United States v. Ronnanita Fluker , 698 F.3d 988 ( 2012 )

In the
United States Court of Appeals
For the Seventh Circuit
Nos. 11-1013, 11-3008 & 11-3082
U NITED STATES OF A MERICA,
Plaintiff-Appellee,
v.
R ONNANITA F LUKER, R OY F LUKER, III,
and R OY F LUKER, JR.,
Defendants-Appellants.
Appeals from the United States District Court
for the Northern District of Illinois, Eastern Division.
Nos. 1:08-cr-00540—David H. Coar and
Gary S. Feinerman, Judges.
A RGUED S EPTEMBER 5, 2012—D ECIDED O CTOBER 26, 2012
Before B AUER, M ANION, and T INDER, Circuit Judges.
B AUER, Circuit Judge. This case proves the old adage,
“If something sounds too good to be true, it probably
is.” Following a three-week trial, Roy Fluker, Jr. (“Roy Jr.”),
Roy Fluker III (“Roy III”), and Ronnanita Fluker
(“Ronnanita”), (collectively, the “Appellants”), were found
guilty of charges related to their participation in various
fraudulent, Ponzi-like schemes that duped victims into
2 Nos. 11-1013, 11-3008 & 11-3082
investing millions of dollars into programs that were
destined to fail. The Appellants were sentenced to prison
at separate sentencing hearings. In this consolidated
appeal, Roy Jr. and Roy III challenge three of the
district court’s evidentiary rulings that they believe
deprived them of a fair trial. Roy III also contends that
the district court erred in calculating his sentence under
the United States Sentencing Guidelines (“U.S.S.G.” or
“Sentencing Guidelines”). Ronnanita challenges the
district court’s decision to provide the jury with an
“ostrich” instruction, as well as the calculation of her
sentence. We affirm all of the convictions and sentences.
I. BACKGROUND
From early 2005 until late 2007, Roy Jr., together with
his son Roy III and his daughter Ronnanita, devised
and participated in various schemes that defrauded
thousands of people. Roy Jr. founded a company All
Things in Common, LLC, which did business under the
name More Than Enough, Inc. (“MTE”), in May 2005,
and later a second company, Locust International, LLC
(“Locust”), in January 2006. Using the MTE business, the
Appellants created, marketed, and carried out a “Spend
and Redeem Program” and a “Housing Program” for
roughly eighteen months until the programs collapsed.
Roy Jr. generally created and structured the particular
program’s terms while Roy III and Ronnanita were re-
sponsible for overseeing and executing the specific trans-
actions.
Nos. 11-1013, 11-3008 & 11-3082 3
The Spend and Redeem Program consisted of two
parts. First, participants would “spend” by paying MTE
an initial minimum payment of $500, with a maximum
of $5,000. Then, in exchange for the participants’ initial
payments, MTE would provide the participants with
certificates that they could “redeem” at the monthly
“venue” meetings (to be discussed later) for a monetary
payment. The Spend and Redeem Program promised
participants that they would receive a twenty-five
percent return on their total investment every month
for twelve consecutive months—i.e., a guaranteed 200%
return after one year. In other words, a $500 initial pay-
ment would entitle the participant to receive $1,500
after twelve months; a $5,000 initial payment would
yield a $15,000 payment after twelve months. Participants
could contribute up to $20,000 per year to the Spend
and Redeem Program, plus additional money for
children under eighteen. Witnesses testified at trial that
the Spend and Redeem Program was just a “hook;” the
real money was made from the Housing Program.
The Housing Program was more complex, as MTE
offered two options within the program: the “Reverse
Mortgage Program” and the “35 Percent Equity Pro-
gram.” Which program an individual could participate
in depended on the individual’s credit scores, loan bal-
ances, and the amount of equity the individual had in
his home.
The Reverse Mortgage Program required the partic-
ipant to own a minimum of seventy-five percent equity
in his home. To participate, the participant would
4 Nos. 11-1013, 11-3008 & 11-3082
refinance or sell his home and pay MTE from the
equity proceeds an amount equal to at least seventy-
five percent of the home’s value. In return, the
Appellants told the participant that the equity money
would be used to repay a traditional thirty-year loan
in five years and that MTE would be solely re-
sponsible for paying the lenders on behalf of the
participant-borrowers. The Appellants also promised to
make monthly payments to the participants in an
amount equal to roughly one percent of the total loan
value.
