United States v. Walters ( 2004 )

Opinions of the United
2004 Decisions States Court of Appeals
for the Third Circuit
5-14-2004
USA v. Walters
Precedential or Non-Precedential: Non-Precedential
Docket No. 03-1058
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Recommended Citation
"USA v. Walters" (2004). 2004 Decisions. Paper 708.
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Nos. 03-1058, 03-1091 and 03-1133
UNITED STATES OF AMERICA
v.
ROBERT CHARLES WALTERS,
Appellant in 03-1058
UNITED STATES OF AMERICA
v.
DENNIS OSLOSKY,
Appellant in 03-1091
UNITED STATES OF AMERICA
v.
EDMOND HAROLD GENEST
Edmond Genest,
Appellant in 03-1133
____________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
(D.C. Crim Nos. 01-cr-00076-1; 01-cr-00076 & 01-cr-00076-4 )
District Judge: Honorable Donald J. Lee
____________
Submitted Under Third Circuit L.A.R. 34.1(a)
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May 11, 2004
Before: NYGAARD, McKEE and WEIS, Circuit Judges.
Filed
____________
OPINION
WEIS, Circuit Judge.
These three cases were consolidated for trial and similarly joined on appeal.
Because this is a non-precedential opinion, the discussion will be abbreviated. We are
aware that the parties are well acquainted with the facts and rulings that developed at the
trial.
The defendants were convicted by a jury on counts of mail fraud in
violation of 18 U.S.C. § 1341 and aiding and abetting in violation of 18 U.S.C. § 2. The
charges resulted from the operation of a Ponzi scheme in which these defendants and
other individuals sold worthless debenture bonds and guaranteed income stocks in
corporate shells.
Sales efforts targeted wealthy, elderly individuals who were usually in the
seventy to eighty year-old range. Because of their previous contacts with individuals in
that age category, former insurance salesmen, particularly those who had sold health or
long-term care policies, were recruited for operation of the scheme. The sales tactics
included: deliberate misrepresentations about the financial strength and operations of the
worthless corporations, intimations that the securities were guaranteed by the United
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States government, claims that the securities were at least as safe as CDs, and statements
that the salesmen and their parents had purchased them. During its short-lived existence,
the scheme bilked elderly persons of millions of dollars.
Some of the participants in the scheme pleaded guilty and agreed to
cooperate with the prosecution.
I.
THE DOUBLE JEOPARDY ISSUE
During the defendants’ trial, the government asked one of its principal
witnesses on direct examination about his obligations pursuant to his plea agreement. He
replied that he would cooperate with the investigation and offer testimony if the matter
came to trial. He continued, “I would be willing to take, upon the government’s request,
a lie detector test for any issue here.” J.A. at 244. The trial judge granted the defendant’s
motion for a mistrial.
Defendant then moved to dismiss the indictment on a claim of double
jeopardy. The trial judge denied the motion, finding that the mention of a lie detector test
was inadvertent on the part of the government. The court found the Assistant United
States Attorney’s explanation of the incident to be entirely credible and observed that
defendant’s counsel declined to engage in an evidentiary hearing.
In United States v. Curtis, 683 F.2d 769, 774 (3d Cir. 1982), we explained
that, in order to successfully invoke the double jeopardy clause in this setting, the
defendant must demonstrate that the government’s conduct was intended to provoke or
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goad him into moving for a mistrial. The record in this case fails to meet that standard.
Accordingly, we conclude that the District Court properly rejected the defendant’s
assertion of double jeopardy.
II.
SUFFICIENCY OF THE EVIDENCE OF MAILING
Defendants Walters and Oslosky challenge the sufficiency of the evidence
on the mailing element of their mail fraud conviction. Walters preserved his exception to
the intent to participate in the scheme, but not as to the mailing element.
The record demonstrates that salesmen such as Walters and Oslosky would
bring checks and applications for the securities to Carrie Thomas, who acted as the
secretary for the corporations. She would then send a letter to the customer
acknowledging receipt of the check and advising that the security would be delivered
personally by the salesmen. The personal delivery tactic was intended to provide another
opportunity for additional sales, and it proved to be quite successful. In addition, the
letter often contained specific references to commitments made by the salesmen, such as
discounts or negotiated rates of interest.
