United States v. Lubowa ( 2004 )

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 04a0082n.06
Filed: November 12, 2004
No. 02-5653
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
UNITED STATES OF AMERICA, )
)
Plaintiff-Appellee, )
)
v. ) ON APPEAL FROM THE
) UNITED STATE DISTRICT
DANIEL P. LUBOWA, ) COURT FOR THE EASTERN
) DISTRICT OF KENTUCKY
Defendant-Appellant. )
)
)
Before: KRUPANSKY* and COLE, Circuit Judges, and COOK, District Judge.**
KRUPANSKY, Circuit Judge: Plaintiff-appellant, Daniel Lubowa (“Lubowa”) has
forwarded several claims in challenging his jury conviction and sentencing on five counts of mail
fraud, in violation of 18 U.S.C. § 1341. For the reasons discussed below, this court AFFIRMS the
district court’s determination on each issue.
Lubowa, a modern-day Elmer Gantry, was named in a one count indictment charging him
with five counts of mail fraud in his efforts to solicit donations from church congregants for his
“missionary” work in Uganda and Sudan. The appellant pleaded not guilty and proceeded to trial
*
This decision was concurred in by The Honorable Robert B. Krupansky before his untimely
death on November 8, 2004.
**
The Honorable Julian A. Cook, Jr., United States District Judge for the Eastern District of
Michigan, sitting by designation.
No. 02-5653
United States v. Lubowa
in February 2002. After a five-day trial, the jury returned a verdict of guilty against Lubowa as to
all counts. On May 7, 2002, the appellant received a concurrent sentence of 40 months, and a fine
of $75,000. Lubowa filed this timely appeal on May 9, 2002.
In 1992, Lubowa formed Grace Ministries International (“GMI”), with a volunteer board of
directors in Rochester, Minnesota for the stated purpose of raising money to fund Christian pastors
in his native Uganda, Africa. The board members resigned, however, soon after Lubowa requested
that GMI pay for his recently purchased sports car and after he refused to account for monies given
to the association. Lubowa, nevertheless, continued with his collection efforts: renting a small
office for GMI in a hotel basement in Rochester which he staffed with a volunteer, and maintaining
a post office box to receive mailed donations.1
Lubowa solicited funds and goods from church congregants in a number of states including
Minnesota, Kentucky, Tennessee, Georgia, Texas and Oklahoma. Lubowa told church
congregations that he was involved in missionary work in Sudan and Uganda, and requested
donations in the name of GMI, the East African Bible Belt Council (of which he was President), and
the African Baptist Convention (of which he was the sole known member).
From 1997 through 2001, Lubowa traveled throughout the southeast United States to raise
funds for GMI. Several churches donated money after Lubowa spoke passionately to their
congregations about missionary needs in Africa, earmarking contributions intended for church
1
GMI became a delinquent corporation in Minnesota in 1998.
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No. 02-5653
United States v. Lubowa
construction and pastor expenses in Uganda,2 purchasing bibles and bicycles. Congregants also
made in-kind donations of clothing to be shipped to the African nation for distribution. Evidence
indicated that between June 26, 1997, and June 22, 2001, there were approximately 226 individual
deposits, totaling $386,175.00, into three separate bank accounts controlled by Daniel Lubowa, his
nom de guerre Mark Phelps, or GMI. Lubowa provided no evidence of income aside from those
donations.
To further his scheme, Lubowa adopted several aliases. Some church congregations knew
him as Mark Phelps, while others received e-mails purportedly from a Dr. Mark Isaacs, who
appeared to be affiliated with GMI. Lubowa represented that Dr. Mark Isaacs was head of GMI.
Meanwhile, Lubowa created the semblance of an organized, charitable and religious foundation by
hiring temporary employees to work in a rented apartment in Lexington, Kentucky. The record
indicated that Lubowa directed employees and volunteers to misrepresent themselves as officers of
GMI in correspondence to donors.
Testimony further revealed that Lubowa did not maintain itemized accounts even though he
solicited donations from congregants and churches to GMI for specific purposes. Instead, checks
mailed to the post-office box in Minnesota were deposited into one of several bank accounts
controlled by Lubowa. Government investigators sampled five of those mailings to form the basis
of the instant mail fraud matter.
