United States v. Lamar Chapman, III , 692 F.3d 822 ( 2012 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 11-2951
U NITED S TATES OF A MERICA,
Plaintiff-Appellee,
v.
L AMAR C HAPMAN III,
Defendant-Appellant.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 09 CR 741—Charles P. Kocoras, Judge.
A RGUED A PRIL 5, 2012—D ECIDED A UGUST 30, 2012
Before R OVNER, W OOD , and W ILLIAMS, Circuit Judges.
W OOD , Circuit Judge. Lamar Chapman was convicted
by a jury of six counts of forging checks in violation
of 18 U.S.C. § 513(a). Chapman would now like to
convince us that the government failed to prove his guilt
beyond a reasonable doubt. He also asserts that he is
entitled to a new trial because the district court
improperly admitted a previous forgery conviction. The
standard of review he faces for each of these is an
2 No. 11-2951
exacting one, however, and he has not convinced us that
any reversible error occurred. We therefore affirm.
I
Chapman ran into trouble through some work he was
doing for North American Herb and Spice (NAHS), a
nutritional supplements business located in Lake Forest,
Illinois. On the recommendation of their accountant, Art
Sutton, NAHS-owner Judy Gray and her husband Bill
had hired Chapman in 2003 to help them resolve a tax
dispute with the IRS. In the course of that work, Chapman
notified the Grays that he needed several cashier’s
checks. On April 3, 2003, Mr. Gray and Chapman went
to the Bank of Highwood to get seven cashier’s checks
made payable to the “Internal Revenue Service.” The
next day, Chapman faxed a letter to Mr. Gray stating
that the cashier’s checks were “made payable to the
Internal Revenue Service in the total sum of $109,776.99
to settlement [sic] any and all claims in compromise
for” their dispute with the IRS. Unbeknownst to the
Grays at the time, Chapman sent only four of the
cashier’s checks to the IRS. He kept the other three,
amounting to more than $64,000, for himself, altering
the “pay to order” line to substitute his name for that of
the IRS.
In 2004, Mrs. Gray signed a limited power of attorney
that permitted Chapman to “execute banking applica-
tions and to start up proceeding forms and documents”
on behalf of NAHS, the International Research Founda-
tion (its former payroll arm), and the Lake Forest Trust
No. 11-2951 3
(its former property management entity), among other
entities. Mrs. Gray’s understanding was that Chapman
would use this limited power of attorney to open bank
accounts to support the business. Using his new
authority, Chapman opened multiple accounts at Fifth
Third Bank for NAHS, International Research Founda-
tion, and the Lake Forest Trust. Then on November 13,
2004, Chapman submitted a letter to Fifth Third Bank
stating that he was withdrawing his power of attorney
for NAHS and its related entities. Mrs. Gray included
a note on the letter stating that “[n]o withdrawals are
allowed today by [Chapman] until further notice.” One
month later, on December 14, 2004, Chapman sent a
second letter to the bank in an effort to reinstate his
power of attorney. The letter included the words “With
authorization” and had Mrs. Gray’s signature stamp
underneath. She testified that she did not sign the letter,
did not authorize Chapman’s use of the stamp, and
had never given Chapman her signature stamp. She was
not aware of the letter until 2006. Chapman later
informed an investigating agent that he secured a
rubber stamp with Mrs. Gray’s signature and used it in
2006 to execute checks.
Chapman was dismissed from NAHS in early 2006.
At that time, the Grays asked him to return any com-
pany documents in his possession. Chapman refused.
In April 2007, Mr. Gray spotted some inconsistencies
in NAHS’s accounts. He contacted his bank, which
faxed him copies of two checks. Check 46263, dated
April 9, 2007, was drawn from the International
Research Foundation’s account and was made payable to
4 No. 11-2951
the “Clerk of the United States District Court.” The memo
line said “Filing fees Chapman vs. U.S. Marshals.” Check
46264, also dated April 9, 2007, had the same payee, but
its memo line said “Filing Fee, Chapman vs. Police De-
partment.” Both checks were signed using Mrs. Gray’s
signature stamp, but neither of the Grays had in fact
authorized them. Other unauthorized checks also
showed up, including one for $6,500 drawn on the
Lake Forest Trust account, again using Mrs. Gray’s signa-
ture stamp without authorization.
Special Agent Glass of the U.S. Secret Service inter-
viewed Chapman, along with Special Agent William
Quelle, in March 2008. Agent Glass interviewed him
again in September 2009. In their first meeting,
Chapman admitted that he had cashed the three Fifth
Third Bank checks. He contended, however, that his
actions were authorized by the limited power of attor-
ney. Chapman explained that he wrote and cashed
the checks because NAHS owed him money for his work
there. Around this time, Chapman deposited the final
cashier’s check into his account. The federal agents
were not aware of the three cashier’s checks until the
September 2009 meeting. When asked to justify the
checks in 2009, Chapman repeated the story that they
represented compensation for unpaid work. Shortly
thereafter, the government indicted Chapman on six
forgery counts for the three cashier’s checks and three
checks drawn with Mrs. Gray’s signature stamp.
