United States v. John Westine, Jr. , 883 F.3d 659 ( 2018 )

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 18a0038p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
UNITED STATES OF AMERICA, ┐
Plaintiff-Appellee, │
│
> Nos. 15-6014/6402/16-5356
v. │
HENRY IRVING RAMER (15-6014 & 15-6402); JOHN G. │
WESTINE, JR. (16-5356), │
│
Defendants-Appellants. │
┘
Appeal from the United States District Court
for the Eastern District of Kentucky at Frankfort.
No. 3:14-cr-00010—Gregory F. Van Tatenhove, District Judge.
Argued: December 6, 2017
Decided and Filed: February 26, 2018
Before: CLAY, GIBBONS, and BUSH, Circuit Judges.
_________________
COUNSEL
ARGUED: David J. Guarnieri, MCBRAYER MCGINNIS, LESLIE & KIRKLAND, PLLC,
Lexington, Kentucky, for Appellant in 15-6014 and 15-6402. Kevin M. Schad, FEDERAL
PUBLIC DEFENDER, Cincinnati, Ohio, for Appellant in 16-5356. David B. Goodhand,
UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellee. ON
BRIEF: David J. Guarnieri, MCBRAYER MCGINNIS, LESLIE & KIRKLAND, PLLC,
Lexington, Kentucky, for Appellant in 15-6014 and 15-6402. Kevin M. Schad, FEDERAL
PUBLIC DEFENDER, Cincinnati, Ohio, for Appellant in 16-5356. David B. Goodhand,
UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., Charles P. Wisdom, Jr.,
Kenneth Taylor, Neeraj K. Gupta, UNITED STATES ATTORNEY’S OFFICE, Lexington,
Kentucky, for Appellee.
Nos. 15-6014 /6402 /16-5356 United States v. Ramer, et al. Page 2
_________________
OPINION
_________________
CLAY, Circuit Judge. Defendants John Westine and Henry Ramer (“Defendants”)
appeal their convictions and sentences in their criminal cases involving charges of mail fraud, in
violation of 18 U.S.C. § 1341; money laundering, in violation of 18 U.S.C. § 1956; and securities
fraud, in violation of 15 U.S.C. § 78j(b). Defendants were convicted in separate jury trials. For
the reasons set forth below, we AFFIRM both convictions and both sentences.
BACKGROUND
Factual History
This case involves a group of individuals who schemed to defraud investors through the
marketing of a series of spurious oil and gas drilling projects. Prosecutors indicted several
individuals in connection with the scheme, including Defendants. The evidence presented at
Defendants’ trials supports the following timeline of events.
In October 2011, Defendant Westine completed a 235-month sentence following his
conviction for securities fraud, whereupon he returned to his home in California. The crime that
led to this prior term of imprisonment involved the sale of fraudulent Kentucky oil and gas
interests as well as non-existent shares of crude oil from Saudi Arabia. Investors knew Westine
by his aliases, John Scott and Michael Fairchild. Westine operated through a company he called
TriState Development, and he hired a sales team that worked out of a Los Angeles call center.
Less than a year after Westine was released from prison, he began offering investments in
Kentucky oil wells through three companies: Liberty Oil Leasing, Three Star Leasing, and
Clementsville Oil & Gas Leasing. The companies published promotional materials claiming that
their wells were currently producing oil and would generate a steady stream of royalty payments.
These promotional materials highlighted the leadership of “John Scott,” a “long-time oil and gas
operator” (R. 357 at PageID #3415), and the companies rented virtual office space in Kentucky
under the names Michael Fairchild and Michael Ross. Prospective investors were promised that
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they would receive their “[f]irst monthly check within 90 days.” (R. 357 at PageID #3414.) The
government refers to the operations of these three companies as “Phase I” of the fraud.
When investors never received royalty checks from the Phase I companies, they began
filing complaints with the Kentucky Department of Financial Institutions (“DFI”). DFI
investigators concluded that the companies were selling unlawful securities. DFI’s investigation
culminated in the issuance of a restraining order that, among other things, prohibited the
individuals affiliated with the companies from “making offers to sell and selling interests in oil
and gas programs.” (GEX 57 at 2.)
By this point, Defendant Westine had recruited Defendant Ramer as a partner in his
scheme. Together, Defendants began winding down the Phase I companies’ operations and
transitioning them to three new companies—the start of what the government calls “Phase II.”
Over the course of the following year, Royal Leasing of Tennessee, Royal Energy of Tennessee,
and Royal Energy LLC collected over $2 million from 138 investors. When these investors
complained about not receiving royalty payments, “Michael Ross” reassured them, blaming
“freakish weather” for delays, telling them he had multiple wells generating 15–20 barrels of oil
per day, and promising that checks were forthcoming. (R. 358 at PageID #3934–35, 3948,
3990.) But none of this was true, and investors never received the promised checks.
Meanwhile, Defendant Ramer recruited new investors and persuaded existing investors to
double down, sometimes even after they complained. To find new recruits, he oversaw two call
centers in California and developed a promotional video that boasted a fictional production
capacity of 75 barrels per day. Ramer helped Westine keep track of his many aliases, tutoring
him on which identity to use during at least one meeting with Ramer’s call center sales staff. For
existing investors, Ramer organized a trip so that they could “see[] the oil wells” and “smell[] the
oil.” (R. 358 at PageID #3945–46; R. 473 at PageID #6005; R. 474 at PageID #6203.) On this
trip, Ramer introduced investors to a third co-conspirator, Mark Cornell, who provided a tour of
his JMack Energy oil facility. In reality, this facility was capable of producing only a small
amount of oil—nowhere near 75 barrels per day—but it served to create an appearance of
legitimacy. During the tour, Cornell even gave the investors jars of oil, purportedly produced by
JMack Energy.
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Not all the investors were placated. In mid-2014, investor complaints again started to
weigh on Defendants. Defendants began to wind down the Phase II companies and to shift
operations to a new company called Marathon Leasing. Defendant Ramer also proposed that
they form a company called Midwest Leasing “so . . . there will not be a link to Marathon or
Royal.” (GEX 501; see R.476 at PageID #6753–54.) During a period of less than two months,
which prosecutors referred to as “Phase III,” Defendants collected $242,233 from twelve
investors. But before Defendants could fully transition from Phase II to Phase III, prosecutors
had Defendant Westine arrested. Upon learning of the arrest, Defendant Ramer directed his
associates to “take [out] as much money” as possible from the corporate accounts and send it to
him. (R. 356 at PageID #3277; R. 237 at Page ID #1301–02; GEX 371 (audio recording); R.450
at PageID #5507.) Ramer’s arrest followed shortly thereafter.
Procedural History
On October 9, 2014, the government indicted two individuals in connection with the
scheme, including Defendant Westine. A superseding indictment named additional individuals,
including Defendant Ramer. The superseding indictment charged Defendants with 29 counts of
mail fraud, in violation of 18 U.S.C. § 1341; conspiracy to commit money laundering, in
violation of 18 U.S.C. § 1956(h); securities fraud, in violation of 15 U.S.C. § 78j(b) and
17 C.F.R. § 240.10b-5; and three forfeiture allegations.
Defendants were tried separately. The government presented overwhelming evidence
implicating both Defendants in the scheme, including extensive testimony from oil and gas
experts, victims, co-conspirators, and federal investigators. At the conclusion of each trial, a jury
found each Defendant guilty of multiple counts of mail fraud, conspiracy to commit money
laundering, and securities fraud. The district court sentenced Defendant Westine to 480 months’
imprisonment and Defendant Ramer to 156 months’ imprisonment.
The government also obtained a conviction for co-conspirator Mark Cornell. In
connection with Cornell’s sentencing, which took place after Defendants’ sentencing, the
government submitted evidence that Cornell had conducted a separate criminal securities fraud
scheme. The government described a “side deal” that resembled the one for which Cornell,
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Westine, and Ramer were indicted, but which Cornell conducted on his own. (R. 496 at PageID
#7352–57.) An independent team of state investigators discovered Cornell’s scheme based on a
web page he created to recruit investors.
On September 3, 2015, Ramer filed a Motion for New Trial “pursuant to Brady v.
Maryland evidence or, in the alternative, newly discovered evidence pursuant to F.R.C.P. 33.”
(R. 388 at l.) Westine, who represented himself through the trial, filed several motions that the
district court construed as also requesting a new trial. The district court concluded that neither
Defendant was entitled to a new trial and denied their motions.
Defendants then filed timely appeals, raising numerous challenges to the trial
proceedings. We address each of their challenges in turn.
