United States v. Paneras, Ioanis V. ( 2000 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 99-3754
United States of America,
Plaintiff-Appellee,
v.
Ioanis V. Paneras,
Defendant-Appellant.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 98 CR 380--Charles P. Kocoras, Judge.
Argued April 13, 2000--Decided July 28, 2000
Before Harlington Wood, Jr., Flaum, and Diane P. Wood,
Circuit Judges.
Flaum, Circuit Judge. On February 11, 1999,
defendant Ioanis V. Paneras was convicted of mail
fraud in violation of 18 U.S.C. sec. 1341,
engaging in a prohibited financial transaction in
violation of 18 U.S.C. sec. 1957, wire fraud in
violation of 18 U.S.C. sec. 1343, and failing to
file income tax returns in violation of 26 U.S.C.
sec. 7203. The defendant now appeals, arguing
that the evidence was insufficient to establish
that he defrauded his alleged victims. In
addition, the defendant contends that the
district court erred in denying his motion for a
new trial and in calculating his sentence. For
the reasons stated herein, we affirm the
defendant’s convictions and sentence.
I. Background
In the summer of 1994, the defendant was hired
as the national sales manager for Global Chemical
Corporation ("Global") in Chicago, Illinois. At
the time Global hired the defendant, the company
had no sales staff and virtually no customers.
The company purportedly had three product lines,
including the chlorine replacement "Oxydyne,"
several household cleaning products, and an oil-
spill cleanup and oil pipeline drag reducer
product.
Immediately after being hired by Global, the
defendant attempted to recruit distributors for
the company’s products. Although Global was a
struggling start-up company, the defendant
repeatedly told distributorship candidates that
Global was a successful company that was closely
affiliated with a large and wealthy middle
eastern oil company. Through these efforts, the
defendant managed to convince Jean Gaerlan of Los
Angeles and Jerry Beougher of Phoenix to become
distributors.
During the course of his dealings with Gaerlan
and Beougher, the defendant made continuous false
representations about Global’s business status as
a multi-national corporation. The defendant also
requested money from Gaerlan and Beougher
pursuant to their distributorship agreements. As
a result, Gaerlan spent an estimated $250,000 on
security deposits, payments for product
shipments, and warehouse expenses. Beougher
estimated he paid out $75,000 in reliance on the
defendant’s representations before he terminated
his association with Global. Of the funds paid by
Gaerlan and Beougher to Global, at least some of
the money was converted to the defendant’s
personal use.
In addition to his activities on behalf of
Global, the defendant also entered into a series
of romantic relationships with six women between
1977 and 1998. During these relationships, the
defendant frequently misrepresented himself as a
wealthy businessman and promised to marry several
of the women. The defendant also requested
various advances of both cash and property from
these women, usually justifying these requests by
explaining that he was temporarily unable to
access his assets. In total, these six women
suffered losses of almost $250,000 through their
relationships with the defendant.
The defendant was charged with various crimes
arising from the conduct of both his business and
personal affairs, including mail fraud, engaging
in a prohibited financial transaction, wire
fraud, and failing to file income tax returns. On
February 11, 1999, the defendant was convicted by
a jury on all counts. In calculating the
defendant’s sentence, the district court
increased the offense level applicable to the
defendant’s crimes under both U.S.S.G. sec. 3A1.1
for the vulnerability of his victims and U.S.S.G.
sec. 3B1.3 for an abuse of trust. The defendant
was then sentenced to a total of seventy-one
months in prison and a $6,000 fine, as well as a
five-year term of supervised release. The
defendant now appeals
II. Analysis
The defendant challenges both his convictions
and sentence, arguing that the evidence presented
at trial was insufficient to support a finding
that he committed fraud in his activities on
behalf of Global and during his relationships
with the six women who testified at trial. In
addition, the defendant contends that the
district court erred in refusing to grant his
post-trial motion for a new trial, and in
departing upward on his sentence based on the
district court’s conclusion that he defrauded
vulnerable victims and that he abused a position
of trust. We address each of the defendant’s
claims in turn.