It turned out that Chapman’s behavior with NAHS was
not his inaugural performance. In 2004, he had pleaded
No. 11-2951 5
guilty to forging a check intended for the IRS by adding
his name to the “payable to” line. In the plea agreement,
he admitted to the following:
[O]n April 14, 1999, defendant deposited check number
1-263823 in the amount of $68,510 into his account at
Charles Schwab & Company (“Schwab”). This check
was drawn on an account maintained by Stewart
Title Company of Illinois at American National Bank
and made payable to the “Internal Revenue Service”
(“IRS”). This check was generated on behalf of In-
dividuals A and B from the proceeds of a home
equity loan they took to pay off debts, including
$68,510 in taxes they owed to the IRS. In 1999, Individ-
uals A and B were clients of defendant’s consulting
business. Defendant agreed to convey this check to the
IRS. Instead, on or before April 14, 1999, defendant
added “Lamar C. Chapman III for the benefit of Indi-
vidual A and Individual B” to the payee portion of the
check and endorsed it on the back with his signature
without the knowledge, authorization or consent of
Individuals A and B, Schwab, the IRS or Stewart Title.
On April 14, 1999, defendant deposited the check
into his Schwab account.
Before trial in the present case, the government moved
to admit evidence of this conviction under Federal Rule
of Evidence 404(b). The prosecutor argued that the con-
viction was admissible because in Counts I, II, and VI
of the indictment Chapman was charged with similar
conduct, namely, “forging cashier’s checks, adding his
own name and account numbers over the initially
6 No. 11-2951
executed payable to line of ‘Internal Revenue Service’
and then cashing the checks and pocketing the money.”
The district court concluded that the evidence was ad-
missible because it was “highly relevant and probative
on elements of the crime, particularly the issue of intent.”
The court further found that the evidence was “close
in time to the matters at issue here, and there can be
no question these are the acts of the defendant on trial.”
To reduce the risk of prejudice, the court used the fol-
lowing jury instruction:
You have heard evidence of acts of the
defendant other than those charged in the indict-
ment. You may consider this evidence on the
question of intent, plan, knowledge, identity or
absence of mistake. You should consider this
evidence only for this limited purpose.
After the jury found Chapman guilty as charged, he was
given concurrent sentences of 60 months on each count.
II
On appeal, Chapman first argues that the government
lacked sufficient evidence to support his conviction.
We review the sufficiency of evidence for Chapman’s
conviction under the familiar deferential standard: We
may reverse the conviction only if no rational trier of fact,
viewing the evidence in the light most favorable to
the government, could have found his guilt beyond a
reasonable doubt. United States v. Gorman, 613 F.3d 711,
715 (7th Cir. 2010).
No. 11-2951 7
A
The government had the burden at trial to prove
beyond a reasonable doubt that Chapman “ma[de],
utter[ed] or possesse[d] a forged security of . . . an organi-
zation, with intent to deceive another person, organiza-
tion, or government.” 18 U.S.C. § 513(a). Chapman
argues that the government failed to prove his lack of
good faith or his intent to deceive. As he sees it, his good
faith cannot be doubted because he substituted his name
for that of the IRS on the “pay to the order” line on
three cashier’s checks and he issued the checks from
NAHS’s Fifth Third Bank accounts to himself using his
limited power of attorney. With a certain amount of
chutzpah, he argues that his conduct must have been
in good faith because it was otherwise so obviously illegal.
Chapman’s arguments are unconvincing. Not surpris-
ingly, there is no support for the idea that blatant
illegality is actually evidence of pristine intent. With
respect to the cashier’s checks, Chapman instructed
Mr. Gray to purchase seven such checks made payable
to the IRS for more than $109,000 in total. He submitted
a letter to the Grays informing them that this had
been done. But Chapman did not submit all seven
checks to the IRS; instead, he kept three of the checks
for himself and cashed them after he had been fired
from NAHS. He did not notify the Grays that he had
kept the checks or that he had cashed them for himself.
This conduct is overwhelming evidence of intent
to deceive.
Turning to the checks written on the Fifth Third Bank
accounts, we have no trouble concluding that the jury
8 No. 11-2951
was entitled to reject Chapman’s argument that he had
the power to write those checks. First, his power of at-
torney was limited to opening accounts. Mrs. Gray had
revoked even that limited authorization by the time
he wrote these checks. Chapman attempted to reinstate
it using her signature stamp, but he did so without in-
forming her or securing her authorization. Using his
illicit authority, Chapman wrote checks to himself using
Mrs. Gray’s signature stamp. The jury certainly could
infer that he would not have bothered to use her stamp
if he already possessed authority to draw on the account.