2
Additional testimony indicated that several church members sent monthly payments to GMI
to sponsor specific pastors in Uganda. None of the pastors actually existed, but for one, who turned
out to be Lubowa’s brother.
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No. 02-5653
United States v. Lubowa
Lubowa used the monies in the GMI account to purchase automobiles, to finance a hotel he
owned in Uganda, and to support his girlfriend in Uganda. Additionally, he received thousands of
dollars through wire transfer. In his regular visits to Uganda, Lubowa purchased land and sold
church donated clothing. Testimony further revealed that in 1999, Lubowa shipped a limousine,
several large kitchen appliances and televisions from the United States to Uganda. At the time of
his arrest, Lubowa was preparing to ship two more automobiles to Uganda.
Several congregants testified that in their visits to Uganda they could find no evidence of
Lubowa’s missionary work, or any indication that he had spent donated money as he had represented
to church members. During those visits, Lubowa assured the questioning congregants that he could
account for the donations through his computer records, yet he never provided those records.
Witnesses further recounted that Lubowa recruited church members to accompany him on
missionary trips to Uganda, during which Lubowa billed the groups at inflated rates for hotel
accommodations, food, ground transportation and airline tickets.
Lubowa testified that he used GMI funds for missionary purposes in Africa and that he never
intended to deceive anyone in personally using GMI funds. Lubowa admitted only to spending
money on his personal travel expenses. He stated that he performed “underground” missionary work
in Sudan and that he used the Mark Phelps alias in order to minimize his exposure to Muslims
opposed to his activities. He further testified that he freely distributed the donated clothes in
Uganda, that he used the automobiles in his ministry work, and that he purchased land in Uganda
for a medical clinic site, a guest house for missionaries, and a school. Finally, Lubowa testified that
Dr. Mark Isaacs was a real person with whom he had worked in Sudan.
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No. 02-5653
United States v. Lubowa
At the conclusion of the trial, the jury found Lubowa’s testimony less than credible.
Additionally, Judge Hood determined that Lubowa obstructed justice when he testified that he had
worked in Sudan and that Dr. Mark Isaacs was an actual person.
Lubowa has, first, claimed that in prosecuting the case sub judice, the government effectively
altered the terms of the indictment through its presentation of evidence, thereby modifying the
essential elements of the mail fraud offense to such a degree that the defendant was convicted of an
offense other than that charged in the indictment. This Circuit has directed that a constructive
amendment occurs when the evidence and the jury instructions alter the offense charged in the
indictment resulting in the substantial likelihood that the defendant was convicted of a different
offense. See United States v. Solorio, 337 F.3d 580, 590 (6th Cir. 2003).
Because Lubowa did not raise his constructive amendment claim before the district court,
this court will review only for plain error. United States v. Wilson, 168 F.3d 916, 923 (6th Cir.
1999). Accordingly, the error must be “plain,” and it must “affect substantial rights,” which “usually
means that the error must have affected the outcome of the district court proceedings.” United States
v. Cotton, 535 U.S. 625, 631 (2002). Even so, the court has discretion to notice the error only if it
“seriously affects the fairness, integrity, or public reputation of judicial proceedings.” Id. at 631.
“Plain error is defined as an egregious error, one that directly leads to a miscarriage of justice.”
United States v. Krimsky, 230 F.3d 855, 858 (6th Cir. 2000).
In the instant case, the evidence reveals that the indictment, the proof, and the instructions
were consistent with each other. The indictment contained five counts of mail fraud based upon five
different mailings. To prove mail fraud, however, the United States needed show not only the use
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No. 02-5653
United States v. Lubowa
of the mails, but also a scheme to defraud. See, e.g., United States v. Crossley, 224 F.3d 847, 857
(6th Cir. 2000). The background section of the indictment provided that from 1993 through 2001,
Lubowa devised a scheme to defraud by soliciting contributions for GMI, by making material
misrepresentations to induce contributions, and by appropriating the contributions for his personal
use. Most of the government’s proof naturally concerned Lubowa’s scheme. The district court
properly instructed the jury on the scheme and mailing elements of mail fraud. Accordingly, the
evidence and jury instructions did not constructively amend the mail fraud charges upon which
Lubowa was indicted and ultimately convicted.