A. Sufficiency of the Evidence
The defendant’s challenge to the sufficiency of
the evidence centers on his convictions for wire
fraud and mail fraud. In order to find the
defendant guilty of these crimes, the jury had to
determine that the defendant engaged in his
alleged schemes with an "intent to defraud." See
United States v. Montani, 204 F.3d 761, 769 (7th
Cir. 2000) (mail fraud); United States v.
O’Brien, 119 F.3d 523, 532 (7th Cir. 1997) (wire
fraud). An "intent to defraud" means that the
defendant "act[ed] willfully and with specific
intent to deceive or cheat, usually for the
purpose of getting financial gain for [himself]
or causing financial loss to another." United
States v. Moede, 48 F.3d 238, 241 (7th Cir.
1995). However, "[b]ecause direct evidence of a
defendant’s fraudulent intent is typically not
available, specific intent to defraud may be
established by circumstantial evidence and by
inferences drawn from examining the scheme itself
which demonstrate that the scheme was reasonably
calculated to deceive persons of ordinary
prudence and comprehension." United States v.
LeDonne, 21 F.3d 1418, 1426 (7th Cir. 1994). In
evaluating the defendant’s sufficiency of the
evidence claim, "[w]e consider the evidence in
the light most favorable to the prosecution,
making all reasonable inferences in its favor,
and affirm the conviction so long as any rational
trier of fact could have found the defendant to
have committed the essential elements of the
crime." United States v. Masten, 170 F.3d 790,
794 (7th Cir. 1999) (citing Jackson v. Virginia,
443 U.S. 307, 319 (1979)).
The defendant now admits that his actions were
dishonest, but claims that he did not engage in
any of his allegedly fraudulent activities with
the specific intent necessary to support a
conviction of either mail fraud or wire fraud. In
support of this argument, the defendant contends
that there was no direct evidence of an intent to
defraud, and that the evidence presented at trial
failed to establish a sufficient connection
between his lies and his financial benefit such
that a specific intent to defraud could be
inferred. However, after a review of the record,
it is clear that the defendant has not met the
heavy burden he bears in attempting to make a
sufficiency of the evidence claim. As we noted
previously, the defendant cannot prevail on his
sufficiency of the evidence claim unless he
demonstrates that no rational jury could have
found that the circumstances of his crimes
indicated an intent to defraud. See Masten, 170
F.3d at 794 (citing Jackson, 443 U.S. at 319).
Instead of making such a showing, the defendant
offers a competing characterization of the
evidence which misapprehends both the role of the
jury and our standard of appellate review. See
United States v. Cueto, 151 F.3d 620, 633 (7th
Cir. 1998).
It is the function of the jury to evaluate the
credibility of witnesses and to weigh the
evidence adduced at trial, see United States v.
Moore, 115 F.3d 1348, 1364 (7th Cir. 1997), and
we overturn a verdict "[o]nly when the record
contains no evidence, regardless of how it is
weighed, from which the jury could find guilt
beyond a reasonable doubt . . . ." Brandom v.
United States, 431 F.2d 1391, 1400 (7th Cir.
1970). In this case, the circumstantial evidence
presented at trial and the testimony of the
victims demonstrate a pattern of deceit in the
defendant’s business activities and in his
personal life that a rational jury could infer
was part of a scheme designed to defraud.
Moreover, the evidence clearly establishes that
the defendant benefitted financially from his
relationships with the Global distributors and
the women with whom he was romantically involved,
and that these benefits were contemporaneous with
his misrepresentations. This evidence is more
than adequate to establish the defendant’s intent
to defraud beyond a reasonable doubt, and we
therefore conclude that the defendant’s
sufficiency of the evidence claim has no merit.
B. The Defendant’s
Motion for a New Trial
The defendant next contends that the district
court erred in denying his post-trial motion for
a new trial. In his motion, the defendant alleged
that on February 10, 1999, David Huey, one of the
jurors and a professional artist, created a
cartoon depicting his perception of the defendant
and the events described at trial. Huey then
shared this cartoon with the other jurors during
deliberations. According to the defendant, Huey’s
actions in creating and sharing this cartoon
constitute juror misconduct that introduced
extraneous and prejudicial material into the
deliberation process and consequently deprived
the defendant of his right to a fair trial. The
defendant contends that the appropriate remedy
for this juror misconduct is a new trial, and
that the district court erred in refusing to
grant one.