In order to qualify for the 35 Percent Equity Program,
participants were required to own a minimum of thirty-
five percent equity in their homes. Like the participants
in the Reverse Mortgage Program, to join the program,
participants needed to pay MTE from the equity
proceeds from the sale or refinancing of the home.
But under this program, the amount only needed to
be thirty-five percent of the home’s value. These partici-
pants were told that they would not be responsible
for making any payments during the first six months
after the transaction. After the six-month grace period,
the participants would be responsible for making
monthly payments to MTE—later Locust—for the next
fifty-four months until the loan was paid off. The Ap-
pellants claimed these payments would be approxi-
mately one-half of the participant’s previous mortgage
payment. Regardless of which Housing Program
subprogram an individual participated in, the Appellants
essentially promised that the program would allow the
participants to do two things: reduce their monthly
Nos. 11-1013, 11-3008 & 11-3082 5
mortgage payments and own their homes mortgage-free
within five years. The reality is that the Appellants
were causing the participants to take out a loan with a
high interest rate and a principal balance that was sig-
nificantly more than the previous balance owed.
In the event an individual was otherwise ineligible
to participate in the Housing Program but had
a sufficient credit score, MTE would provide an
“A-Buyer” to facilitate the individual’s participation.
A-Buyers were essentially straw purchasers for the
various transactions; they were other MTE members
who had credit scores that would allow them to qualify
for loans. Thus, the A-Buyer would take out a loan to
“purchase” the home of a Housing Program participant
who was otherwise ineligible for the program, but the
seller-participant would continue to live in the home rent
free and simply comply with the payment terms of what-
ever subprogram he was participating in. The terms
usually required the seller-participants to make
monthly payments to MTE. The Appellants assured the
A-Buyers that MTE would accept all responsibility
under the loan for paying the lender.
The Appellants, in addition to Hayward Borders
and six other individuals who became MTE’s Board
Members, set out in June 2005, to market and promote
the aforementioned programs. Monthly “venue” meetings
were held at various churches and hotels throughout
the Chicagoland area at which Roy Jr., Roy III, or another
MTE employee explained MTE’s programs to those
in attendance. The Appellants claimed the programs
6 Nos. 11-1013, 11-3008 & 11-3082
would “develop an economy basically for the African-
American community” and would teach individuals
about “functional spending.” Each venue had a capacity
of one hundred members. When a given venue reached
its maximum capacity, the Appellants would open
another one. New venues were opened in Wisconsin,
Nevada, Florida, Georgia, and Texas before the Appel-
lants’ scheme collapsed. Ronnanita’s role at the meetings
involved assisting Roy Jr. with his presentations,
typically by providing information from her computer
files, and collecting cash from interested participants.
In response to questions as to how the Appellants
could promise such significant returns from the
programs, Roy Jr. stated that MTE had invested in the
foreign market exchange and had achieved significant
returns by buying and selling currencies. Roy Jr. also
represented to participants that he had invested in real
estate or gold mines in Africa. When pressed for
details, Roy Jr. claimed that the investment strategies
could not be revealed because they were patented.
On one occasion, Roy Jr. compared his refusal to pro-
vide details of MTE’s investment strategies to KFC’s
refusal to provide customers with its fried chicken rec-
ipe. Roy III made similar misrepresentations re-
garding MTE’s investments and claimed patents. If an
active participant had a question about a program or
needed something done, he would go to Ronnanita,
who was known as being “second in command” to Roy Jr.
As time passed, more investors were enticed into par-
ticipating in the schemes. Although the earliest Spend
Nos. 11-1013, 11-3008 & 11-3082 7
and Redeem Program participants were paid back
millions of dollars, many of them were induced to
reinvest much of their earnings and to encourage other
potential participants to join.
Around March 2006—roughly nine months after the
scheme began—the Appellants introduced MTE’s “Presi-
dential Club,” also known as the “Big Boys Club,” to
about thirty of MTE’s past Spend and Redeem Program
participants. Members of this group were required to
invest at least $50,000, but, unlike participants in the
original program, they would have to wait two months
after their initial investments before they would begin
to receive their first twenty-five percent payments.
