United States v. Timothy Boisture ( 2009 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 07-1621
U NITED S TATES OF A MERICA,
Plaintiff-Appellee,
v.
T IMOTHY A. B OISTURE,
Defendant-Appellant.
Appeal from the United States District Court for the
Southern District of Indiana, Evansville Division.
No. EV 5-43-CR-01—Richard L. Young, Judge.
A RGUED JANUARY 7, 2008—D ECIDED A PRIL 20, 2009
Before P OSNER, R OVNER, and W OOD , Circuit Judges.
R OVNER, Circuit Judge. As partial owner of the environ-
mental consulting firm Environmental Consulting and
Engineering Company (“Environmental Consulting”),
Timothy A. Boisture participated in a multi-part scheme
to defraud, among others, his company and the
Indiana Department of Environmental Management. A
grand jury returned a superseding indictment charging
Boisture with three counts of mail fraud, see 18 U.S.C.
2 No. 07-1621
§ 1341, one count of money laundering, see 18 U.S.C. § 1957,
and one count of making false statements, see 18 U.S.C.
§ 1001. A jury convicted him on just two counts—both
for mail fraud. Boisture appeals, arguing that the
evidence against him was insufficient as to one of his
mail fraud convictions.
I.
In 1999, Boisture, on behalf of Environmental Con-
sulting, bid on and was awarded an environmental
remediation project through the Indiana Department of
Environmental Management. Initially, the project entailed
cleaning up oil and waste storage tanks and plugging
approximately twelve oil and oil injection wells at the
inactive Claremark Oil Production Facility in Vander-
burgh County, Indiana. Later that same year, the
project expanded to include plugging thirty-nine addi-
tional wells near the Bayou Creek, also located in
Vanderburgh County. As the regulatory agency
charged with enforcing state environmental law, the
Department of Environmental Management paid for the
work. The Indiana Department of Natural Resources
(“DNR”) oversaw the closure of the wells. Because the
wells were located in a flood plain of the Ohio River,
Indiana was entitled to reimbursement from the federal
Oil Spill Liability Trust Fund, which was administered
by the United States Coast Guard. The United States
Environmental Protection Agency also oversaw the
project to ensure that it met the Trust Fund’s criteria. The
Coast Guard reimbursed the Department of Environ-
No. 07-1621 3
mental Management approximately $370,000 for the
work at the Claremark Oil and Bayou Creek sites.
Boisture subcontracted with Bi-State Pipe Company, Inc.
and an individual named Carl F. Hanisch to plug the
Claremark Oil and Bayou Creek wells. DNR regulations
specified that a DNR inspector be present at the well
during certain closure operations. The DNR inspector
present at the wells with Boisture and Hanisch was
Donald Veatch.
The project as a whole was governed by a document
entitled the “Claremark Oil Company Well Abandon-
ment & Cleanup Agreement.” As relevant here, the
Claremark Agreement specified that the Department of
Environmental Management would pay Environmental
Consulting $4,085 for each well plugged. In addition to
the set fee, Environmental Consulting could recoup
additional costs for specified “Out of Scope” services.
These services included (1) installing a cast iron bridge
plug (an underwater mechanical device that prevents oil
from flowing upward into freshwater and allows the
well to be reopened at a later date) inside a well during
the closure, (2) renting tubes used to inject cement during
the well closure, and (3) disposing of wastewater gen-
erated during the plugging and associated cleanup of
the site.
After Hanisch incurred unexpected out-of-pocket costs
drilling out and replugging six of the wells, he and Veatch
devised a scheme to recoup some of the excess costs. The
scheme capitalized on the “Out of Scope” services by
charging for cast iron bridge plugs where none were
4 No. 07-1621
installed and charging for tubing that was never rented.1
Hanisch and Veatch included Boisture in the scheme
because he would be approving the charges for the work
and would need to assist with the documentation
required by the various agencies involved. As relevant
here, Bi-State Pipe Co. (through Hanisch) billed Environ-
mental Consulting for installing bridge plugs in twenty-
three of the thirty-nine wells in the Bayou Creek project
when in fact no bridge plugs were installed. As the
DNR inspector, Veatch certified that the bridge plugs
had been installed, and Environmental Consulting
(through Boisture) in turn billed the Department of Envi-
ronmental Management for the nonexistent bridge plugs.
