantial losses to five or more
victims.
4. Organizer or Leader
White next challenges the enhancement to his guidelines range for being “an
organizer or leader of a criminal activity that involved five or more participants or
was otherwise extensive,” U.S.S.G. § 3B1.1(a), contending that the government
offered no evidence that White led or organized at least five people. White
acknowledges that the district court expressly found that Genzone, Reech, Kipness,
Markowitz, and Itah were criminal participants; he nonetheless argues that the
court did so without reason or evidentiary support. He is mistaken. Reech testified
that he, White, and the four other individuals the district court identified were
involved in the criminal scheme at FCV. Based on this testimony, the court was
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entitled to find that White, in his undisputed roles as President and CEO, led or
organized the criminal activity charged in this case. See United States v. Shabazz,
887 F.3d 1204, 1222 (11th Cir. 2018) (explaining that aggravated-role
determinations are factual findings).
5. Obstruction of Justice
White’s final sentencing challenge is to the enhancement he received for
obstructing justice by perjuring himself when he testified at trial that Adams did
not request return of her initial investment in FCV and that he paid back to FCV
money he withdrew from the company’s account and spent at a casino. We
conclude, however, that the district court’s obstruction findings were not clearly
erroneous. See United States v. Guevara, 894 F.3d 1301, 1311–12 (11th Cir. 2018)
(reviewing a district court’s finding that the defendant obstructed justice for clear
error).
The Guidelines provide for a two-level enhancement if the defendant
“willfully obstructed or impeded, or attempted to obstruct or impede, the
administration of justice with respect to the investigation, prosecution, or
sentencing” of his instant offense and “the obstructive conduct related to [his]
offense of conviction and any relevant conduct” or “a closely related offense.”
U.S.S.G. § 3C1.1. A defendant obstructs justice within the meaning of this
provision when he commits perjury, defined as “false testimony concerning a
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material matter with the willful intent to provide false testimony, rather than as a
result of confusion, mistake, or faulty memory.” United States v. Duperval,
777 F.3d 1324, 1337 (11th Cir. 2015) (internal quotation marks omitted). White
argues only that the testimony was not false; he does not challenge the intent or
materiality requirements.
The district court first found that White perjured himself when he testified
that Adams did not ask for her principal investment back in April 2013, pointing to
Adams’s contrary trial deposition testimony. White argues that Adams admitted
on cross examination that she did not ask for return of her initial investment, but
we see no such admission in the record. Rather, Adams testified she told White
that she “definitely needed to have the money returned,” at which point he offered
two percent more in interest if she would keep her principal invested. Doc. 174-24
at 144. “[A]t that point,” Adams testified, she still wanted her money back. Id.She testified that she “spent quite a bit . . . of money and time . . . trying to recoup
the money.” Id. at 145. Adams also testified that at one point she decided to “hold
off for a little bit, see what happens,” but she clarified that she always “really
wanted to get out of it” and “White knew that. It’s just that he said he could not at
the time.” Id. Even if Adams’s “hold off” statement, in isolation, supported
White’s argument, the context of her testimony is wholly consistent with her
testimony that she sought return of her principal.
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Second, the district court found that White perjured himself when he
testified that he returned $133,000 of FCV’s money that he had taken to gamble at
a casino, explaining that FCV bank records contradicted White’s assertion and
White could offer no evidence to support it. White argues there was no evidence
that he lied about reporting use of the company’s credit card to his partners or
about reconciling what he owed, no evidence that his use of the card created
financial difficulty for FCV, and no evidence that he took funds from a specific
investor account. Even assuming that White’s assertions are correct, these facts
would not undercut the lie that the district court relied on to support the
enhancement: that White had not paid the funds back to an FCV account.
Moreover, even if White could show the district court clearly erred in finding that
he failed to return FCV funds he used for personal entertainment, the court’s
finding that White perjured himself about Adams’s request for return of her
investment alone would support the obstruction enhancement.
IV. CONCLUSION
For the foregoing reasons, we affirm White’s convictions and sentence.
AFFIRMED.
37