Each of the Appellants’ representations and promises
to the participants were false, and the programs had
absolutely no chance of succeeding. The money the Ap-
pellants received was used for a multitude of expenses,
including but not limited to the MTE Board Members’
salaries and cars, tropical vacations, and purchasing real
estate. Hundreds of thousands of dollars were used for
the Appellants’ personal expenses and affairs, like pay-
ments for Roy III’s wedding. More significantly, the
money coming in was not kept in separate bank
accounts, so the precise amount generated from each
program or subprogram could not be tabulated. For
example, equity money received from the Housing Pro-
gram was often deposited into the same bank accounts
as the Spend and Redeem Program proceeds. Despite
the Appellants’ assurances that the Spend and Redeem
Program was separate and distinct from the Housing
8 Nos. 11-1013, 11-3008 & 11-3082
Program, all the monthly mortgage payments that
MTE and Locust made to lenders on behalf of the
Housing Program participants and A-Buyers were
made directly from the money contributed by both
Spend and Redeem and Housing Program participants.
Roy Jr. had at least eighteen accounts at three different
national banks that were used to pay whatever expenses
were due. Money was freely transferred between the
accounts whenever necessary, usually by Ronnanita
at Roy Jr.’s direction.
The scheme as a whole began to collapse in the sum-
mer of 2006, roughly twelve months after its inception
and three months before the banks froze the Appellants’
accounts. As with all Ponzi schemes, the money coming
in had to exceed the money going out. Before the
freeze in September 2006, Grace Edwards, the MTE
Board Member who prepared the “redeem” checks each
month for the Spend and Redeem Program participants,
recognized that the incoming cash flow was insufficient
to cover the amounts due. Roy Jr. told Edwards to let
him know how much money was needed each month
to complete the redemptions, and she obliged. Edwards,
who only had access to one account, then noticed
deposits totaling hundreds of thousands of dollars
were made to that account each month. This continued
until the scheme’s ultimate demise. It was also around
this time when the Appellants caused monthly mortgage
payments made by MTE and Locust to be late. Housing
Program participants and A-Buyers began receiving
unexpected telephone calls from lenders advising them
of overdue payments, and they attempted to contact
Nos. 11-1013, 11-3008 & 11-3082 9
the Appellants about these issues. The Appellants rarely
answered or returned the calls.
The State of Illinois Attorney General served Roy Jr., as
well as All Things in Common, on September 20, 2006,
with an amended Temporary Order of Prohibition
entered by the Illinois Securities Department.1 This led
to the banks putting a hold on MTE’s accounts. Never-
theless, the Appellants continued to operate venue meet-
ings under the company name Wealth Creation Institute
as well as solicit new participants for both programs.
This time, however, the Appellants referred to the
Spend and Redeem Program as an “educational program
or school.”
In order to reduce discontent among Housing
Program participants who had heard rumors about MTE,
Ronnanita sent letters in January 2007 explaining that
Locust was now responsible for MTE’s mortgage
program and that the participants had no reason to
worry. In actuality, MTE had stopped making payments
on the participants’ mortgages around late 2006, which
eventually caused many of the participants to default
on their mortgages and lose their homes to foreclosure.
Some Housing Program participants continued making
monthly payments to the Appellants in 2007, even after
the Appellants were legally ordered to cease their MTE
operations.
1
Neither Roy III nor Ronnanita was named in this order, and
Ronnanita’s Presentence Investigation Report (“PSR”) con-
cluded that the evidence did not support a finding that either
possessed knowledge of the order.
10 Nos. 11-1013, 11-3008 & 11-3082
By the time the overall scheme ended in 2007, the
Appellants had already received more than $16 million
from the Spend and Redeem Program and more than
$2.6 million from the Housing Program. Over 3,000 people
from the Spend and Redeem Program and more
than 25 people from the Housing Program were affected
in only eighteen months. For the scheme to have
continued, the Appellants would have needed to
generate $45 million over approximately the next year
to make the Spend and Redeem Program “redeem”
payments and at least $7 million over the next five years
to make the required Housing Program payments. Bank
records demonstrate that the money the Appellants
received was never invested in any significant way in
order for a return to have been generated. As the
district court put it, the scheme was a “virtual impossi-
bility.”
Roy Jr. admitted the fraudulent nature of the Spend
and Redeem Program in a consent order of prohibition
signed with the Illinois Secretary of State Securities De-
partment on October 8, 2007 (the “Consent Order”). Roy III
signed a separate consent order of prohibition re-
garding the Spend and Redeem Program on October 5,
2007.