Although the success of the scheme depended on the
submission of a number of documents containing false
information—from Bi-State and Environmental Consult-
ing’s invoices to required weekly pollution reports sub-
mitted to the EPA and the Coast Guard—the govern-
ment did not rely on these documents in its prosecution
of Boisture. This is because the majority of the documents
in furtherance of the scheme were mailed outside of the
five-year statute of limitations applicable to § 1341. See
United States v. Rumsavich, 313 F.3d 407, 413 n.2 (7th Cir.
2002) (noting five-year statute of limitations). The gov-
1
Veatch and Boisture also devised a second scheme
capitalizing on the third “Out of Scope” service—wastewater
disposal. They arranged for a company owned by Veatch to
dramatically overcharge Environmental Consulting for
wastewater disposal and then kick back most of the excess
to Boisture.
No. 07-1621 5
ernment’s case thus hinged on false representations in
two of the twenty-three so-called “Plugging and Aban-
donment Reports” (“P & A Reports”) required by DNR
procedures for each well closed. The P & A Reports, which
were signed by Veatch and Hanisch, contained different
sections to be completed at the time the well was plugged,
at the time the site was cleaned and restored, and a final
section to be completed by the DNR Division of Oil
and Gas in Indianapolis, Indiana.
In total, Boisture submitted invoices to the Indiana
Department of Environmental Management seeking
reimbursement for just over $44,000 in fraudulent charges:
approximately $12,000 for nonexistent cast iron bridge
plugs and around $32,000 in false tubing rental charges.
In January 2000, Hanisch gave Veatch a $3,780 check for
his role in the scheme, and later that year Hanisch also
gave Boisture $3,780 for his participation.
Boisture was convicted after a jury trial of two counts
of mail fraud, see 18 U.S.C. § 1341. The jury acquitted him
of the three other counts charged in the superseding
indictment. Boisture then moved for a judgment of acquit-
tal, see Fed. R. Crim. P. 29, and for a new trial, see Fed. R.
Crim. P. 33. The district court denied the motions, and
Boisture was subsequently sentenced to concurrent 60-
month prison sentences on the two counts of conviction.
He was also ordered to pay nearly $500,000 in restitution.2
He appeals, contending that there was insufficient evi-
2
The large sum includes restitution for the separate waste-
water scheme as well as the estimated cost of drilling out and
replugging the twenty-three wells.
6 No. 07-1621
dence of the mail fraud charged in Count I of the super-
seding indictment.
II.
In challenging the sufficiency of the evidence, Boisture
faces a “nearly insurmountable hurdle.” E.g., United States
v. Woods, 556 F.3d 616, 621 (7th Cir. 2009) (citation and
internal quotation marks omitted). We do not reweigh
the evidence, nor do we second-guess the jury’s cred-
ibility determinations. Instead, we review the evidence in
the light most favorable to the prosecution, and will
overturn the verdict only if the record contains no
evidence from which a rational jury could have returned
a guilty verdict. See, e.g., United States v. Millbrook, 553
F.3d 1057, 1065 (7th Cir. 2009).
The mail fraud statute prohibits using the mails to
execute any “scheme or artifice to defraud, or for ob-
taining money or property by means of false or
fraudulent pretenses, representations, or promises.” 18
U.S.C. § 1341. To sustain a mail fraud conviction, the
government must prove that the defendant (1) participated
in a scheme to defraud; (2) intended to defraud; and
(3) used the mails to further the fraudulent scheme.
E.g., United States v. Jackson, 546 F.3d 801, 810 (7th Cir.
2008).