Lubowa has further contended that the government presented insufficient evidence to support
the counts named in the indictment. Specifically, appellant has charged that the victims named in
the indictment did not testify and that it was, therefore, “impossible for a jury to determine that these
alleged victims were defrauded.”
A claim of sufficiency of the evidence is reviewed in the light most favorable to the
government, drawing all inferences in the government’s favor, determining only whether any
“reasonable jury could find guilt beyond a reasonable doubt.” United States v. Talley, 164 F.3d 989,
996 (6th Cir. 1999).
A conviction for mail fraud requires proof both of a scheme to defraud, and use of the mails
in furtherance of the scheme. United States v. Brown, 147 F.3d 477, 483 (6th Cir. 1998). “The
prosecution must prove that the defendant possessed the specific intent to deceive or defraud in order
to convict him; the issue of fraudulent intent is an issue reserved for the trier of fact.” Id. A
defendant possesses specific intent to deceive or to defraud when he knowingly makes a material
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No. 02-5653
United States v. Lubowa
misrepresentation for the purpose of inducing the fraud victim to part with money or property.
United States v. DeSantis, 134 F.3d 760, 764 (6th Cir. 1998).
Mail fraud does not require proof that a defendant actually used the mails. Rather, a
reasonable person must have foreseen such use. See, e.g., Crossley, 224 F.3d at 857. When Lubowa
directed donors to mail their checks to his post office box in Minnesota, use of the mail was
reasonably foreseeable.
In the instant matter, viewed in the light most favorable to the prosecution, a rational jury
could have found beyond a reasonable doubt that Lubowa possessed specific intent to deceive or to
defraud. As the evidence indicated, Lubowa deceived church members by stating that he performed
missionary work in Sudan, by using aliases, and by holding out GMI as a legitimate and organized
foundation. Lubowa addressed congregations in several states on his “mission” to Africa, he
accepted clothing donations and money for missionary purposes in Uganda. Rather than spend the
money as represented, on church construction, pastor sponsorships, and other missionary expenses,
Lubowa instead sent money to his girlfriend, purchased automobiles, land, and a hotel. The jury
properly found the evidence sufficient to support Lubowa’s indictment.
The appellant has, next, maintained that the district court allowed the government to
introduce evidence of uncharged acts, for which there were no Rule 404(b) findings, and without
limiting instructions, which were prejudicial and irrelevant to the offenses of conviction. Lubowa’s
contention is unsupportable.
The charge of “other acts” evidence stems from Fed. R. Evid. 404(b), which directs the court
to permit the introduction of evidence on issues such as motive, opportunity, intent, preparation,
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No. 02-5653
United States v. Lubowa
plan, knowledge, identity or absence of mistake. The district court is also directed to weigh the
probative nature of the evidence to determine if the inherent prejudicial nature of such evidence
outweighs its value to the jury. See e.g., United States v. Talley, 164 F.3d at 999. Pursuant to
United States v. Ward, 190 F.3d 483 (6th Cir. 1999), where a court admits evidence under Rule
404(b), it should instruct the jury on the basis for its inclusion into the case, rather than merely
reciting the litany of reasons available under Rule 404(b).
As an initial matter, the record reveals that Lubowa did not object at trial to any evidence
based upon Federal Rule of Evidence 404(b). Accordingly, this court reviews for plain error.
United States v. Murphy, 241 F.3d 447, 451 (6th Cir. 2001).
Contrary to Lubowa’s contention, the record before this court indicated that the government
simply did not present any Rule 404(b) evidence during the trial. Accordingly, there were no Rule
404(b) findings or limiting instructions. Rather, each witness testified, to the satisfaction of the jury,
that Lubowa executed a scheme to defraud as set forth in the indictment.