On July 9, 2008, a Grand Jury in the Northern District
of Illinois returned an eleven-count indictment against
Roy Jr., Roy III, and Ronnanita for their conduct vio-
lating 18 U.S.C. §§ 1341, 1343—mail and wire fraud. The
Appellants were tried together and, after a three-week
jury trial, convicted on May 25, 2010. Roy Jr. was
convicted on all eleven counts. Roy III was found guilty
Nos. 11-1013, 11-3008 & 11-3082 11
on five counts of wire fraud, and Ronnanita was found
guilty on five counts of wire fraud and three counts of
mail fraud. The Appellants each filed post-trial motions,
which the district court denied in their entirety.
At sentencing for Ronnanita on December 16, 2010,
the district court accepted the PSR’s findings, but also
acknowledged that “Roy Fluker, Jr., is the person who
is most responsible for what happened.” Accordingly,
even though the Sentencing Guidelines called for a sen-
tencing range of 210 to 262 months’ imprisonment,
the district court sentenced Ronnanita to ninety-six
months’ incarceration, plus restitution in the amount of
$10,783,960.45.2 On August 16, 2011, the district court
sentenced Roy III to ninety-six months’ imprisonment
with restitution in the amount of $7,336,957.49. Roy Jr.
was sentenced on August 25, 2011, to 180 months’ impris-
onment plus $7,336,957.49 restitution. This consolidated
appeal followed.
II. DISCUSSION
A. Evidentiary Rulings
Roy Jr. and Roy III challenge the admission of three
pieces of evidence. They assert that this evidence was
2
Ronnanita was sentenced by Judge David H. Coar, who
presided over the Appellants’ trial. On January 1, 2011, before
Roy Jr. and Roy III were sentenced, Judge Coar took inactive
status, and the case was reassigned to Judge Gary S. Feinerman,
who subsequently sentenced Roy Jr. and Roy III.
12 Nos. 11-1013, 11-3008 & 11-3082
improperly admitted and its admission denied them a
fair trial. We review the admission of this evidence
for abuse of discretion. United States v. Chapman, No. 11-
2951, 2012 U.S. App. LEXIS 18379, at *11 (7th Cir. Aug. 30,
2012).
1. Roy Jr.’s Consent Order 3
Roy Jr. signed the Consent Order on October 8, 2007,
after the Attorney General of the State of Illinois initiated
a civil action against him because of the fraudulent
nature of the Spend and Redeem Program. In the Con-
sent Order, Roy Jr. acknowledged that he failed to
disclose the following material facts to Spend and
Redeem Program participants:
(a) MTE had no substantive investments capable
of producing returns sufficient to repay Investors;
(b) MTE was using Investors’ funds to meet MTE
and [Wealth Creation Institute’s] obligations to
repay prior Investors; and
(c) MTE’s ability to repay Investors was dependent
on MTE’s continuing to fraudulently raise funds
from future Investors.
Roy Jr. also acknowledged that “he had the opportunity
to consult with an attorney regarding this matter;” the
3
Roy III originally challenged the admission of the consent
order he signed but later stipulated that the Government
could present a redacted form of his consent order to the jury.
Nos. 11-1013, 11-3008 & 11-3082 13
“Stipulation [was] entered into freely and voluntary;”
and he was not promised anything with regard to “civil
or criminal liability arising from the facts underlying
this matter.”
Roy Jr. filed a motion in limine to exclude the Consent
Order. The parties discussed the motion during a
status hearing on June 30, 2009, and the district court
stated, “[A]s to the general notion that none of this
comes in, that’s not going to happen.” Proceeding in
light of the district court’s comment, Roy Jr. entered into
a stipulation with the Government that the Consent
Order would either be admitted in its entirety or with
certain portions redacted. The district court instructed
the parties that “there should be an instruction at the
end, and there should also be an instruction when this
evidence comes in[,] that it’s only to be used for the
person who signed the consent and no other defendant.”
At trial, the entire Consent Order was admitted
without redaction, accompanied by an instruction ad-
monishing the jury to consider the Consent Order
only against Roy Jr.
The brief and reply brief for Roy Jr. and Roy III
are unclear as to who exactly is challenging the admissi-
bility of the Consent Order, Roy Jr. alone or Roy Jr. and
Roy III.4 Either way, the limiting instruction, coupled
4
Roy Jr. and Roy III filed a consolidated brief and reply brief.