DISCUSSION
I. PRIOR ACTS EVIDENCE
The government’s theory of mail fraud involved allegations that both Defendants failed
to disclose material facts to prospective investors, including that Defendant Westine had been
convicted in 1992 for “conducting essentially the same oil production scam” and that Defendant
Ramer was “the subject[] of state regulatory cease and desist orders for selling unregistered
securities.” (R. 51 at PageID #217–18.) The district court permitted the introduction of prior
acts evidence showing that Defendant Westine had indeed been convicted for the fraudulent sale
of oil and gas interests. The court also permitted the jury to learn of regulatory actions in
California and Arizona that directed Defendant Ramer to cease and desist the sale of unregistered
securities.
The government also alleged that Defendants made affirmative misrepresentations to
investors regarding the production capacity of their oil wells and the corresponding returns on
investment. In their defense, Defendants largely focused on the knowledge and intent elements
of mail fraud; they asserted that they were not sophisticated enough to recognize or understand
that the representations they made to investors were false or misleading. Westine also disputed
that he used aliases such as Michael Fairchild and John Scott. In response to these defenses, and
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over Defendants’ objections, the district court permitted the government to introduce additional
details regarding Defendant Westine’s previous fraud conviction (such as his use of the aliases
Michael Fairchild and John Scott) as well as the California cease and desist letter directed to
Defendant Ramer. Defendants now argue that all prior acts evidence should have been excluded.
This court reviews evidentiary rulings for abuse of discretion. United States v. White,
492 F.3d 380, 398 (6th Cir. 2007); see United States v. Churn, 800 F.3d 768, 774–80 (6th Cir.
2015). Pursuant to Rule 404(b), “a court may admit evidence of a defendant’s ‘other’ or
‘similar’ bad acts or crimes only if the evidence is probative of a relevant fact, and not to show
the defendant’s ‘character’ or ‘propensity’ to commit bad acts.” United States v. Mack, 258 F.3d
548, 552–53 (6th Cir. 2001) (quoting United States v. Clemis, 11 F.3d 597, 600 (6th Cir. 1993)).
Relevant facts include “motive, opportunity, intent, preparation, plan, knowledge, identity,
absence of mistake, or lack of accident.” Fed. R. Evid. 404(b)(2). “To admit evidence under
Rule 404(b), the trial court must follow three steps: (1) make a preliminary determination that
enough evidence exists that the prior act actually occurred; (2) determine whether the other acts
evidence is being offered for a proper purpose under Rule 404(b); and (3) determine whether the
other acts evidence is more prejudicial than probative under Federal Rule of Evidence 403.”
United States v. Thompson, 690 F. App’x 302, 307 (6th Cir. 2017). Rule 403 states, “[t]he court
may exclude relevant evidence if its probative value is substantially outweighed by a danger of
one or more of the following: unfair prejudice, confusing the issues, misleading the jury, undue
delay, wasting time, or needlessly presenting cumulative evidence.” Fed. R. Evid. 403.
Defendants argue that the prior acts evidence was improperly offered to suggest a
propensity for wrongdoing. But the record shows that the evidence was offered for a number of
proper purposes. One such purpose was to prove Defendants’ knowledge. To prove mail fraud,
the government needed to show that “the scheme included a material misrepresentation or
concealment of a material fact.” Sixth Circuit Pattern Jury Instructions, 10.01 Mail Fraud
(18 U.S.C. § 1341). The government alleged that Defendants concealed their prior conduct from
investors and that the investors would have chosen not to invest if they had known the full truth.
Because the facts of Defendants’ prior conduct were the same facts that Defendants were alleged
to have concealed from investors, the facts were relevant for purposes of Rule 404(b).
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“A contrary ruling would place the government in the thoroughly untenable position of
attempting to prove that [the defendants] failed to disclose material facts without allowing the
government to demonstrate the existence of those facts.” United States v. Monea, 129 F.3d
1266, 1997 WL 704935, at *2 (6th Cir. 1997) (per curiam) (unpublished).
Another proper purpose was to prove Defendants’ intent. Defendants argued that they
were merely “acting as part of the company” and that other individuals “made false promises that
duped everyone.” (Def. W. Br. 16; see Def. R. Br. 38.) The details of Defendants’ prior acts
evidence tended to prove that they were not so naive. Defendant Westine previously
orchestrated a scheme selling fake oil and gas securities under a fake identity, and Defendant
Ramer had previously been sanctioned in California for, as he describes it, “contact[ing]
investors by telephone about purchasing fractional interests in oil and gas leases, which the
California Department of Corporations (DCOC) deemed unregistered securities.” (Def. R. Br.
37.) Defendants both knew about this information, and their deliberate effort to conceal it from
investors severely undermines their credibility in telling the jury that they were just as surprised
as their investors were to learn that the securities they sold were fraudulent.
Furthermore, the evidence was admissible for the proper purpose of proving Defendant
Westine’s identity. Evidence of prior acts is admissible for the purpose of proving identity when
the act is so “unusual or distinctive as to be like a signature.” United States v. Woods, 613 F.2d
629, 634–35 (6th Cir. 1980). The details of Westine’s prior conviction show that he used the
same aliases (John Scott and Michael Fairchild) and nearly the same techniques (fake companies,
virtual offices, and California-based call centers) when perpetrating his previous fraud. These
aliases and techniques are sufficiently distinctive to qualify as Westine’s “signature” for
purposes of Rule 404(b).
Nevertheless, Defendants also argue that the evidence should have been excluded as
unfairly prejudicial. Given the many proper purposes for which the prior acts evidence was
admissible and highly probative, Defendants face a heavy burden to show, as they must, that the
probative value of the evidence was substantially outweighed by the risk of unfair prejudice. See
Fed. R. Evid. 403. Defendants’ argument falls short. Defendants assert that the government
repeatedly showcased the prior acts evidence and encouraged the jury to consider it as propensity
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evidence when it asked witnesses questions along the following lines: “If you had known Henry
Ramer had been sanctioned in California and Arizona for selling unregistered securities, would
you have invested?” (Def. R. Br. at 30; see Def. W. Br. at 17–18.) But these questions merely
demonstrate the significance of Defendants’ omissions to their investors and, by extension, the
relevance of Defendants’ prior acts. Although admission of the prior acts evidence carried some
risk of unfair prejudice, this risk was not amplified by the cited government conduct.
The district court also recognized a risk that jurors might consider the evidence for an
improper purpose, and it abated this risk by instructing both juries to consider Defendants’ prior
acts only if the jurors “find the defendant did commit those [prior acts]” and only “as it relates to
the government’s claim on the defendant’s intent, knowledge, identity, absence of mistake, or
lack of accident.” (R. 195 at PageID #956; R. 306 at PageID #2854.) The district court
concluded that the probative value of this evidence, combined with its jury instruction, was
sufficient to satisfy Rule 404(b),1 and we are not persuaded that the district court abused its
discretion in reaching this conclusion.
II. NEW TRIAL MOTIONS
Both Defendants appeal based on information that came to light during the sentencing of
their co-conspirator Mark Cornell. Cornell was charged in connection with the same oil
securities scheme for which Defendants were also charged. Cornell pleaded guilty, cooperated
with the government’s investigation, and agreed to testify against Defendants at trial. Cornell’s
initial testimony downplayed his role in the scheme, potentially to the point of perjury. Cornell
initially testified that he was unaware of the fraud and that he merely served as Defendants’
unwitting agent. After his examination, the government obtained evidence that Cornell had
knowingly embraced an active role in the scheme. The government put Cornell back on the
stand, treated him as a hostile witness, and obtained an admission that he had lied about his true
level of involvement.
1
The district court also concluded that the prior acts evidence was admissible at least in part as res gestae.
Because we conclude that the evidence was admissible under Rule 404(b), we need not examine its admissibility as
res gestae.
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What the jury did not know—and what the government later disclosed during Cornell’s
sentencing—is that DFI was building a separate file on Cornell as the government’s case
unfolded. Cornell was operating a “little side deal”—essentially a smaller scale carbon copy of
the oil securities scam that he operated with Defendants. (R. 497.) Indeed, Cornell had been
using many of the same techniques and the same false documentation he used with Defendants,
but he did so through his own company, JMack Energy. DFI’s investigation of Cornell was
conducted by an independent team of civil investigators. By the time of Defendant Westine’s
trial, these investigators had issued a cease-and-desist letter to Cornell regarding a web page that
marketed unregistered securities. Whether the investigators at this point understood the interplay
between this web page, the criminal investigation of Defendants, and Cornell’s side deal is
unclear, but the investigators knew enough to make the cease-and-desist letter available to the
criminal division; the government turned the letter over to Defendant Westine as Brady material.
See Brady v. Maryland, 373 U.S. 83, 87 (1963). By the time of Defendant Ramer’s trial, which
was four months later, civil investigators had received a complaint from an additional Cornell
investor and pieced together that Cornell was running “some side deals.” (R. 497 at PageID
#7454.)