To prove that Boisture committed the mail fraud
alleged in Count I, the government relied on the mailing
of two of the P & A Reports from the DNR’s Evansville,
Indiana field office to its Indianapolis office in June of
No. 07-1621 7
2001. At the time of the alleged mailings, all of the wells
specified in the contract had been plugged, and Boisture
and his co-schemers had received payment for their
work. Boisture thus contends that the government failed
to prove that these mailings were in furtherance of the
scheme to defraud. He also maintains that there was
insufficient evidence that anyone in the scheme knew or
could foresee that the P & A Reports would be mailed to
the Indianapolis DNR office. We consider his arguments
in turn.
According to Boisture, the two P & A Reports were
unrelated and unnecessary to the scheme to defraud the
Indiana Department of Environmental Management. In
order to prove that the mails were used to further the
scheme, the government must demonstrate that the
mailing of the P & A Reports was “part of the execution
of the fraud.” Kann v. United States, 323 U.S. 88, 95 (1944).
The mailings need not, however, be central to the scheme;
it is sufficient if they are “incident to an essential part of
the scheme or a step” in the plot. Schmuck v. United States,
489 U.S. 705, 711 (1989) (internal citation and quotations
omitted); see also United States v. Fernandez, 282 F.3d 500,
508 (7th Cir. 2002). In other words, the mailings must
contribute to the success of the scheme. Schmuck, 489
U.S. at 711-12; United States v. Franks, 309 F.3d 977, 978
(7th Cir. 2002).
As noted above, each P & A report contains three sec-
tions: one completed at the time the well is plugged, one
completed when the well site is restored and any
debris removed, and a final section completed by the
8 No. 07-1621
Indianapolis office of the DNR to facilitate the release of
a statutorily-required bond on the well. See 312 Ind.
Admin. Code § 16-4-1. Shortly after the wells were
plugged, Boisture submitted invoices to the Indiana
Department of Environmental Management for pay-
ment. The Department then paid Environmental Consult-
ing with a series of checks issued in late 1999 and early
2000. Veatch completed the second section certifying
that the site had been remediated in June 2001, approxi-
mately a year-and-a-half after the actual well closures 3 ,
and he then submitted the P & A Reports to the local
DNR field office in Evansville, Indiana. From there, the
Evansville office sent the Reports to the main office in
Indianapolis for processing of the bond release.
Boisture maintains that the June 2001 mailing of the
P & A Reports and attendant release of the bond (held by
3
In his reply brief, Boisture points out that under the Indiana
Administrative Code, the site restoration portion of the P & A
Report should have been completed within 6 months of the
well closure. He argues that Veatch’s failure to timely complete
the site restoration portion caused the two P & A Reports to
work against the scheme because they were not timely com-
pleted. See United States v. Koen, 982 F.2d 1101, 1107 (7th Cir.
1992) (mailing that works against fraud will not support
conviction). We note that it is unlikely that the untimely
completion of one portion of the P & A Reports caused them to
work against the scheme as a whole. We need not decide,
however, because Boisture waived this argument by raising
it for the first time in his reply brief. E.g., United States v.
Diaz, 533 F.3d 574, 577 (7th Cir. 2008).
No. 07-1621 9
a third party unaffiliated with Boisture, Veatch, or
Hanisch) was irrelevant to the fraudulent scheme to
collect money for bridge plugs that were never installed.
In support of his theory, Boisture points to United States
v. Maze, 414 U.S. 395 (1974). The defendant in Maze stole
his roommate’s credit card and used it to pay for food
and lodging on a cross-country jaunt in his roommate’s
car. Maze, 414 U.S. at 396. The Court deemed Maze’s
scheme complete when he checked out of the motels
rented with his roommate’s credit card; the subsequent
mailing of the invoices from the motel to the bank and
then to Maze’s roommate for payment determined who
would bear the loss but did nothing to advance the
scheme. Id. at 402.