The appellant has, further, objected to the amount of loss attributed to him in his fraudulent
scheme and submits that re-sentencing is required. Lubowa has specifically maintained that the
district court should have off-set the approximately $386,000 in donations he received by subtracting
legitimate expenses taken on behalf of the victims, and the legitimate costs of “keeping up the
ministry, such as lighting, phone bills, and rent.” For instance, Lubowa has contended that “many
of the alleged victims received tangible benefits, such as travel to Uganda, lodging, meals.”
This court reviews the district court’s loss calculation only for clear error. See United States
v. Jackson, 25 F.3d 327, 330 (6th Cir. 1994) (defendant has a heavy burden to show that the amount
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No. 02-5653
United States v. Lubowa
is outside the realm of permissible computations). “Because the precise amount of the loss may be
difficult to ascertain, various methods of fixing the total loss may be used. But, no matter what
method is used, a court need only make a reasonable estimate of the loss, given the available
information.” United States v. Brawner, 173 F.3d 966, 971 (6th Cir. 1999).
In the instant case, the probation officer calculated the amount of the loss based on the
deposits into bank accounts that Lubowa controlled. After careful review, the district court properly
held that the calculated amount of loss included the deposits that Lubowa obtained through his
fraudulent scheme. Moreover, any alleged off-set to the sentencing loss would be de minimus.
Lubowa rented a basement room in a hotel in Minneapolis, staffed by a part-time volunteer, who
funneled the donations to GMI into bank accounts controlled by the appellant. Additionally, the
testimony indicated that Lubowa charged the church groups higher-than-market rates for the
lodging, flights and meals involved in their tours of Uganda. Finally, the loss calculation did not
include any cash donations Lubowa received in person or the value of meals and accommodations
provided him without charge by congregants during his barnstorming.
Lubowa has also challenged the district court’s imposition of a sentence enhancement for
obstruction of justice. This court reviews for clear error the district court’s fact-bound decision to
apply the two-level sentencing enhancement for obstruction of justice under U.S.S.G. § 3C1.1.
United States v. Jackson-Randolph, 282 F.3d 369, 390 (6th Cir. 2002). If a defendant commits
perjury when testifying, the enhancement applies. United States v. Lawrence, 308 F.3d 623, 631
(6th Cir. 2002). To apply the two-level increase for obstruction based on perjury, the district court
must identify the statements that constitute perjury. Id. at 633.
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No. 02-5653
United States v. Lubowa
In the instant case, the district court specifically found that Lubowa perjured himself when
he testified falsely regarding his work in Sudan, and when he represented Dr. Mark Isaacs as an
actual person. The district court noted that appellant’s testimony on Dr. Mark Isaacs “was designed
to legitimize his scheme and artifice and to sway the jury.” Equivalently, the district court stated
that appellant’s testimony regarding Sudan was in an effort to “legitimize” his use of the alias Mark
Phelps.3 In attempting to legitimize his scheme and to sway the jury, Lubowa willfully gave false
testimony about a material matter. The district court’s determination properly “encompassed all the
factual predicates for a finding of perjury.” Lawrence, 308 F.3d at 632.
Lubowa’s two-level enhancement for obstruction of justice was predicated on a finding by
the district court, and not a jury, which, this court notes sua sponte, implicates the Supreme Court’s
recent determination in Blakely v. Washington, --- U.S. ----, 124 S. Ct. 2531, 159 L. Ed. 2d 403
(2004), calling into question the constitutionality of sentencing enhancements based on facts not
found by a jury. However, this court’s recent en banc decision in United States v. Koch, 383 F.3d
436, 2004 WL 1899930 (6th Cir. Aug. 26, 2004), directs us to conclude that Blakely does not affect
the validity of a sentence imposed under the federal sentencing guidelines, enabling the application
of an obstruction of justice enhancement by the district court in the instant matter. See also United
States v. Hammoud, 381 F.3d 316, 357 (4th Cir. 2004).
The appellant has additionally contended that the district court erred when it allowed the
introduction of evidence before the jury of Lubowa’s personal religious beliefs, and permitted an
3
Lubowa justified the Phelps alias on the grounds that he had to assume a different name as
his “underground” missionary work in Sudan made him a target for Muslims.