Both Defendants request a new trial under Rule 33, arguing that the Cornell file
constitutes newly discovered evidence. Defendant Westine argues in the alternative that the
Cornell file is Brady material that the government suppressed. This Court “review[s] the denial
of a motion for new trial based on Brady violations or newly discovered evidence under an abuse
of discretion standard.” United States v. Jones, 399 F.3d 640, 647 (6th Cir. 2005); United States
v. Barlow, 693 F.2d 954, 966 (6th Cir. 1982). “However, the district court’s determination as to
the existence of a Brady violation is reviewed de novo.” United States v. Graham, 484 F.3d 413,
416–17 (6th Cir. 2007).
To successfully obtain a new trial under either Rule 33 of the Federal Rules of Criminal
Procedure or Brady, a criminal defendant must show that the undisclosed evidence would have
affected the outcome of the original trial or affected his sentence. Under Rule 33 specifically,
the defendant must show, among other things, that “the evidence . . . would likely produce an
acquittal if the case were retried.” Barlow, 693 F.2d at 966. Meanwhile, under the Brady
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standard, a defendant must show, among other things, that the evidence was “material” to his
conviction or sentence. See Strickler v. Greene, 527 U.S. 263, 281–82 (1999); Jones v. Bagley,
696 F.3d 475, 486 (6th Cir. 2012). Undisclosed evidence is material “if there is a reasonable
probability that, had the evidence been disclosed to the defense, the result of the proceeding
would have been different.” United States v. Bagley, 473 U.S. 667, 682 (1985). A “reasonable
probability” is a probability sufficient to undermine confidence in the outcome. United States v.
Hawkins, 969 F.2d 169, 175 (6th Cir. 1992). “The question is not whether the defendant would
more likely than not have received a different verdict with the evidence, but whether in its
absence he received a fair trial, understood as a trial resulting in a verdict worthy of confidence.”
Kyles v. Whitley, 514 U.S. 419, 434 (1995). The materiality inquiry involves weighing “the
value of the undisclosed evidence relative to the other evidence produced by the state.” Eakes v.
Sexton, 592 F. App’x 422, 427 (6th Cir. 2014). “[W]here the undisclosed evidence merely
furnishes an additional basis on which to challenge a witness whose credibility has already been
shown to be questionable or who is subject to extensive attack by reason of other evidence, the
undisclosed evidence may be cumulative, and hence not material.” Bales v. Bell, 788 F.3d 568,
574 (6th Cir. 2015) (alteration in original) (internal quotation marks omitted); see Byrd v.
Collins, 209 F.3d 486, 518 (6th Cir. 2000).
Neither Defendant has made the showing required for remand. With regard to Defendant
Westine, the district court found that the information from the civil division’s file on Cornell was
immaterial in light of overwhelming evidence of Westine’s guilt and because the information is
“plainly cumulative of the substantial evidence already establishing Cornell’s history of fraud
and deception.” (R. 472 at PageID #5725.) We agree.
The district court articulated its rationale and provided a concise summary of the
extensive inculpatory evidence presented to the jury regarding both Westine and Cornell:
Although Westine argues the “newly discovered evidence shows that Mark
Cornell had the intent to commit fraud,” he overlooks the fact that Cornell’s intent
to commit fraud was never in dispute. In his testimony at Westine’s trial, Cornell
expressly admitted that he had been indicted as a co-conspirator in the scheme,
that he intended to enter a guilty plea in the case, and that he had previously lied
to investigators about his involvement in the fraud. [R. 360 at 101-105.]
Moreover, the jury in Westine’s trial was aware of Cornell’s dishonesty not only
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as a result of his guilty plea, but also as a result of his false testimony at trial. The
United States severely impeached his testimony after discovering an email
exchange that flatly contradicted his previous statements on direct examination.
[R. 361 at 74-92.] As Westine himself emphasized in his closing argument,
“Mark Cornell pled guilty ... and he lied, and he lied, and he lied.” [R. 354 at 94.]
Placed alongside this existing evidence, any additional information undermining
Cornell’s credibility is immaterial. See Robinson v. Mills, 592 F.3d 730, 736
(6th Cir. 2010) (“Where the undisclosed evidence merely furnishes an additional
basis on which to challenge a witness whose credibility has already been shown to
be questionable or who is subject to extensive attack by reason of other evidence,
the undisclosed evidence may be cumulative, and hence not material.”). . . .
Additionally, when measuring the impact this evidence might have had on the
outcome of each Defendant’s trial, this Court must situate that information
beneath the weight of the evidence establishing the Defendants’ guilt. In the case
of both Westine and Ramer, the United States provided a sweeping and
exhaustive body of evidence demonstrating that both Defendants were guilty of
the crimes charged. Moreover, the majority of this evidence was wholly
independent of Cornell’s participation in the scheme. Although the evidence
adduced at trial is far too voluminous to recount in full, the following summary
provides a snapshot of the evidence available to the jury prior to the Defendants’
convictions.
At Westine’s trial, the United States introduced abundant evidence showing that
his fraudulent scheme commenced long before he ever met Cornell. Throughout
the time period identified by the United States as “Phase I,” Westine had no
association with Cornell. During this period, Westine assured prospective
investors that he had “dozens of wells” and announced a plan “to put 50 on line,”
yet made no attempt to describe the location of the wells or the ownership of the
purported leases. [R. 362 at 13.] Marni Gibson, an enforcement branch manager
at DFI, testified that, “[f]rom all appearances,” these 50 wells were “just made
up.” [R. 297 at 21.] In July 2013, Westine distributed a sales script to employees
in which he encouraged them to suggest the company had “been in business for
over 25 years” and that investors should expect to “receive [their] first royalty
check with[in) 60 days after filing.” [Id. at 22.] Also in July 2013, Westine sent
an email to a victim promising a “300 barrel a day target before November,”
despite the absence of any evidence indicating that such a target was remotely
reasonable. [Id. at 97.] By October 2013—the month in which Cornell provided
the production guarantee to investors—there were about “five pages of
investments that had nothing to do with the 75 barrel a day promise of
Mr. Cornell.” [R. 359 at 160.]
The jury also heard evidence that Westine failed to inform investors he had
recently served a 22-year prison sentence for devising a similar oil and gas
investment scheme. [R. 362 at 199.] In an effort to prevent victims from
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uncovering his criminal history, Westine used at least five aliases. [Id. at 204.]
He sent “email after email” to victims in which he variously identified himself as
John Scott, Michael Fairchild, Michael Ross, John Gorman, and Michael Hicks.
[Id. at 207-08.] When an employee in his virtual office discovered that his name
was John Westine, he fired her and replaced her with someone who was not yet
aware of his identity. [R. 354 at 96.] Some of the fake names used in this scheme
were the same names used in the previous oil and gas fraud for which Westine
served the 22-year prison term. [R. 362 at 207.] Relatedly, the prosecution also
demonstrated that Westine habitually “changed business locations when the heat
and the law came down on him,” and hid the existence of these business
operations from his parole officer. [Id. at 210-11.]
Most importantly, the jury heard evidence confirming that it was Westine, not
Cornell, who insisted on making the 75-barrel-a-day guarantee. [R. 361 at 74-92.]
During Cornell’s direct examination, the United States introduced an email
exchange between Cornell and Westine, then operating under the aliases of
Michael Fairchild and Michael Hicks. The emails showed that Cornell initially
promised only to “produce what is producible” in the operating agreement. [R.
361 at 80.] Westine responded by threatening to “do the [lease] through another
broker,” suggesting that he was “not content” with Cornell’s proposal. [Id. at 76.]
He later encouraged Cornell to “tighten up the contract.’’ [Id. at 80.] Westine
finally told Cornell that, if he were willing to make the 75-barrel-a-day guarantee,
he “might be willing to give [him] another shot.” [Id. at 91.] Cornell ultimately
agreed to provide the guarantee. [Id. at 92.] . . .
The foregoing evidence unmistakably supports the conclusion that Westine . . .
[was] guilty of the crimes charged, irrespective of Cornell’s contribution to the
conspiracy.
(Id. at 5725–31.)