Boisture argues that the same is true of the P & A Report
mailings: Boisture and his co-schemers had succeeded in
collecting money for work they did not perform in early
2000—long before the final sections of the P & A Reports
were completed in June of 2001. Moreover, the reports
simply ensured that the bond on the wells was released, an
issue that had no bearing on the scheme to defraud. The
government, for its part, maintains that the false P & A
Reports were an important part of the scheme as a whole,
in that they worked together with the many other false
documents submitted to governmental agencies to ensure
that Boisture and his co-schemers both received and
retained the overcharges.
The fact that Boisture had submitted the fraudulent
invoices and received payment from the Department of
Environmental Management does not itself negate the
10 No. 07-1621
possibility that the P & A Reports furthered the scheme.
Ample evidence existed that Veatch, Hanisch, and
Boisture sought not simply to fraudulently obtain pay-
ment, but to retain their ill-gotten gains by avoiding
investigation or detection. See United States v. Bach, 172 F.3d
520, 522 (7th Cir. 1999) (mailings that failed to elicit
additional money from fraud victims furthered scheme
to “obtain and retain” payments by duped investors)
(emphasis in original).
Unlike the later-mailed invoices in Maze, the P & A
Reports here tied into and helped complete the scheme
as a whole. Although they had received payment for
the well closures, Boisture, Veatch, and Hanisch had a
strong incentive to keep all the documentation surround-
ing the well closures uniform so as to avoid arousing
suspicion. The invoices that Boisture had previously
submitted to the Indiana Department of Environmental
Management contained charges for bridge plugs in the
two wells identified in the P & A Reports. Documenting
the installation of bridge plugs on the P & A Reports
ensured that all of the paperwork surrounding the job
was consistent. Moreover, discrepancies between the
invoices and the Reports could provide a tip-off to the
fraud.
Boisture insists that because the invoices and P & A
Reports were submitted to different agencies, the contents
of the P & A Reports (whether truthful or falsified) was
irrelevant to the scheme. Environmental Consulting
submitted its invoices to the Indiana Department of
Environmental Management, and that agency paid
No. 07-1621 11
Boisture, not the DNR. As Boisture points out, the DNR
never receives copies of the invoices, and so a com-
parison between the invoices and the P & A Reports is
unrealistic. This may be, but Boisture’s argument ignores
the possibility that such a comparison could take place
at other levels. For example, Environmental Consulting’s
bookkeeper testified that she would have been alerted to
a problem if she had seen a discrepancy between the
invoices and the P & A Reports.
Moreover, Boisture’s focus on whether such a discrep-
ancy was likely to be discovered misses the point. As
Hanisch explained in his testimony, the DNR did not
consider the plugging process finished until the
completed P & A Reports were received and the bond on
the wells was released. The fact that the bond release had
no bearing on the payment Boisture received does not
mean that the P & A Reports themselves were irrelevant
to the scheme’s success. On the contrary, the fraudulent
P & A Reports completed the scheme by creating a con-
sistent picture for all involved agencies of cast iron
bridge plugs where none existed. The false information
in the P & A Reports thus helped avoid detection, even
if only tangentially: accurately stating in the reports that
no plugs were installed may not have immediately
raised suspicion, but it would have created an incon-
sistent paper trail capable of illuminating the fraud. See
United States v. Szarwark, 168 F.3d 993, 995 (7th Cir. 1999)
(noting that courts must consider “full scope of the
scheme when determining the sufficiency of the mailing
element”) (citation and internal quotations omitted); United
States v. LeDonne, 21 F.3d 1418, 1430 (7th Cir. 1994)
12 No. 07-1621
(“Avoidance of detection is often a material part of a
fraudulent scheme; for an illegal scheme would hardly
be undertaken were there to be no profit to the plotters.”).
And Hanisch testified at trial that he knew the final step
of the well-plugging process was the bond release in
Indianapolis and that the scheme entailed submitting
the same false information on both the invoices and the
P & A Reports.