"A criminal defendant in our system has a right
to be tried on the basis of the evidence admitted
at his trial, and this right may be violated if
the jury gets access to extra-record evidence .
. . even if that access is not the result of any
prosecutorial misconduct." United States v.
Bruscino, 687 F.2d 938, 940 (7th Cir. 1982) (en
banc). "Nevertheless, a new trial is not
automatically required whenever a jury is exposed
to material not properly in evidence." United
States v. Sababu, 891 F.2d 1308, 1333 (7th Cir.
1989). Each case turns on its own facts, and on
"the degree and pervasiveness of the prejudicial
influence possibly resulting." United States v.
Solomon, 422 F.2d 1110, 1118 (7th Cir. 1970). The
defendant is not entitled to a new trial unless
"there is a reasonable possibility that the
[cartoon] had a prejudicial effect on the jury
verdict." United States v. Berry, 64 F.3d 305,
307 (7th Cir. 1995). We review the district
court’s denial of the defendant’s motion for a
new trial based on juror misconduct for an abuse
of discretion, and "we will reverse the district
court’s decision only if we have a strong
conviction of error." United States v. McClinton,
135 F.3d 1178, 1186 (7th Cir. 1998).
The district court based its decision to deny
the defendant’s motion for a new trial on two
grounds. First, the district court found that the
cartoon in question depicted only events that
were described at trial, and therefore did not
introduce extraneous material into the jury’s
deliberations. The district court regarded the
cartoon as simply another means for Huey to
express his views and opinions about the case to
the other jurors. Second, the district court
found that the drawing itself was fairly benign,
and that there was no reasonable possibility that
the cartoon could have had a prejudicial effect.
In considering the district court’s denial of the
defendant’s motion for a new trial, we give great
deference to the district court and recognize
that "[t]he trial judge will always be in a
better position than the appellate judges to
assess the probable reactions of jurors in a case
over which he has presided." Bruscino, 687 F.2d
at 941; see also Arizona v. Washington, 434 U.S.
497, 513 (1978).
We are not convinced that a juror’s cartoon
rendering of the events described at trial
constitutes an extraneous influence. However,
even if we assume arguendo that the introduction
of the cartoon was improper, there would be no
basis for overturning the district court’s denial
of the defendant’s motion for a new trial. The
cartoon was a humorous depiction of the
defendant’s activities as they were described at
trial, and it did not make any reference to
events that were not part of the evidentiary
record nor expose the jury to any new evidence.
In this situation, it is significant that the
cartoon expressed one juror’s view of the case,
and was subject to the scrutiny and the
questioning of other jurors. We also note that
the evidence of the defendant’s fraud in this
case was overwhelming, a factor which militates
against a finding that the introduction of the
disputed cartoon effected the jury’s verdict./1
See, e.g., United States v. Sanders, 962 F.2d
660, 673-74 (7th Cir. 1992). Against this
backdrop, we cannot conclude that the district
court abused its discretion in denying the
defendant’s motion for a new trial.
C. The Abuse of
Trust Sentencing Enhancement
The defendant’s first challenge to his sentence
centers on the district court’s decision to
increase his offense level by two points for an
abuse of trust pursuant to sec. 3B1.3 of the
Sentencing Guidelines. In applying this increase,
the district court found that the defendant
represented himself as a licensed money manager
to Theresa Anzine and offered to invest her money
for her. The district court further determined
that the defendant assumed a position of trust in
respect to Anzine when she gave him money to
invest, and that he abused that position by
misappropriating her funds. According to the
defendant, these findings are erroneous because
he did not hold himself out as an expert in
investing in the manner that he contends would be
necessary for an abuse of trust enhancement, but
only stated that he had some level of knowledge
in regard to money management. The defendant
admits that he took advantage of an opportunity
that was presented to him by Anzine, but argues
that this kind of action does not constitute an
abuse of trust.
