United States v. Sutherlin ( 2004 )

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 04a0182n.06
Filed: December 21, 2004
Nos. 03-6085; 03-6086; 03-6088; 03-6089
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
UNITED STATES OF AMERICA, )
)
Plaintiff-Appellee, )
)
v. )
) ON APPEAL FROM THE UNITED
ROBERT G. SUTHERLIN, ) STATES DISTRICT COURT FOR
STEPHEN L. KELLER, ) THE EASTERN DISTRICT OF
STERLING KEITH DRACH ) KENTUCKY
)
Defendants-Appellants. )
)
)
Before: DAUGHTREY, COOK, and FARRIS,* Circuit Judges.
FARRIS, Circuit Judge. Stephen L. Keller, Robert Grant Sutherlin, and
Sterling Keith Drach were convicted, following a trial to a jury, of conspiracy, mail
and wire fraud, and money laundering. The defendants challenge several of the
jury instructions and the admission of evidence. Drach also argues insufficiency of
the evidence. We affirm.
*
The Hon. Jerome Farris, United States Circuit Judge for the Ninth Circuit, sitting by
designation.
The defendants’ first claim of error is that the district court issued a “good
faith belief” instruction which confused the jury and negated the defendants’
advice of counsel instruction. We need not decide whether the trial court erred in
giving a good faith belief instruction. See, e.g., United States v. Janusz, 135 F.3d
1319, 1322-23 (10th Cir. 1998) (holding that the defendant was not entitled to a
good faith belief instruction because he admitted his false representations and false
pretenses). The fact that the district court gave such an instruction did not deprive
the defendants of the ability to advance and prevail on their theory of the case,
which was that they believed in good faith, based on advice of counsel, that it was
lawful to purchase and resell fraudulently obtained insurance policies.
The defendants’ second claim of error is that the district court should have
instructed the jury to consider the alleged fraudulent practices within the viatical
insurance industry. The district court properly rejected the defendants’ “viatical
industry” instruction. Essentially, the defendants asked the trial court to instruct
the jury that fraud may be acceptable so long as others in the business are also
committing fraud. By refusing to provide the jury with the proposed industry
practice instruction, the district court did not impair the defendants’ theory of the
case. Furthermore, the defendants’ proposed instruction simply asked the jury to
consider the evidence of the fraudulent practices within the viatical insurance
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industry, adding nothing to the general instruction that the jury consider all the
evidence and give it such weight as they believed it deserved.
The defendants also contend that the district court erred by rejecting their
proposed instruction concerning the “reasonably calculated to deceive persons of
ordinary prudence” element of mail and wire fraud offenses. The district court
properly rejected the portions of the proposed instruction requiring acquittal if “an
ordinary and prudent insurance company” would have verified the representations
or if “the insurance companies were in as good a position as the defendants” to
detect the misrepresentations. The defendants’ proposed instruction would have
impermissibly shifted the jury’s focus away from the defendants’ intent toward the
victims’ reaction to the fraud. See, e.g., United States v. Coffman, 94 F.3d 330,
334 (7th Cir. 1996); United States v. Maxwell, 920 F.2d 1028, 1037 (D.C. Cir.
1990); United States v. Brien, 617 F.2d 299, 311 (1st Cir. 1980).
The defendants were not entitled to a “duty to disclose” instruction because
failure to disclose was not at issue. The trial court instructed the jury to base any
conviction on the defendants’ acts and representations (i.e., false and fraudulent
pretenses, representations, or promises). Contrary to the defendants’ claim, the
mail and wire fraud instructions were not so broad to permit the jury to consider
non-disclosures as well as affirmative misstatements.
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Using the Sixth Circuit pattern instructions as his guide, the trial judge told
the jury that Drach’s connection to the conspiracy need only be slight. In a
separate instruction, the trial court told the jury that “[t]o convict any defendant,
the government must prove that he knew the conspiracy’s main purpose, and that
he voluntarily joined it intending to help advance or achieve its goals.” Explaining
the elements of conspiracy, the district court instructed the jury that the
government must prove “beyond a reasonable doubt” that “the defendant
knowingly and voluntarily joined the conspiracy.” The court also properly defined
“reasonable doubt.” The conspiracy instructions fit squarely within Sixth Circuit
precedent. See, e.g., United States v. Christian, 786 F.2d 203, 211 (6th Cir. 1986).
Drach also challenges the district court’s supplemental instruction to the jury
based on Allen v. United States, 164 U.S. 492 (1896), arguing that the instruction
was coercive because it referenced the need for the case to be decided in the future
if the jurors did not return a verdict. Even if we assume the defendant did not
waive his challenge to the court’s supplemental instruction, there was no abuse of
discretion in giving the Allen instruction, which included language (1) addressing
“both those [jurors] in the majority and those in the minority” and (2) reminding
the “jury that no one should surrender honest beliefs simply because others
disagree.” United States v. Clinton, 338 F.3d 483, 490 (6th Cir. 2003). The
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“district court’s failure to use the Sixth Circuit pattern instruction, while risky, did
not amount to reversible error in the context of this case.” Id.The defendants’ next claim is that the district court erred by allowing
investors to testify about the losses they incurred, thereby evoking sympathy from
the jury. We find no abuse of discretion. The government was entitled to
introduce proof of investor loss to prove the defendants’ specific intent to defraud.
United States v. DeSantis, 134 F.3d 760, 768 (6th Cir. 1998).
The final claim is that the evidence was insufficient to convict Drach of
conspiracy to commit mail and wire fraud and conspiracy to commit money
laundering. After reviewing the evidence in the light most favorable to the
prosecution, we reject Drach’s claim. As Chief Financial Officer of Kelco, the
principal corporate entity through which the defendants operated, Drach played a
pivotal role in the viatical insurance scheme. The evidence demonstrated that
Drach knew about the fraudulently obtained policies, that he knew Kelco was
deceiving insurance companies as part of the fraud, and that he willfully became a
member of the scheme and participated in the fraud. The evidence also supported
his conviction of conspiracy to commit money laundering. He agreed to conduct
financial transactions with the proceeds of mail and wire fraud to promote the
ongoing fraud. Drach was responsible for receiving millions of dollars from the
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resale of fraudulent life insurance policies. He then used this money to pay for
legitimate and illegitimate expenses.
AFFIRMED.
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