Defendant Westine’s argument about the potential impact of the Cornell file ignores the
strength of the case against him. He insists that the evidence from the civil division was “more
than mere impeachment – it helped to prove the only defense raised . . . [and] would have been
useful and persuasive to the jury.” (Def. W. Br. 25.) Indeed, Defendant Westine’s only defense
at trial was that he was oblivious to a fraud that was designed and perpetrated by Cornell. Given
the extensive evidence against Westine—especially that he began engaging in the fraudulent
practices at issue “long before he ever met Cornell,” and that he did so under the same aliases he
had previously used in a similar scheme (with the exception of the new name Michael Ross)—
we cannot conclude that there is any “reasonable probability that, had the evidence been
Nos. 15-6014 /6402 /16-5356 United States v. Ramer, et al. Page 13
disclosed to the defense, the result of the proceeding would have been different.” See Bagley,
473 U.S. at 682.
Defendant Westine also argues that the government’s Brady obligation created a duty for
DFI’s criminal prosecutors to learn of the civil division’s file on Cornell. The government
disputes that it had such a duty, suggesting that DFI’s civil division fits the description of “other
government agencies that have no involvement in the investigation or prosecution at issue.”
See Goff v. Bagley, 601 F.3d 445, 476 (6th Cir. 2010). We need not reach this issue, however,
due to the immateriality of the evidence. Strickler, 527 U.S. at 281–82 (1999) (requiring proof
of all three elements to bring a successful Brady claim).
Finally, and somewhat puzzlingly, Defendant Westine also argues that the district court
improperly permitted the chief prosecutor in his case, AUSA Taylor, to act as both an advocate
and a witness at the post-trial evidentiary hearing on the Cornell file. However, Defendant
Westine waived this argument when, during the hearing, he “objected to any way of proceeding
in which [AUSA Taylor] d[id] not testify.” (R. 497 at PageID #7450–51.) Thus, Defendant
Westine has not shown that he is entitled to a new trial.
Defendant Ramer similarly asserts that the newly discovered evidence would allow him
to argue in a new trial that Cornell alone orchestrated the fraud. But the Cornell file is not likely
to produce an acquittal or otherwise affect Defendant Ramer’s proceedings because the evidence
of his culpability, like that of Westine’s culpability, is overwhelming. As the district court
summarized:
The United States presented . . . persuasive evidence at Ramer’s trial. Critically,
the jury read the same email exchange establishing that Westine, rather than
Cornell, insisted upon the 75-barrel-a-day guarantee. [TR: Ramer Trial Day 5 at
51.] Moreover, although Ramer did not himself use aliases, the United States
showed that Ramer was aware of both Westine’s fake names and his criminal
history, and facilitated the concealment of this information from the defrauded
investors. [R. 450 at 70, 78.] One witness testified, for example, that Ramer
referred to Westine as “Michael Ross” when he introduced the two. Further,
Ramer failed to disclose to investors that he had also been sanctioned in two states
for selling unregistered securities. [TR: Ramer Trial, Day 3 at 76.] Victims
testified that, had they been aware of these prior sanctions, they never would have
invested in the scheme. [See, e.g., id.]
Nos. 15-6014 /6402 /16-5356 United States v. Ramer, et al. Page 14
Because Ramer led the sales force promoting his and Westine’s fraudulent
project, the Government also introduced substantial evidence showing that Ramer
supervised the conspirators’ deceptive marketing of the non-producing wells.
Ramer appeared in videos distributed to victims in which he made demonstrably
false statements indicating that the business had been in operation for many years,
that he had a well-established relationship with the enlisted oil drillers, and that he
had thoroughly investigated the potential outputs of the oil wells. [R. 450 at 71 .]
Ramer claimed, for example, that Cornell and oil driller James Garmon were
longtime associates of his, despite having recently met the two on the internet.
[Id. at 73.] Further, the marketing materials provided to victims contained
deceptive surveys of the Illinois Mining Basin designed to look like geological
studies of the wells in which the victims had invested. Roberta Bottoms, an agent
of the United States Postal Inspection Service, testified that her investigation
revealed Ramer was “[a]bsolutely” involved in the editing of these brochures.
[TR: Ramer Trial, Day 5 at 39.]
The prosecution further showed the jury that, when victims began to suspect their
investments were worthless, Ramer assured them that profits were forthcoming.
[TR: Evidentiary Hearing at 118.] The jury heard “a long list of...witnesses that
came up and described their interaction with Henry Ramer, how when they
expressed doubt and concern that they weren’t getting their money, he lulled
them, he reassured them and sold them on new investments to get their money
back.” [Id.] The United States noted that Ramer made these representations with
full knowledge that “every other victim had lost their money.” [Id.]
In addition to deceiving investors, evidence also established that Ramer lied to
federal investigators. Bottoms testified that, following Westine’s indictment,
Ramer told her that he had called Hicks to inform him that they were “shutting
things down” and “couldn’t possibly keep things going after” learning
of Westine’s arrest. [TR: Ramer Trial, Day 5 at 24.] Recorded telephone
conversations, however, proved the content of Ramer’s conversation with Hicks
was the “exact opposite of what he told [her] in the interview.” [Id. at 25.]
Rather than encourage Hicks to shut down the fraudulent operation, Ramer
instead told him to “go to the bank, get all the money, [and] mail it to [him] by
3:00.” [Id.] Ramer further declared “that they had to stay up and running, that he
was in control, and they had to . . . put the money in (a different bank] account.”
[Id. at 24.]
Nos. 15-6014 /6402 /16-5356 United States v. Ramer, et al. Page 15
The foregoing evidence unmistakably supports the conclusion that . . . Ramer
w[as] guilty of the crimes charged, irrespective of Cornell’s contribution to the
conspiracy.
(R. 472 at PageID #5729–31.)
In light of this evidence against Defendant Ramer, the evidence that Mark Cornell was
running a side deal is insufficient to warrant remand.
III. HEARSAY CHALLENGES
Defendant Westine argues that the following evidence introduced at trial was
inadmissible hearsay:
(1) A document received in Defendants’ virtual office in Kentucky and forwarded
to Defendants in California, as read into the record by Defendants’ Kentucky
office administrator;
(2) Email correspondence between employees of a Phase II company questioning
the company’s legitimacy, as read into the record by a DFI investigator;
(3) Testimony of a Phase II company employee regarding angry statements made
by investors;
(4) Prospectus issued by a Phase II company, as read into the record by a
company employee;
(5) A Better Business Bureau complaint against a Phase II company and the
company’s response thereto, as read into the record by a company employee;
(6) Testimony by an accountant hired during Phase I regarding an interaction with
a bank employee in which the accountant learned that a bank account she
believed belonged to the company actually belonged to an individual named
John Westine; and
(7) Testimony of a DFI investigator regarding his research demonstrating that
company websites were created and owned by John Westine.
Complicating his appeal, however, is the fact that Defendant Westine did not object to
any of the alleged hearsay at trial. In fact, he elicited one of the challenged statements himself
while cross-examining a witness.
When a party does not object at trial, this Court reviews hearsay objections for plain
error. United States v. Lopez-Medina, 461 F.3d 724, 746 (6th Cir. 2006); see United States v.
Olano, 507 U.S. 725, 731 (1993). Under the plain error standard, this Court has discretion to
Nos. 15-6014 /6402 /16-5356 United States v. Ramer, et al. Page 16
remedy an error, but only upon a showing that the error is “clear or obvious, affect[s] a
defendant’s substantial rights, and seriously affect[s] the fairness, integrity or public reputation
of judicial proceedings.” Lopez-Medina, 461 F.3d at 746; see Olano, 507 U.S. at 736. The
defendant has the burden of persuasion, and “[i]n most cases, a court of appeals cannot correct
the forfeited error unless the defendant shows that the error was prejudicial.” Olano, 507 U.S. at
734.
Defendant Westine fails to show any prejudice arising from the alleged hearsay. In lieu
of argumentation on this point, Defendant Westine merely states the following:
When viewing each of these statements individually, their effect on the trial may
have been slight. However, taken together, the cumulative effect of the erroneous
admission of this evidence denied Westine a fair trial. “Errors that might not be
so prejudicial as to amount to a deprivation of due process when considered
alone . . . may cumulatively produce a trial setting that is fundamentally unfair.”
United States v. Robinson, 357 Fed. App’x 677, 688 (6th Cir. 2009). For these
reasons, Westine’s convictions must be vacated.
(Def. W. Br. at 30.) This conclusory statement is unilluminating. Nor is there any obvious
reason to presume prejudice in the context of this trial, especially given that Defendant Westine
elicited one of the challenged statements himself while conducting his cross-examination.
See United States v. Hanna, 661 F.3d 271, 293 (6th Cir. 2011) (holding that an invited error does
not warrant reversal); United States v. Tandon, 111 F.3d 482, 489 (6th Cir. 1997) (explaining
that “an error introduced by the complaining party will cause reversal only in the most
exceptional situation” (internal quotation marks and citation omitted)). We therefore find that
the introduction of the challenged evidence did not deny Defendant Westine the right to a fair
trial.