B
Chapman next argues that the government failed to
prove at trial that International Research Foundation
(NAHS’s former payroll arm) and Lake Forest Trust (the
NAHS-affiliated trust) conducted business outside
Illinois or otherwise affected interstate commerce. The
government was required to prove that the two victim
entities were each “a legal entity . . . which operates
in or the activities of which affect interstate or foreign
commerce.” 18 U.S.C. § 513(c)(4); see also United States
v. Lee, 439 F.3d 381, 387 (7th Cir. 2006) (reversing
conviction on two forgery counts where the govern-
ment did not present any evidence that the bank named
on the check existed).
This argument is also easily dismissed. The testimony
at trial established that International Research Founda-
tion and Lake Forest Trust were engaged in the business
of their parent NAHS, and that the parent enterprise
No. 11-2951 9
sold products throughout the United States. Ted Camp-
desuner, NAHS’s director of client services, and the
Grays testified that the two entities are NAHS’s sub-
sidiaries: International Research Foundation was re-
sponsible for payroll and Lake Forest Trust managed
the business’s property and now manages its research
facility. While further testimony on this issue might
conceivably have solidified the matter, it cannot be
said from the testimony that the entities lacked “at least,
a de minimis effect on interstate commerce.” Id.III
Chapman next contends that the district court improp-
erly admitted evidence of his 2004 forgery conviction.
He claims it was not used for anything other than pro-
pensity and therefore should have been excluded
under Rule 404(b). As he puts it, all the government
wanted to do was to suggest to the jury “once a forger,
always a forger.” We review the district court’s ruling
for abuse of discretion. United States v. Reese, 666 F.3d
1007, 1015 (7th Cir. 2012). The district court’s ruling will
be reversed “[o]nly where no reasonable person could
take the view adopted by the trial court.” United States
v. Vargas, 552 F.3d 550, 554 (7th Cir. 2008).
The rule forbids the use of earlier bad acts to
prove propensity (which it labels a “prohibited use”), but
it permits the use of such evidence for a variety of
other purposes: “motive, opportunity, intent, preparation,
plan, knowledge, identity, absence of mistake, or lack
of accident.” FED. R. E VID. 404(b)(2); see United States v.
10 No. 11-2951
Conner, 583 F.3d 1011, 1021-22 (7th Cir. 2009). The admis-
sion of this type of evidence always carries with it
some risk of unfair prejudice to the defendant, but the
critical issue is whether that risk is sufficiently out-
weighed by other factors. United States v. Green, 258
F.3d 683, 694 (7th Cir. 2001). We look at four points
in deciding whether evidence was properly admitted
under this rule: whether the evidence “(i) is directed
toward establishing a matter in issue other than the de-
fendant’s propensity to commit the crime charged; (ii)
shows that the other act is similar enough and close
enough in time to be relevant; (iii) is sufficient to
support a finding that the defendant committed the
other act; and (iv) has probative value not outweighed
by the danger of unfair prejudice.” Id.Here, looking at the first element, we are satisfied
that Chapman’s 2004 conviction shed light on the
questions of intent and lack of mistake. It shows that he
knew how to manipulate financial instruments for his
personal benefit, and it also undermines his argument
that he thought that he was authorized to treat the
NAHS accounts as his own.
As for the second point, the district court rationally could
have concluded that the 2004 conviction was similar
enough to charged counts to be relevant. In both cases,
Chapman used his business relationship with a client to
gain access to his client’s funds. He tampered with propri-
etary information—business checks, signature stamps,
and company accounts—for personal financial gain.
The fact that the underlying conduct is nearly identical
No. 11-2951 11
to only three of the six counts (those dealing with the
cashier’s checks) does not render it irrelevant to the
remaining counts (those focused on the Fifth Third Bank
account). In addition, the conviction was close enough
in time to this case to be relevant to the charges. The
acts underlying the 2004 conviction and this case are
separated by two years, at most.
Chapman does not seriously challenge the sufficiency
of the evidence to support a finding that he committed
the earlier acts. He really could not. The 2004 plea agree-
ment was sufficient to support the conclusion that he
did, in fact, forge the earlier check.
Finally, there is the question whether on balance the
earlier conduct was unfairly prejudicial. This is a matter
entrusted to the district court’s discretion, and we see
no abuse of discretion here. The court took care to
instruct the jury about the proper use of this evidence,
and we have no reason to think that the jury disre-
garded the instruction. In addition, Chapman has not
challenged the content of the instruction on appeal. We
therefore conclude that the district court did not abuse
its discretion in admitting Chapman’s 2004 conviction
into evidence.
IV
Accordingly, we A FFIRM Chapman’s conviction.
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