Unlike the indictment in Maze, which charged the
defendant with unlawfully obtaining goods and services
on four discrete occasions at four specified motels, the
indictment here alleged a broad scheme to defraud the
Indiana Department of Environmental Management. See
United States v. Franks, 309 F.3d 977, 978 (7th Cir. 2002)
(distinguishing broad scheme covering 449 checks from
a case charging “three schemes of one check apiece” that
had succeeded once each check reached the drawee
bank). Admittedly, the government’s case could have
been stronger: the false invoices submitted and other
false documentation furthered the fraud far more
directly than the two P & A Reports referenced in Count I.
Nonetheless, the jury could have inferred from the evi-
dence that the two P & A Reports amounted to the final
step in a broad scheme to both dupe the Indiana Depart-
ment of Environmental Management into overpaying
and to avoid detection for the fraud and thereby retain
the overpayments. See Schmuck, 489 U.S. at 712 (mailings
that did not contribute directly to scheme still supported
conviction where they were necessary to an essential
part of the scheme); Fernandez, 282 F.3d at 507-08 (up-
holding convictions based on mailings that assisted in
No. 07-1621 13
concealing “true nature of the scheme” and falsely portray-
ing construction firm as legitimate).
Boisture next claims that the government failed to
prove that any of the three schemers knew or could have
foreseen that the P & A Reports would be mailed. Al-
though the government need not prove that using the
mail is an essential part of the scheme, United States v.
Young, 232 U.S. 155, 161-62 (1914), it must demonstrate
that Boisture knowingly caused the mails to be used in
furtherance of the scheme. E.g., United States v. Hickok,
77 F.3d 992, 1004 (7th Cir. 1996). The government could
satisfy its burden with evidence that either Veatch or
Hanisch, whose knowledge could be imputed to
Boisture, could reasonably foresee that the P & A Reports
would be mailed in the ordinary course of business. See
Pereira v. United States, 347 U.S. 1, 8-9 (1954); United States
v. Useni, 516 F.3d 634, 648 (7th Cir. 2008).
Boisture asserts that the government’s evidence on this
point fell short because it failed to demonstrate that
Veatch or Hanisch either knew or could foresee that the
P & A Reports would be mailed from Evansville to India-
napolis. Boisture maintains that the government devoted
considerable energy trying to prove that the forms were
actually mailed, but that it neglected to put forth
evidence regarding any of the co-schemers’ expectations
about the use of the mails. It is true that most of the
evidence at trial about the mailings centered on how they
arrived in Indianapolis. Because the government lacked
direct evidence that the two P & A Reports were
mailed from the Evansville office to the Indianapolis
14 No. 07-1621
office, it was obliged to prove circumstantially that Veatch
submitted the reports in Evansville and that they were
not hand-delivered to their final destination in Indiana-
polis. The government succeeded on this front with
testimony from the only DNR employee who traveled
between the two offices during the relevant time period: he
testified that he did not hand-deliver the reports. That
same employee also testified that he stamped each piece
of mail as he opened it with a date stamp like the one
borne by each of the P & A Reports.
But this was not the only evidence on the mailing
element. There was also evidence presented that Veatch
could have foreseen the use of the mails. Veatch testified
that he knew the final portion of the P & A Report—the
bond release—was completed and stored at the main DNR
office in Indianapolis. He also testified that he submitted
the P & A Reports with the other two sections completed
to the Evansville office. The jury could infer from this
testimony that Veatch could have reasonably foreseen
that the forms would be mailed from the Evansville
office to the Indianapolis office for completion. Although
the jury was not required to make such an inference, it was
certainly a plausible one. See United States v. Haskins, 511
F.3d 688, 693 (7th Cir. 2007). We are thus unconvinced
by Boisture’s assertion that there was insufficient evidence
of the schemers’ knowledge that the mails would be used.
III.
Although the question is a close one, we conclude that
sufficient evidence supports the jury’s conclusion that
the mailing of the two P & A Reports furthered the
No. 07-1621 15
scheme to defraud. Likewise, the evidence was sufficient
on the mailing aspect of Count I. We therefore A FFIRM
Boisture’s convictions and sentence.
4-20-09