In the sections discussing the admissibility of the Consent
Order, the parties are inconsistent, first stating that “Roy
(continued...)
14 Nos. 11-1013, 11-3008 & 11-3082
with the fact the Consent Order did not contain any
references to Roy III, sufficiently removed any unfair
prejudice to Roy III, see United States v. Javell, No. 11-3044,
2012 U.S. App. LEXIS 18377, at *9-11 (7th Cir. Aug. 30,
2012) (explaining that the admission of a co-defendant’s
confession is permissible at trial if the admission is ac-
companied by a limiting instruction and does not
facially incriminate the defendant), and we, thus, move
on to Roy Jr.’s argument.
Roy Jr. maintains that the Consent Order he signed
should not have been admitted because it was highly
prejudicial and unnecessarily confusing to the jury,
inserting state civil procedure issues into a federal
criminal trial. The Government contends the informa-
tion was relevant, as it contained factual admissions
related to the fraud allegations, and not unfairly prejudi-
cial. We find that Roy Jr. has waived his ability to
contest the Consent Order’s admission.
“To preserve an issue for appellate review, a party
‘must make a proper objection at trial that alerts the
court and opposing party to the specific grounds for the
objection.’ ” Naeem v. McKesson Drug Co., 444 F.3d 593,
610 (7th Cir. 2006) (quoting United States v. Wynn, 845
F.2d 1439, 1442 (7th Cir. 1988)). “When a party fails
to timely and properly object at trial to the admission of
4
(...continued)
Fluker Jr. and Roy Fluker III” were deprived of a fair trial
and, later, that “Mr. Roy Fluker Jr.” previously argued that
the Consent Order’s admission was improper.
Nos. 11-1013, 11-3008 & 11-3082 15
evidence, the party is deemed to have waived the issue
on appeal.” Christmas v. City of Chi., 682 F.3d 632, 640
(7th Cir. 2012) (quoting Jones v. Lincoln Elec. Co., 188 F.3d
709, 727 (7th Cir. 1999)).
The Government and Roy Jr. stipulated to the
Consent Order’s admission. When the Government
asked at trial to publish portions of it to the jury, Roy
Jr.’s counsel stated that he had no objection. By
entering into a stipulation with the Government and
failing to object at trial to the Consent Order’s admission,
Roy Jr. made a strategic decision to abandon his
challenge of the Consent Order’s admissibility. See
United States v. Gaona, No. 12-2039, 2012 U.S. App. LEXIS
20787, at *11 (7th Cir. Oct. 5, 2012) (“The touchstone
of waiver is a knowing and intentional decision.”
(quoting United States v. Jaimes-Jaimes, 406 F.3d 845, 848
(7th Cir. 2005))). This decision precludes our review of
the issue on appeal.
2. Roy Jr.’s Prior Felony Convictions
Roy Jr. was convicted of larceny by conversion (failure
to return a rental car) on April 29, 1997, and “uttering
and publishing” a forged check (forgery) sometime in
2003. He filed a motion in limine, citing Rule 609(1), to
bar the admission of these convictions. At a pretrial
hearing, the district court ruled that the Government
could question Roy Jr. regarding the larceny conviction
if he testified at trial but deferred its ruling as to the
forgery conviction. At the next status date, the parties
discussed the forgery conviction and whether the Gov-
16 Nos. 11-1013, 11-3008 & 11-3082
ernment intended to introduce it during its case-in-chief.
The Government stated it did not, to which Roy Jr.’s
counsel responded, “End of the problem.” The district
court offered no further instructions regarding the
forgery conviction.
Roy Jr. contends these determinations amount to
an abuse of discretion because the offenses were
unduly prejudicial, but he encounters an insur-
mountable hurdle. During the Government’s case-in-
chief, the Government did not publish to the jury or
question any witnesses about either of Roy Jr.’s convic-
tions.5 It was not until Roy Jr. testified on direct exam-
ination that the jury heard about the two convictions.