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No. 02-5653
United States v. Lubowa
investigating agent to testify about Lubowa’s handwriting. Both the evidence and the testimony
were proper.
“Decisions regarding the admission and exclusion of evidence are within the peculiar
province of the district court and are not to be disturbed on appeal absent an abuse of discretion.”
United States v. Middleton, 246 F.3d 825, 838 (6th Cir. 2001). In evaluating the evidence, this court
utilizes the standard of “unfair prejudice,” meaning the “undue tendency to suggest a decision based
on improper considerations; it does not mean the damage to a defendant’s case that results from
legitimate probative force of the evidence.” Sutkiewicz v. Monroe County, 110 F.3d 352, 361 (6th
Cir. 1997). In the instant case, the district court did not abuse its discretion in admitting evidence
of Lubowa’s religious beliefs or the testimony of an investigator regarding Lubowa’s handwriting.
The evidence of Lubowa’s religious beliefs supported an inference of fraud. Prior to opening
statements, Lubowa’s counsel objected in limine relating to evidence of Lubowa’s religious beliefs.
The government responded that evidence would show that Lubowa joined a Pentecostal church soon
after he wrote that the Pentecostal movement should be stopped in Africa. The government
explained that the evidence proved that Lubowa made statements to people to become a part of their
religious movement, regardless of his actual beliefs. The district court properly concluded that the
evidence of Lubowa’s inconsistent religious statements was admissible to prove that Lubowa made
the contradictory statements to church members, variously Pentecostal and Baptist congregants, to
ingratiate himself and thereby perpetuate his fraudulent scheme. See, e.g., United States v. Mick,
263 F.3d 553, 566 (6th Cir. 2001).
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No. 02-5653
United States v. Lubowa
With regard to the testimony on Lubowa’s handwriting, the appellant did not object to the
investigating agent’s testimony identifying Lubowa’s signature on documents. Accordingly, this
court reviews appellant’s claim for plain error. Murphy, 241 F.3d at 451. Based on his
investigation, the agent testified that he recognized Lubowa’s handwriting. Such testimony was
proper under Fed. R. Evid. 901(b)(2), and would have been proper even if Lubowa had made a
timely objection to the admission of the evidence.4
Next, appellant claims that the government engaged in prosecutorial misconduct in its
opening remarks, by referring to Lubowa as a liar. Lubowa’s contention is without foundation.
Because Lubowa did not object to the government’s opening statement, this court reviews the claim
for plain error.
During the opening statement, the prosecutor properly outlined the anticipated evidence.
Part of the evidence rested on the misrepresentations Lubowa made to induce church donations.
That evidence entailed an explanation that Lubowa’s statements about his missionary work in Sudan
were untrue, and that the five chosen mailings named in the indictment were merely a sample of
thousands of mailings that comprised an integral part of Lubowa’s scheme. The proof was
consistent with the prosecutor’s opening statements. Accordingly, the district court properly
instructed the jury that opening statements were an outline of the case, not evidence or argument.
4
The government did not represent the investigating agent as a handwriting expert, and his
recognition testimony was within the ambit of Rule 901(b)(2) which provides for the admission of
“[n]onexpert opinion as to the genuineness of handwriting, based upon familiarity not acquired for
purposes of litigation.”
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No. 02-5653
United States v. Lubowa
Finally, the appellant has maintained that the district court committed reversible error when
it ordered Lubowa’s arraignment based on an indictment that was unsigned by the grand jury
foreman, in violation of Fed. R. Crim. Proc. 6(c). Lubowa’s claim is patently frivolous.
The record contains only one original indictment, which was signed by the foreman. The
evidence indicated that to expedite the grand jury return, indictments in the Eastern District of
Kentucky are routinely copied after being signed by the United States Attorney, but prior to the
presentations to the grand jury. Consequently, service copies, while stamped as filed by the district
court clerk, do not contain the foreperson’s signature. Speculatively, Lubowa may have received
one of these service copies during his arraignment, however, the only indictment in the record is the
original indictment with the foreman’s signature.
For the foregoing reasons, this court AFFIRMS Lubowa’s conviction and sentence on all
issues.
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