The Sentencing Guidelines mandate a two-level
increase "[i]f the defendant abused a position of
public or private trust . . . in a manner that
significantly facilitated the commission or
concealment of the offense . . . ." U.S.S.G. sec.
3B1.3. In order to determine if the abuse of
trust enhancement was properly applied in this
case, we consider: "(1) whether the defendant
occupied a position of trust; and (2) whether his
abuse of the position of trust significantly
facilitated the crime." United States v. Sierra,
188 F.3d 798, 802 (7th Cir. 1999). We review the
district court’s interpretation of what
constitutes a "position of trust" de novo, see
United States v. Boyle, 10 F.3d 485, 489 (7th
Cir. 1993), but we review the district court’s
factual determination as to whether the defendant
occupied such a position for clear error, see
United States v. Bhagavan, 116 F.3d 189, 192 (7th
Cir. 1997).
Although the defendant claims that he did not
occupy a position of trust in relation to Anzine
because he did not hold himself out as an expert
money manager, the evidence introduced at trial
indicates the opposite. The defendant told Anzine
that he possessed a Series 7 license, which is
the basic license required by the National
Association of Securities Dealers before a person
is permitted to operate as an investment broker.
In addition, the defendant stated that he was
knowledgeable about investments, and that he
regularly invested other peoples’ money for them.
These representations were sufficient to convince
Anzine to entrust the defendant with her money,
thereby placing the defendant in a position of
trust. See United States v. Gellene, 182 F.3d
578, 596 (7th Cir. 1999) (stating that a person
is considered to have occupied a position of
trust if he had "’access or authority over things
of value’") (quoting United States v. Lamb, 6
F.3d 415, 419 (7th Cir. 1993)). Moreover, the
defendant’s actions in defrauding Anzine were not
merely opportune, but were made possible by the
private trust Anzine placed in him because of his
avowed knowledge about financial markets and by
his willingness to exploit that trust. See United
States v. Kosth, 943 F.2d 798, 800 (7th Cir.
1991) (rejecting an abuse of trust enhancement
where "no special element of private trust [was]
involved"). Because the defendant’s abuse of his
position of trust facilitated his commission of
the fraud against Anzine, the district court
properly increased the defendant’s sentence two
offense levels pursuant to sec. 3B1.3 of the
Sentencing Guidelines.
D. The Vulnerable
Victim Sentencing Enhancement
The defendant also challenges the district
court’s decision to enhance his sentence two
offense levels pursuant to U.S.S.G. sec. 3A1.1
based on the district court’s conclusion that the
women the defendant "targeted and preyed on" were
vulnerable victims. Section 3A1.1(b)(1) provides
that a defendant’s offense level should be
increased two levels "[i]f the defendant knew or
should have known that a victim of the offense
was a vulnerable victim . . . ." U.S.S.G. sec.
3A1.1(b)(1). The Sentencing Guidelines further
interpret "vulnerable victim" to mean "a person
(A) who is a victim of the offense of conviction
and any [relevant] conduct . . . ; and (B) who is
unusually vulnerable due to age, physical or
mental condition, or who is otherwise
particularly susceptible to the criminal
conduct." U.S.S.G. sec. 3A1.1, Application Note
2. Because the district court is in the best
position to determine whether a victim is
vulnerable, we review the district court’s
conclusions in that regard for clear error. See
United States v. Snyder, 189 F.3d 640, 649 (7th
Cir. 1999), cert. denied, 120 S.Ct. 839 (2000).
The defendant argues that the district court
erred in determining that he deliberately
targeted the women whom he defrauded because of
their vulnerability, but that argument is
misplaced. Section 3A1.1 of the Sentencing
Guidelines was amended on November 1, 1995 to
eliminate any targeting requirement, and the
vulnerable victim enhancement no longer requires
a showing of targeting. See U.S.S.G. sec. 3A1.1,
Application Note 2; see also United States v.