IV. BANK RECORDS
Defendant Ramer argues that Government Exhibits 271–87 and 291–94 were
inadmissible hearsay and that the district court erred when it permitted the exhibits to be
introduced pursuant to the hearsay exception for business records: Rule 803(6) of the Federal
Rules of Evidence. The exhibits at issue are records of corporate bank accounts that were
Nos. 15-6014 /6402 /16-5356 United States v. Ramer, et al. Page 17
managed by Defendants Ramer and Westine.2 We find Defendant Ramer’s argument
unpersuasive.
The parties disagree as to whether admissibility decisions made by the district court
pursuant to Rule 803(6) of the Federal Rules of Evidence are reviewed de novo or for abuse of
discretion. In United States v. Collins, 799 F.3d 554, 582 (6th Cir. 2015), this Court noted a
“discrepancy” in its rulings on that subject but concluded that it “need not resolve this
discrepancy since Defendants’ challenge fails under either standard of review.” We arrive at the
same conclusion in this case.
Rule 803(6) permits business records to be admitted into evidence despite the normal bar
against the introduction of hearsay as long as four requirements are met: (1) the records were
“created in the course of a regularly conducted business activity;” (2) the records were “kept in
the regular course of that business;” (3) the records resulted from a “regular practice of that
business” to create such documents; and (4) the records were “created by a person with
knowledge of the transaction or from information transmitted by a person with knowledge.”
Yoder & Frey Auctioneers, Inc. v. EquipmentFacts, LLC, 774 F.3d 1065, 1071–72 (6th Cir.
2014); Fed. R. Evid. 803(6). The fulfillment of these conditions must be “shown by the
testimony of the custodian or another qualified witness, or by a certification that complies with
Rule 902(11) or (12) or with a statute permitting certification.” Fed. R. Evid. 803(6)(D). Once
these conditions have been shown to be satisfied, another party may challenge the veracity of the
business records by showing “that the source of information or the method or circumstances of
preparation indicate a lack of trustworthiness.” Fed. R. Evid. 803(6)(E).
Defendant Ramer’s argument is foreclosed by the logic of this Court’s ruling in United
States v. Coffman, 574 F. App’x 541, 556 (6th Cir. 2014). In that case, we affirmed the
introduction of similar bank records and bank record summaries, explaining that qualified
investigators can authenticate such documents:
2
Exhibits 271–87 are the bank records themselves, and Exhibits 291–94 are summaries of those records.
Defendant Ramer’s challenge under Rule 803(6) applies to both sets of exhibits because the summary evidence
(Exhibits 291–94) is admissible only if the underlying bank records (Exhibits 271–87) are admissible. See Fed.
R. Evid. 1006; Auto Indus. Supplier Emp. Stock Ownership Plan v. Ford Motor Co., 435 F. App’x 430, 448 (6th Cir.
2011).
Nos. 15-6014 /6402 /16-5356 United States v. Ramer, et al. Page 18
[The defendant] argues that the district court erred when it admitted thousands of
pages of bank records documenting [the defendant]’s money transfers because
they were not properly authenticated under Federal Rule of Evidence 803(6).
At trial, Government witnesses testified that they used the bank records to create
consolidated charts and documents outlining the flow of money into and out of
Mid-America and Global bank accounts. . . .
Business records may be admissible if the records are properly authenticated.
Fed.R.Evid. 803(6). . . . [D]ocuments may be authenticated . . . using a “custodian
or other qualified witness.” Fed.R.Evid. 803(6)(D). Regarding that provision, we
have said: “there is no reason why a proper foundation for application of
Rule 803(6) cannot be laid, in part or in whole, by the testimony of a government
agent or other person outside the organization whose records are sought to be
admitted. When a witness is used to lay the foundation for admitting records
under Rule 803(6), all that is required is that the witness be familiar with the
record keeping system.”
Witnesses, including Assistant United States Attorney Lisa Hasday and Ryan Lee,
a United States Postal Service analyst, testified to the authenticity of the records.
Hasday testified that using account numbers from investors’ deposited checks, she
subpoenaed bank records for a given time period. This testimony evinces a
familiarity with the record keeping system of the banks. Lee’s testimony
described the process for obtaining those bank records, demonstrating that he was
familiar with the record keeping system of the banks. And the admitted
documents had the appearance of bank records, and some of them contained
Coffman’s name and signature. The district court did not abuse its discretion in
admitting the bank records.
Id. (citing United States v. Hathaway, 798 F.2d 902, 906 (6th Cir. 1986)).
In this case, DFI witness Gibson was qualified to authenticate the bank records because
she demonstrated a similar familiarity with bank recordkeeping systems. Gibson explained a
painstaking process by which she examined investors’ checks, drafted subpoenas to obtain bank
records associated with those checks, identified the accounts used by Defendants, issued more
subpoenas, and repeated the process until she thought she had “built the entire picture.” (See
R. 475 at PageID #6374–77.) Gibson further explained that she worked to compile Government
Exhibits 271–87 and 291–94, challenged here, which together depict an enterprise spanning
more than 20 different bank accounts and millions of dollars of contributions from hundreds of
unique investors. Gibson had a strong understanding of the records at issue and was a qualified
Nos. 15-6014 /6402 /16-5356 United States v. Ramer, et al. Page 19
witness for purposes of Rule 803(6). She also provided a sufficient description of the
recordkeeping process to properly authenticate the evidence for trial.
Defendant Ramer challenges Gibson’s qualification because she is a “non-bank
employee.” (Def. R. Br. 17.) In other words, Defendant Ramer suggests that the government
was required to lay a foundation for the bank records by obtaining sworn testimony from an
employee of each bank involved with Defendants’ sprawling network of accounts. This Court
has not previously found that Rule 803 imposes such a burden on prosecutors or on the trial
court; indeed, “all that is required is that the witness be familiar with the record keeping system.”
Coffman, 574 F. App’x at 556 (citing Hathaway, 798 F.2d at 906) (emphasis added). Finding
that Gibson was qualified and further finding no basis to question the trustworthiness of the bank
records, we conclude that the district court did not err or abuse its discretion in its evidentiary
determination.
V. EXPERT TESTIMONY
Defendant Ramer argues that the district court erred by admitting the expert testimony of
Marvin Combs. Although Defendant Ramer objected at trial to Combs’ testimony, he did not
specifically object on the ground raised in this appeal. Below, his objections were that
(1) Combs was not qualified to serve as an expert due to insufficient education and experience,
and (2) that Combs’ “testimony is not relevant to the instant prosecution.” (R. 273 at PageID
#2295.) His current argument is that the production reports supporting Combs’ testimony were
unreliable because they were self-reported by individual oil well operators in Kentucky.
In preparation for trial, Defendant Ramer did not challenge the self-reported nature of the
production reports. To the contrary, he stated the following:
I think if the court determines the witness is qualified by education and
experience and the court determines it’s relevant, . . . I think he can comment on
his belief as to the veracity or the propriety of the representations that the
operator was making. But I think to carry it one step further and go through
analysis in carrying the pro forma with the representations, that’s argument for
counsel, that’s not for the person from the Division -- he doesn’t do that.
(R. 450 at PageID #5360–61 (emphasis added).) Defendant Ramer therefore forfeited this
argument. See United States v. Murphy, 241 F.3d 447, 451 (6th Cir. 2001) (holding that
Nos. 15-6014 /6402 /16-5356 United States v. Ramer, et al. Page 20
defendant forfeited argument on appeal by failing to raise argument with specificity); United
States v. Buchanon, 72 F.3d 1217, 1226–27 (6th Cir. 1995) (same).
Because Defendant Ramer forfeited this argument below, this Court’s review is limited to
the plain error standard. See United States v. Reed, 167 F.3d 984, 988–89 (6th Cir. 1999) (“The
‘plain error’ rule also applies to a case, such as this, in which a party objects to [an evidentiary
determination] on specific grounds in the trial court, but on appeal the party asserts new grounds
challenging [that determination].” (quoting United States v. Evans, 883 F.2d 496, 499 (6th Cir.
1989)) (alterations in original)).
Properly qualified expert testimony is admissible where it is “based on sufficient facts or
data.” Fed. R. Evid. 702(b). “An expert may base an opinion on facts or data in the case that the
expert has been made aware of or personally observed.” Fed. R. Evid. 703. “Where an expert's
testimony amounts to ‘mere guess or speculation,’ the court should exclude his testimony, but
where the opinion has a reasonable factual basis, it should not be excluded.” United States v.
L.E. Cooke Co., 991 F.2d 336, 342 (6th Cir. 1993). Rather, the testimony should be admitted,
and any remaining challenges merely go to the weight, as opposed to the admissibility, of the
expert testimony. See In re Scrap Metal Antitrust Litig., 527 F.3d 517, 530 (6th Cir. 2008).