Roy Jr. alone was responsible for putting the informa-
tion before the jury, and the Supreme Court has
provided us guidance for such a situation: “[A] defendant
who preemptively introduces evidence of a prior con-
viction on direct examination may not on appeal claim
that the admission of such evidence was error.” Ohler
v. United States, 529 U.S. 753, 760 (2000). Roy Jr.’s intro-
duction of his prior convictions during his direct exam-
ination may have removed their “sting,” but it also pre-
5
The Consent Order contained a reference to Roy Jr.’s forgery
conviction and his failure to disclose it to participants of the
Spend and Redeem Program. The fact that the Consent Order
was admitted during the Government’s case-in-chief does
not, however, affect our analysis because the Government
did not publish to the jury, or question anyone about, the
section of the Consent Order concerning Roy Jr.’s forgery
conviction until Roy Jr. testified.
Nos. 11-1013, 11-3008 & 11-3082 17
cluded him from appealing the district court’s decision
to admit the evidence as well. See Clarett v. Roberts, 657
F.3d 664, 670 (7th Cir. 2011).
3. Haywood Borders’ Emails
The Government introduced a number of emails at
trial to rebut Roy III’s defense that a mortgage
transaction was a personal undertaking that did not
involve MTE or the Housing Program. The group of
emails at issue includes five separate emails sent to, and
received by, Melvin and Jean Norwood—A-Buyers for a
Housing Program transaction—at their personal email
account. The emails were sent by a “Hayward Borders”
at “mte_123@hotmail.com,” and dated August 22,
2007; August 28, 2007; September 6, 2007; September 7,
2007; and September 10, 2007. The first email says that
MTE’s bank accounts will be unfrozen on January 1, 2008,
and, acknowledging the Norwood’s $108,000 equity
payment, gives the Norwoods four options they can
pursue regarding their participation in the Housing
Program. The second email says the Norwoods’ “account
and options” in the A-Buyer program are being
reviewed, while the third email discusses the Norwoods’
current status and rights under the A-Buyer program.
The fourth email asks for the Norwoods’ full participa-
tion regarding how to deal with the “renter” of the prop-
erty (collect rent from her or tell her she faces evic-
tion), and the fifth email explains how the “renter” will be
evicted. Roy III attacks the emails’ admissibility on
two grounds: (1) the emails were not properly authenti-
cated, and (2) the emails contained inadmissible hearsay.
18 Nos. 11-1013, 11-3008 & 11-3082
Rule 901(a) provides that email evidence is admissible
if authenticated by “evidence sufficient to support a
finding that the item is what the proponent claims it
is.” Fed. R. Evid. 901(a). “Authentication can be estab-
lished in a variety of ways, including by ‘testimony of
[a] witness with knowledge . . . that a matter is what
it claimed to be[,]’ Rule 901(b)(1), and by distinctive
characteristics such as ‘appearance, contents, substance,
[or] internal patterns . . . taken in conjunction with cir-
cumstances[,]’ Rule 901(b)(4).” United States v. Dumeisi,
424 F.3d 566, 574 (7th Cir. 2005) (alterations in original).
Only a prima facie showing of genuineness is required;
the task of deciding the evidence’s true authenticity
and probative value is left to the jury. United States
v. Harvey, 117 F.3d 1044, 1049 (7th Cir. 1997).
Borders purportedly authored the emails. At trial,
neither Borders nor anyone who saw Borders author the
emails testified that the emails were actually sent by
Borders. Authentication under Rule 901(b)(1) was, there-
fore, impossible. See Mark D. Robins, Evidence at the
Electronic Frontier: Introducing E-Mail at Trial in Com-
mercial Litigation, 29 R UTGERS C OMPUTER & T ECH. L.J.
219, 226 (2003) (“Where a written communication such
as an e-mail message is transmitted, only the author of
the e-mail message or anyone who saw the author
compose and transmit the message will truly ‘know’ the
message’s authorship, and be able to authenticate
it.” (citing 2 JOHN W. S TRONG, ET AL., M C C ORMICK ON
E VIDENCE § 219(a), 687-88 (5th ed. 1989))). Accordingly,
the Government attempted to authenticate the emails
using circumstantial evidence, which we think was suf-
ficient.
Nos. 11-1013, 11-3008 & 11-3082 19
Our conclusion is supported by a number of factors
present in the record. The emails sent to the Norwoods
had the email address “mte_123@hotmail.com,” with the
author identified as “Hayward Borders.” Even though
Melvin Norwood testified that he had never met
Borders before receiving the emails, the uncontroverted
testimony established that Borders was an MTE Board
Member. It would be reasonable for one to assume that
an MTE Board Member would possess an email address
bearing the MTE acronym and have the capacity to
send correspondence from such an address. Moreover,
the Norwoods’ email address, the address Borders’
emails were sent to, was the same address to which
Roy III had previously sent his email correspondence
regarding the Housing Program. It would also be rea-
sonable to assume that another MTE Board Member, in
this case Borders, would have the ability to discover
and send emails to the email addresses of Housing Pro-
gram participants.