Bragg, 207 F.3d 394, 400 (7th Cir. 2000); Snyder,
189 F.3d at 649 (stating that the 1995 Amendments
"make clear that there is no targeting
requirement"). Although at least some of the
defendant’s conduct took place prior to November
1, 1995, the defendant was properly sentenced
under the amended version of the Guidelines
because most of the defendant’s offenses occurred
subsequent to the effective date of the 1995
amendments. See U.S.S.G. sec. 1B1.11(b)(3) ("If
the defendant is convicted of two offenses, the
first committed before, and the second after, a
revised edition of the Guidelines Manual became
effective, the revised edition of the Guidelines
Manual is to be applied to both offenses."). As
such, the government need only prove that the
defendant’s victims were vulnerable to justify an
enhancement under U.S.S.G. sec. 3A1.1. See United
States v. Brawner, 173 F.3d 966, 973 (6th Cir.
1999).
In addition to his targeting argument, the
defendant contends that the district court erred
in concluding that the women whom he defrauded
were in fact vulnerable. According to the
defendant, the district court based its findings
of vulnerability on a stereotypical view of
women, and not on any particular characteristics
of the women the defendant defrauded. After a
review of the record and the testimony given at
trial, we believe that the defendant’s argument
has some merit. Although we give due deference to
the district court’s assessment of the witnesses
who appeared before it, see United States v.
Billingsley, 115 F.3d 458, 463 (7th Cir. 1997),
the evidence of vulnerability in regard to some
of the women is questionable. For instance, the
district court found that the enhancement could
be applied based on the fact that one of the
victims was single and, because of the assistance
she received from others during her childhood,
made a point of reaching out to those in trouble.
An enhancement based on this finding is
dangerously close to the imposition of an
enhancement merely because the victim was a
woman.
While we are not convinced that the evidence in
this case is sufficient to support the conclusion
that all of the defendant’s victims were
vulnerable, the government is only required to
establish vulnerability in regard to one of the
victims. See U.S.S.G. sec. 3A1.1(b)(1) (noting
that the enhancement applies "[i]f the defendant
knew or should have known that a victim of the
offense was a vulnerable victim") (emphasis
added). In this case, the district court did not
merely rely on an overbroad generalization, but
rather made particularized findings about some of
the victims--including one woman who was a
recently-divorced immigrant and one who was
involved in a troubled marriage--in sufficient
detail to justify a finding that these women were
emotionally vulnerable and were therefore
"particularly susceptible to the criminal
conduct." U.S.S.G. sec. 3A1.1, Application Note
2; see also United States v. Grimes, 173 F.3d
634, 637 (7th Cir. 1999) (stating that "[t]he
’vulnerable victim’ sentencing enhancement is
intended to reflect the fact that some potential
crime victims have a lower than average ability
to protect themselves from the criminal").
Because the district court based the vulnerable
victim enhancement in this case at least in part
on the particular characteristics of the
defendant’s victims, and because the district
court did not clearly err in its vulnerability
determinations, we conclude that the district
court properly applied a two level vulnerable
victim enhancement to the defendant’s conduct.
III. Conclusion
Because we find the evidence sufficient to
justify the defendant’s convictions and because
we do not find any reversible error in the
defendant’s convictions or sentence, we AFFIRM the
decision of the district court.
/1 The defendant argues that the prejudicial nature
of the cartoon is indicated by the fact that one
juror changed her mind after the cartoon was
introduced into deliberations, but nothing in the
record indicates that the juror changed her mind
because of the cartoon. Furthermore, Rule 606(b)
of the Federal Rules of Evidence prohibits a
juror from testifying as to the effect of any
extraneous information introduced during jury
deliberations. Fed.R. Evid. 606(b). In evaluating
a claim that the jury was improperly influenced
by extraneous material, "a district court must
ignore a juror’s comment regarding how a
particular piece of material disposed the juror
toward a particular verdict, and the district
court must make an independent determination of
the likely effect of the prejudicial material."
United States v. Berry, 92 F.3d 597, 601 (7th
Cir. 1996) (interpreting Rule 606(b)); see Haugh
v. Jones & Laughlin Steel Corp., 949 F.2d 914,
917 (7th Cir. 1991).