Defendant Ramer argues that Combs’ testimony should have been excluded because self-
reported data reports are inherently unreliable. He argues:
By Combs’ own admission, these production reports for wells in southcentral
Kentucky, as well as the oil wells involved with this case, are based upon
information provided by operators, not findings of [government] inspectors.
Furthermore, [the government] does not verify the information provided by these
operators whatsoever. Finally, the records only go back to the early 1990’s, and
the wells in question last operated in the 1980’s.
(Def. R. Br. at 22.)
We find no clear or obvious reason to treat expert testimony based on decades of self-
reported oil well production reports as “mere guess or speculation.” See L.E. Cooke Co.,
991 F.2d at 342 (explaining that admissible expert opinions often rely on some degree of
speculation). Combs’ testimony has a reasonable factual basis: decades of self-reported data
Nos. 15-6014 /6402 /16-5356 United States v. Ramer, et al. Page 21
from numerous sources, as well as Combs’ lengthy experience in the field. Defendant Ramer
suggests that the reports would be more reliable if they were compiled by government
“inspectors,” but he offers no evidence that such inspectors exist or that oil well production data
are unreliable in the absence of such inspectors. See Cooper v. Carl A. Nelson & Co., 211 F.3d
1008, 1020 (7th Cir. 2000) (explaining that “experts in various fields may rely properly on a
wide variety of sources and may employ a similarly wide choice of methodologies in developing
an expert opinion”). Gesturing to a theoretical source of better data is not enough to overcome
the deference owed to the district court’s judgment of the foundation for expert testimony,
particularly when reviewing for clear error. See Conwood Co., L.P. v. U.S. Tobacco Co.,
290 F.3d 768, 781 (6th Cir. 2002).
VI. PHASE I EVIDENCE
At trial, the parties disputed when exactly Defendant Ramer joined the criminal
enterprise that led to his indictment. The parties also disputed Defendant Ramer’s intent and
knowledge of the criminal nature of the enterprise. The parties referred to three distinct phases
of the enterprise, with each phase based on a different set of companies that were used to interact
with investors. Ultimately, the jury convicted Defendant Ramer on twenty-one out of twenty-six
counts of mail fraud, all of which corresponded to Phases II and III.
Defendant Ramer objected when the government attempted to introduce evidence
pertaining to Phase I. He argued that he was not involved at all during Phase I, asking, “[W]hy
are we talking about Phase I? Phase I . . . is June 2012 to September 2013. . . . Phase I took place
prior to Henry Ramer’s involvement.” (R. 450 at PageID #5364.) The government disagreed,
arguing that it would “have proof in this case that Mr. Ramer was involved in June of 2012.”
(R. 450 at PageID #5365.) The government’s theory was that Defendant Ramer was involved
from the beginning of Phase I and merely increased his presence during Phases II and III. The
government also argued that the Phase I evidence was necessary in order to explain that the
enterprise that Defendant Ramer joined—regardless of when he did so—was fraudulent. The
district court ruled for the government, permitting Phase I evidence to be introduced at
Defendant Ramer’s trial, and Ramer now appeals on the basis that this evidence was irrelevant
Nos. 15-6014 /6402 /16-5356 United States v. Ramer, et al. Page 22
and “presented with one purpose in mind, to taint the jury’s perception of Phase II & III.” (Def.
R. Br. 44.)
This Court reviews evidentiary rulings for abuse of discretion. White, 492 F.3d at 398.
Under the Federal Rules of Evidence, “irrelevant evidence is not admissible” at trial. Fed. R.
Evid. 402. “Evidence is relevant if: (a) it has any tendency to make a fact more or less probable
than it would be without the evidence; and (b) the fact is of consequence in determining the
action.” Fed. R. Evid. 401. “This Circuit applies an ‘extremely liberal’ standard for relevancy.”
Collins, 799 F.3d at 578 (quoting United States v. Whittington, 455 F.3d 736, 738 (6th Cir.
2006)).
The indictment alleged, among other things, that Defendant Ramer committed mail fraud
in violation of 18 U.S.C. § 1341 and conspired to commit money laundering in violation of
18 U.S.C. § 1956(h). The elements of a violation of 18 U.S.C. § 1341 are: “(1) a scheme or
artifice to defraud; (2) use of mails in furtherance of the scheme; and (3) intent to deprive a
victim of money or property.” United States v. Warshak, 631 F.3d 266, 310 (6th Cir. 2010).
Meanwhile, to prove a violation of 18 U.S.C. § 1956(h), the government needed to show that:
(1) two or more persons conspired to commit the crime of money laundering, and (2) the
defendant knowingly and voluntarily joined the conspiracy. United States v. Prince, 618 F.3d
551, 553–54 (6th Cir. 2010).
We find that the evidence of Phase I was relevant to the government’s efforts to prove
Defendant Ramer’s violations of 18 U.S.C. § 1341 during Phase I. The government attempted to
link Defendant Ramer to Phase I with evidence that he worked with two of the Phase I
companies. The government offered testimony from one witness who said that, beginning in
April 2013, one of Ramer’s associates solicited him for an investment in the Phase I company
Clementsville Oil and Gas. The government also offered testimony from an investor who said
that Defendant Ramer personally cold-called him in August 2013, asking him to invest $4,700 in
the Phase I company Three Star Leasing. The jury apparently concluded that this evidence was
insufficient to prove that Defendant Ramer was involved with Phase I beyond a reasonable
doubt. However, the Phase I evidence is not retroactively irrelevant merely because the jury
found it insufficient to support a guilty verdict.
Nos. 15-6014 /6402 /16-5356 United States v. Ramer, et al. Page 23
The Phase I evidence was also relevant to establishing the existence of a money
laundering conspiracy in violation of 18 U.S.C. § 1956(h). As Defendant Ramer admits, the
Phase I testimony included “significant exhibits . . . regarding how investor money moved” and
testimony from an accountant hired during Phase I to “receive[] and forward[] company
documentation and investor checks.” (Def. R. Br. 41.) Even if Defendant Ramer was not a
member of the money laundering conspiracy during Phase I, the government’s burden was to
show that he knowingly and voluntarily joined a conspiracy. See Prince, 618 F.3d at 553–54.
Evidence that a conspiracy existed for Defendant Ramer to join was therefore “of consequence”
to proving that he did, in fact, join the conspiracy. Ramer’s challenges to the Phase I evidence
have no merit.
VII. SUFFICIENCY OF THE EVIDENCE
Defendant Westine challenges the sufficiency of the evidence to support his conviction
for securities fraud (Counts 31–34) and for certain counts of mail fraud (Counts 2–5, 12, 15, and
16), raising several specific arguments. The government argues that Defendant Westine waived
these arguments below when he moved for judgment of acquittal under Rule 29. A Rule 29
motion typically need not include any specific grounds in order to preserve all sufficiency of the
evidence arguments for appeal. United States v. Dandy, 998 F.2d 1344, 1356–57 (6th Cir. 1993).
But when a Rule 29 motion does raise specific grounds for acquittal, “all grounds not specified
are waived.” Id.
Defendant Westine moved for judgment of acquittal pursuant to Rule 29 at the close of
the government’s case-in-chief, and he renewed his motion at the close of evidence. Westine’s
motion raised a general challenge to the sufficiency of the evidence. Significantly, however, his
motion also challenged venue.
The law of this Court is ambiguous as to whether a challenge to venue qualifies as a
specific challenge to the evidence such that all specific evidentiary arguments not raised are
waived. This Court examined a related issue in United States v. Zidell, 323 F.3d 412, 421 (6th
Cir. 2003). In that case, the question was whether a criminal defendant who sought to raise a
venue challenge on appeal had preserved the issue at trial by challenging the general sufficiency
Nos. 15-6014 /6402 /16-5356 United States v. Ramer, et al. Page 24
of the evidence in his Rule 29 motion. Id. at 421. We noted that “venue is not properly
considered a true ‘element’ of a criminal offense,” before reluctantly concluding that the
defendant’s venue challenge nevertheless had been preserved. Id.
Zidell could be read as a warning that criminal defendants who wish to preserve the issue
of venue and make a general challenge to the sufficiency of the evidence must raise venue at trial
alongside an otherwise general Rule 29 motion, as Defendant Westine did below. We find that
this outcome would be incorrect, however, and inconsistent with Zidell. We therefore hold that a
general challenge to the government’s proofs in a Rule 29 motion for judgment of acquittal
suffices to preserve the issue of venue. Conversely, a Rule 29 motion for judgment of acquittal
that specifically raises the issue of venue will not be construed as a general challenge to the
government’s proofs; such a motion will waive all other grounds not specified in the motion.