There is ample evidence in the record to establish that Oslosky furnished
information to Thomas to be included in the letters. In addition, a search of the premises
revealed correspondence to his customers in Oslosky’s desk. Similarly, the record reveals
examples of Walters’ correspondence to customers in addition to the letters of receipt.
We have discussed the elements of mail fraud on a number of occasions.
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One recent example is United States v. Pharis, 298 F.3d 228 (3d Cir. 2002). As we
explained there, the government must prove a scheme to defraud, use of the mails made to
further the scheme and fraudulent intent. See id. at 234. The mailings need not be done
by the defendant personally, nor is it “necessary that the scheme contemplate[s] use of the
mails as an essential element.” Id. (quoting Pereira v. United States, 347 U.S. 1, 8
(1954)). It is enough if the mailing is “incident to an essential part of the scheme.”
United States v. Tiller, 302 F.3d 98, 101 (3d Cir. 2002) (quoting Pereira, 347 U.S. at 8).
Based upon these standards, the jury had more than sufficient evidence to
support its verdict against Oslosky and Walters.
III.
FRAUDULENT INTENT
Defendant Genest contends that the government failed to present evidence
of fraudulent intent on his part. Genest was less involved in the scheme than Oslosky or
Walters. Nevertheless, the question of his intent was for the jury’s consideration. Genest
accompanied Walters on several sales presentations and had to know that much of what
he told the customers was false. Genest relies on the fact that people trusted him, but that
view of his character was one of the reasons that persuaded these individuals to place
their investments in these worthless securities.
The best that Genest could say about his conduct was that he was blind to
what was going on around him. The jury, however, was entitled to conclude that his
blindness was self-induced and deliberate. Defendant could not close his eyes while
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those who trusted him were being fleeced.
IV.
SUFFICIENCY OF THE EVIDENCE FOR MAIL FRAUD
AND AIDING AND ABETTING
Walters also contends that there was insufficient evidence to convict him of
mail fraud or aiding and abetting under sections 1341 and 1342. First, we note that the
second charge was not a violation of section 1342, which relates to the use of a fictitious
name or address, but rather of 18 U.S.C. § 2, which relates, in part, to aiding and abetting.
Walters seems to feel that because he did not personally mail any of the
papers that were used in the fraud, he did not violate section 1341. He cites language
from Kann v. United States, 323 U.S. 88, 95 (1944), to the effect that mail fraud only
covers “those limited instances in which the use of the mails is part of the execution of
the fraud.” Walters reads Kann far too narrowly. In Schmuck v. United States, 489 U.S.
705, 710-11 (1989)1 , the Court explained that “it is sufficient for the mailing to be
‘incident to an essential part of the scheme,’ or ‘a step in the plot.’” We have used similar
formulations in previous mail fraud convictions. See, e.g., Tiller, 302 F.3d at 101; United
States v. Coyle, 63 F.3d 1239, 1244 (3d Cir. 1995). Based upon these standards, we find
no merit to Walters’ contention that there was insufficient evidence to convict him.
1
Quoting Pereira v. United States, 347 U.S. 1, 8 (1954) and Badders v.
United States, 240 U.S. 391, 394 (1916), respectively.
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V.
HEARSAY CHALLENGE
Walters also challenges the introduction into evidence of an order of the
Pennsylvania Insurance Commissioner that included findings of fact and conclusions of
law. He contends that the prejudice generated by this document outweighed its probative
value. Furthermore, he argues that Fed. R. Evid. 803(8) bars admission of this document
because it contains findings of fact.
The Insurance Commissioner had found W alters’ conduct during the years
1984 through 1989 included churning insurance policies, particularly those issued to
elderly women. That evidence was relevant to Walters’ defense that his activity in the
case at hand came about as a result of misleading information from the principals of the
fraudulent corporations. The trial judge cautioned the jurors that they should consider
this evidence on the issue of Walters’ intent, plan and/or absence of mistake and not infer
any bad character trait.
The government concedes that admission of this public record may have
been erroneous. However, we conclude that if erroneous, the admission of this evidence
was harmless in light of the overwhelming evidence of Walters’ guilt of this elaborate
swindle.
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Our review of the record convinces us that with the exception of the double
jeopardy and evidentiary issues, this case was a paradigm for jury consideration. There is
more than sufficient evidence for the jurors to decide as they did.
Accordingly, the judgments of conviction will be affirmed.
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