See Dandy, 998 F.2d at 1356–57 (6th Cir. 1993). Given the potential ambiguity in Defendant
Westine’s circumstances, we do not apply today’s holding retroactively, and we proceed to the
merits of Westine’s arguments.
This Court has explained that “[w]e review de novo the trial court's denial of a motion for
judgment of acquittal.” Zidell, 323 F.3d at 420. Further, “[w]e review sufficiency of the
evidence claims to determine whether any rational trier of fact could find the elements of the
crime beyond a reasonable doubt and, in doing so, we view[] the evidence in the light most
favorable to the prosecution, giving the government the benefit of all inferences that could
reasonably be drawn from the testimony.” White, 492 F.3d at 393 (alteration in original)
(internal punctuation marks omitted). “A defendant claiming insufficiency of the evidence bears
a very heavy burden.” United States v. Vannerson, 786 F.2d 221, 225 (6th Cir. 1986) (quoting
United States v. Soto, 716 F.2d 989, 991 (2d Cir. 1983)) (internal quotation marks omitted).
A. Securities Fraud (Counts 31–34)
Defendant Westine argues that he cannot be convicted for securities fraud pursuant to
15 U.S.C. § 78j(b) because the investments he sold do not qualify as “securities.” Contracts that
clearly fall within one of the statutory definitions of a security “are securities as a matter of law.”
Nolfi v. Ohio Kentucky Oil Corp., 675 F.3d 538, 546 (6th Cir. 2012). The statute applicable in
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this case defines the term security as including, among other things, “any . . . certificate of
interest or participation in any profit-sharing agreement or in any oil, gas, or other mineral
royalty or lease.” 15 U.S.C. § 78c(a)(10).
Defendant Westine argues that the contracts at issue do not fall within the definition of a
“security” because they are “net royalty lease[s].” (Def. W. Br. 33.) He attempts to support this
argument by reference to the Supreme Court’s analysis in SEC v. W.J. Howey Co., 328 U.S. 293
(1946). But the test from Howey applies only to contracts that do not clearly qualify as securities
by statute. See Nolfi, 675 F.3d at 546. In this case, the “net royalty lease[s]” clearly qualify as
securities under the Act because they are “certificates of interest or participation” in “any oil . . .
royalty or lease.” See 15 U.S.C. § 78c(a)(10). Thus, the Howey test is inapplicable, and
Defendant Westine’s argument fails. See id.
Defendant Westine also seems to argue that the contracts do not qualify as securities
because the contracts themselves state that they are exempt from the Securities Act of 1933 as
“working interest[s]” (rather than royalty interests) in the oil venture. (Def. W. Br. 33–34.) We
decline to reach this issue, however, because Defendant Westine has not explained why a “net
royalty lease” should be construed as creating a working interest as opposed to a royalty interest.
See United States v. Elder, 90 F.3d 1110, 1118 (6th Cir. 1996) (“[I]ssues adverted to in a
perfunctory manner, unaccompanied by some effort at developed argumentation, are deemed
waived.”). And in any case, Defendant Westine’s argument is inconsequential because working
interests fall within the statutory category of “any interest or participation in any profit-sharing
agreement” in any “royalty or lease.” 15 U.S.C. § 78c(a)(10) (emphases added); see Nolfi,
675 F.3d at 546 (treating contracts “analogous to . . . working interest[s] in oil” as “securities as a
matter of law”).
B. Mail Fraud (Counts 2–5, 12, 15, and 16)
Defendant Westine challenges certain counts of his mail fraud conviction on the basis
that the mailings associated with the charges were not themselves unlawful. Mail fraud “consists
of (1) a scheme or artifice to defraud; (2) use of mails in furtherance of the scheme; and
(3) intent to deprive a victim of money or property.” Warshak, 631 F.3d at 310. A “defendant
may commit mail fraud even if he personally has not used the mails.” United States v. Frost,
Nos. 15-6014 /6402 /16-5356 United States v. Ramer, et al. Page 26
125 F.3d 346, 354 (6th Cir. 1997). “A mail fraud conviction requires only a showing that the
defendant acted with knowledge that use of the mails would follow in the ordinary course of
business, or that a reasonable person would have foreseen use of the mails.” Id. Moreover, “[i]t
is sufficient for the mailing to be incident to an essential part of the scheme, or a step in the plot.”
Warshak, 631 F.3d at 311 (quoting Schmuck v. United States, 489 U.S. 705, 710–11 (1989)).
Defendant Westine argues that the mailings giving rise to Counts 2–5, 12, 15, and 16
were “legitimate business acts, taken not on behalf of Westine, but of Cornell and JMACK.”
(Def. W. Br. 35–36.) For example, he explains, “Count 2 relates to a letter written from the
Commonwealth of Kentucky to JMACK Energy regarding fixing certain well problems.” (Id. at
35.) The other challenged counts similarly involve JMack Energy’s correspondence with the
government regarding its legitimate oil operations.
This argument is unavailing. A mailing need not be unlawful when viewed in isolation in
order to be made “in furtherance of the scheme;” to the contrary, mailings that advance
fraudulent schemes will often appear to be quite legitimate. See, e.g., Warshak, 631 F.3d at 311
(holding that shipments of herbal supplements that were ordered by customers were nevertheless
made in furtherance of fraud because defendants generated the orders by deception). And even if
Defendant Westine himself did not conduct the mailings at issue, a jury could reasonably
conclude that JMack Energy’s governmental correspondence would “follow in the ordinary
course of business” from the scheme in which he partook. Frost, 125 F.3d at 354. Indeed, a jury
would need to look no further than Defendant Westine’s repeated efforts to reassure investors by
reference to JMack Energy’s legitimate operations—efforts that culminated in a trip to observe
JMack Energy’s production facility. Defendant Westine’s sufficiency of the evidence challenges
are without merit.
VIII. SENTENCING CALCULATIONS
Defendants challenge their sentences on numerous grounds. This Court reviews the
sentencing court’s factual findings for clear error. United States v. Kennedy, 714 F.3d 951, 957
(6th Cir. 2013); United States v. Hamilton, 263 F.3d 645, 651 (6th Cir. 2001). But “whether
those facts as determined by the district court warrant the application of a particular guideline
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provision is purely a legal question and is reviewed de novo by this court.” United States v.
Triana, 468 F.3d 308, 321 (6th Cir. 2006) (internal quotation marks omitted). With regard to
arguments not raised at sentencing, however, this Court reviews the application of a particular
provision for plain error as long as the district court concluded the sentencing proceedings, as it
did in this case for both Defendants, by asking the Bostic question. See United States v. Vonner,
516 F.3d 382, 385 (6th Cir. 2008).
A. Violation of Prior Judicial Order
Both Defendants challenge the district court’s decision to apply a two-level sentencing
enhancement under USSG §2B1.1(b)(9)(C), which provides for such an enhancement when the
offense involved a “violation of any prior, specific judicial or administrative order, injunction,
decree, or process not addressed elsewhere in the guidelines.”
The district court’s factual findings on this matter are not clearly erroneous. The court
found that “the offense involved the violation of a prior temporary restraining order [“TRO”]
issued against Three Star Leasing.” (R. 538 at PageID #7894.) The prosecution introduced the
TRO at trial as Exhibit 57. The TRO prohibited “any person acting in active concert or
participation with . . . these companies [Clementsville Oil and Gas Leasing, Liberty Oil Leasing,
and Three Star Leasing]” from “making offers to sell and selling” various oil and gas interests.
(GEX 57 at 2.) As to Defendant Westine, the district court found that the TRO prohibited him
from “advertising on the Internet” and “raising money in connection with the scheme." (R. 538
at PageID #7897–98.) The district court also found that Defendant Westine ignored the TRO.
These findings are consistent with the record.
Defendant Westine argues that the TRO does not qualify as a “prior” judicial order under
§2B1.1(b)(9)(C). His logic is that the TRO is not “prior” because it was issued in connection
with the charged conduct and did not precede it. We disagree. The commentary to
§2B1.1(b)(9)(C) explains that a defendant “deserves additional punishment” if he “does not
comply” with a judicial order because such noncompliance demonstrates his “aggravated
criminal intent.” USSG §2B1.1, comment (n.8(C)). The district court’s application of this
enhancement was based on precisely the type of “aggravated criminal intent” described in the
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commentary: Defendant Westine continued to operate a fraudulent scheme despite an injunction
ordering its immediate termination. Accordingly, we affirm the district court’s interpretation that
the TRO qualifies as a prior order for purposes of §2B1.1(b)(9)(C).
Defendant Westine also complains that the district court did not “set forth what language
from the order itself that Westine violated.” (Def. W. Br. 38.) But the district court accurately
described the dictates of the TRO, which was issued in 2013, and the court referred to testimony
from a DFI witness who described how Defendant Westine ignored the order:
Q. Did you continue to get phone calls?
A. I did continue to get phone calls for quite a while, up until about the time of the
final order.
Q. And were these phone calls complaints, or what were they?
A. They were complaints or inquiries, just checking to see if there was any
registration, people who had already invested in Liberty or Clementsville being
solicited to reinvest in Royal.
Q. Okay. Did any of these complaints mention any of your restraining orders?
A. Yes. We did have people who called who indicated that they had invested
previously, and they were aware of the restraining order. They were given
different explanations.
Q. What do you mean by that, “different explanations?”
A. Some people were told on the first order that [someone] named Don Howard
that Don Howard was a problem and the company itself had gotten a restraining
order against Don Howard, that there was nothing for them to worry about. Some
of the people –
Q. Was that true?
A. And that was not true.
(R. 359 at PageID #4167–68.) Based on this evidence, we find nothing erroneous about the
district court’s finding that Defendant Westine ignored the TRO, and we therefore affirm the
application of the two-level enhancement to Defendant Westine’s sentence pursuant to
§2B1.1(b)(9)(C).
Meanwhile, Defendant Ramer complains that the TRO did not apply to him because the
TRO applied only to Phase I companies and there is “simply no proof that Ramer had any
involvement with any person or entity associated with Phase I . . . . Ramer was not a named party
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in [the TRO].” (Def. R. Br. 47.) Ramer is incorrect. The TRO applied to “any person” with
notice of the TRO who was involved with the Phase I companies. GEX 57. The record shows
that Ramer was indeed involved with several of the Phase I companies while they were being
spun off into the Phase II companies, and the record also shows that Ramer actively participated
in this conversion—a process that was driven largely by the TRO. For instance, one investor
testified that Defendant Ramer reassured him that his $19,000 investment in a Phase I company
would be “credited into” one of the Phase II spinoffs, Royal Leasing. (R. 474 at PageID #6065–
70.) Thus, the district court did not clearly err when it found that Defendant Ramer, like
Defendant Westine, violated the TRO. We affirm the enhancements made pursuant to
§2B1.1(b)(9)(C).
B. Relocation of the Offense
Defendant Westine challenges the district court’s decision to apply a two-level
enhancement pursuant to USSG §2B1.1(b)(10)(A), which permits a sentencing court to impose
such an enhancement if the defendant “relocated, or participated in relocating, a fraudulent
scheme to another jurisdiction to evade law enforcement or regulatory officials.” The district
court applied this enhancement to Defendant Westine’s sentence because:
Mr. Westine used unsuspecting accounting firms and virtual office businesses to
handle various aspects of the fraudulent enterprise. And when these businesses
began to suspect that these defendants were engaged in criminal activity and
refused to continue to facilitate the scheme, then Mr. Westine and the co-
defendants moved the location of their businesses and changed service providers.
(R. 538 at PageID #7901.) These findings are supported by the record, which amply
demonstrates that Defendant Westine used fictitious entities for the general purpose of evading
detection and that it was criminal suspicion from contractors that repeatedly triggered his
relocation. We find no error in the application of §2B1.1(b)(10)(A) to Defendant Westine’s
sentence.
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C. Sophisticated Means
Defendant Ramer challenges the district court’s decision to apply a two-level
enhancement pursuant to USSG §2B1.1(b)(10)(C), which permits a sentencing court to impose
such an enhancement if the offense involved sophisticated means. The Guidelines explain that
“[S]ophisticated means” means especially complex or especially intricate offense
conduct pertaining to the execution or concealment of an offense. For example,
in a telemarketing scheme, locating the main office of the scheme in one
jurisdiction but locating soliciting operations in another jurisdiction ordinarily
indicates sophisticated means. Conduct such as hiding assets or transactions, or
both, through the use of fictitious entities, corporate shells, or offshore financial
accounts also ordinarily indicates sophisticated means.
§2B1.1 comment (9(B)). We find Defendant Ramer’s conduct analogous to the example listed in
the commentary; the scheme involved purported oil well operations in Kentucky; soliciting
operations in another jurisdiction (California); a wide assortment of fictitious entities, accounting
firms, offices, and aliases; and the hiding of both assets and transactions. The district court
reasonably concluded that “[i]f this case doesn’t qualify for the two-level enhancement based on
the sophistication of the fraud, then I am not sure that any case would qualify.” (R. 451 at
PageID #5612.) Defendant Ramer’s arguments that the scheme was “no more sophisticated than
other mail fraud schemes” and that his conduct merely involved “contact[ing] customers and
s[elling] the programs based upon information that was provided by others” are unpersuasive.
The district court properly enhanced Defendant Ramer’s sentence pursuant to §2B1.1(b)(10)(C).
D. Evidentiary Hearing
Defendant Westine argues that “this case must be remanded for resentencing” because
“the district court did not hold an evidentiary hearing on contested Guidelines issues and
objections to the PSR.” (Def. W. Br. 42.) In support, he cites USSG §6A1.3(b) for the
proposition that “[t]he court shall resolve disputed sentencing factors at a sentencing hearing in
accordance with Rule 32(i), Fed. R. Crim. P.” Defendant Westine also cites the commentary to
that Guideline, which provides that “an evidentiary hearing may sometimes be the only reliable
way to resolve disputed matters.” Id. Despite these statements of law and allusions to the trial
proceedings, Defendant Westine fails to specify which matters he considers disputed or how the
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district court abused its discretion by denying his request for an evidentiary hearing.
Accordingly, we deem this matter waived. See Elder, 90 F.3d at 1118.
E. Loss Calculation
Defendant Ramer challenges the district court’s decision to apply an eighteen-level
enhancement pursuant to USSG §2B1.1(b)(1) for an amount of loss between $2.5 million and
$7 million. This Court has previously explained the standard of review and relevant legal
principles for such appeals:
We review the district court’s calculation of the “amount of loss” for clear error,
but consider the methodology behind it de novo. United States v. Poulsen,
655 F.3d 492, 512–13 (6th Cir.2011). The prosecution has the burden to prove by
a preponderance of the evidence that the enhancement applies. United States v.
Dupree, 323 F.3d 480, 491 (6th Cir.2003).
The relevant amount of loss for a Section 2B1.1 enhancement is the greater of the
actual loss, defined as the reasonably foreseeable pecuniary harm that resulted
from the offense, or the intended loss to the victim. SENTENCING
GUIDELINES MANUAL § 2B1.1 cmt. 3(A). The district court’s duty is to make
a reasonable estimate of the loss. SENTENCING GUIDELINES MANUAL
§ 2B1.1 cmt. 3(C).
United States v. Washington, 715 F.3d 975, 984 (6th Cir. 2013).
Defendant Ramer argued below, as he does here, that the foreseeable losses attributable
to his participation in the fraud are limited to those involved with his personal company, R&W
Marketing. Alternatively, he argues that he is responsible only for losses from Phases II and III
of the scheme. But the government persuasively rebutted these arguments at sentencing,
pointing out that Defendant Ramer was in a position to foresee all of the investments once he
joined the scheme, not just those that flowed through R&W Marketing. The government also
zeroed in on the time frame in which the jury concluded that Defendant Ramer participated in the
scheme beyond a reasonable doubt, calculating the amount of loss from that period:
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[F]or every mail fraud count in the indictment where the mailing was after August
of 2013, they [the jury] convicted Mr. Ramer. A number of those counts involved
mailings in that first phase. We have lifted out of Exhibit 293, which was a list of
all contributors during the entire scheme, those that invested after August of 2013,
and the total amount of investment after August of 2013 was $2,617,534.
(R. 451 at PageID #5601.)
The district court agreed with the methodology, time frame, and loss calculation offered
by the government, explaining:
The testimony and the documentary evidence at trial establish that Mr. Ramer had
a different role later in the later phases but certainly was involved in all three
phases with a -- as a salesperson early on, finally in more of a managerial status as
it relates to some parts of the scheme as it unfolded; and so I will overrule the
objection to the -- based on the loss amount raised by the defendant.
(Id. at PageID #5603.)
We find no error in the district court’s reasoning or in the methodology it employed.
Defendant Ramer has not shown that his participation or knowledge of the operation was limited
to Phases II and III. Rather, the evidence shows that Defendant Ramer joined the operation no
later than August 2013, before the conclusion of Phase I. The district court’s loss calculation
excluded all losses incurred prior to this date. Thus, the district court properly applied an
eighteen-level enhancement pursuant to USSG §2B1.1(b)(1) for an amount of loss between
$2.5 million and $7 million.
CONCLUSION
For the foregoing reasons, we AFFIRM Defendants’ convictions and sentences.