The context of the emails further demonstrates
the emails’ author had significant knowledge of the
Norwoods’ involvement with the Housing Program
and MTE. The emails discuss MTE’s frozen bank
accounts, the purchased property being part of the A-
Buyer program, and the $108,900 of equity from the
Norwoods’ home that MTE received from the transaction.
This is all information Borders would be in a position
to know and discuss with the Norwoods. The Eleventh
Circuit has found these types of factors to be sufficient
to satisfy Rule 901(a)’s authentication requirements
for email evidence, see United States v. Siddiqui, 235 F.3d
20 Nos. 11-1013, 11-3008 & 11-3082
1318, 1322-23 (11th Cir. 2000), and we agree. Roy III’s
challenge to the authentication of the emails fails.
Directing our focus to Roy III’s contention that the
emails constituted inadmissible hearsay, this argument
is equally unavailing. He contends the emails were
“offered to show that Borders made [certain] assertions,”
but the touchstone of hearsay is that the evidence is
being used to prove the truth of the matter asserted. See
Fed. R. Evid. 801(c)(2); Smith v. Bray, 681 F.3d 888, 902
(7th Cir. 2012). These emails actually contained a
number of false assertions, so they were not offered
for their truth. 6 We concur with the Government that
these emails were offered to provide context and rebut
Roy III’s argument at trial that the Norwood transaction
was a personal undertaking; one that was separate and
apart from MTE. Therefore, the emails were properly
admitted.
B. Ostrich Instruction
Ronnanita challenges the district court’s decision to
provide the jury with an ostrich instruction. The
district court instructed the jury:
6
The email dated Friday, September 7, 2007, contained a
reference to a conversation that Hayward Borders had with
Roy III. The district court concluded that this reference consti-
tuted inadmissible hearsay and ordered that the reference to
Roy III be redacted, which the Government did before pub-
lishing the email to the jury.
Nos. 11-1013, 11-3008 & 11-3082 21
You may infer knowledge from a combination of
suspicion and indifference to the truth. If you find
that a person had a strong suspicion that things
were not what they seemed or that someone had
withheld some important facts, yet shut his or her
eyes for fear of what he or she would learn, you
may conclude that he or she acted knowingly, as
I have used that word. You may not conclude that
the defendant had knowledge if he or she was
merely negligent in not discovering the truth.
Ronnanita contends the record did not contain the
requisite evidence to support the instruction’s use. We
review a decision to give an ostrich instruction for an
abuse of discretion, viewing all evidence in the light
most favorable to the Government. United States v.
Green, 648 F.3d 569, 582 (7th Cir. 2011).
An ostrich instruction is provided to “explain that the
law expands the definition of ‘knowledge’ for purposes
of determining whether a defendant committed a
specific act. It equates actual knowledge with the
deliberate avoidance of knowledge.” United States v.
Craig, 178 F.3d 891, 896 (7th Cir. 1999) (internal citation
omitted). In other words, a defendant may not escape
criminal liability simply by pleading ignorance “if he
knows or strongly suspects he is involved in criminal
dealings but deliberately avoids learning more exact
information about the nature or extent of those deal-
ings.” United States v. Garcia, 580 F.3d 528, 536 (7th Cir.
2009) (quoting Craig, 178 F.3d at 896). An ostrich instruc-
tion may be given when: “(1) a defendant claims to
22 Nos. 11-1013, 11-3008 & 11-3082
lack guilty knowledge, i.e., knowledge of her conduct’s
illegality, and (2) the government presents evidence
from which a jury could conclude that the defendant
deliberately avoided the truth.” Green, 648 F.3d at 582(emphasis removed) (quoting Garcia, 580 F.3d at 536).
Deliberate avoidance may involve physical effort,
United States v. Pabey, 664 F.3d 1084, 1092-93 (7th Cir.
2011), or be purely psychological—e.g., “a cutting off
of one’s normal curiosity by an effort of will.” United
States v. Giovannetti, 919 F.2d 1223, 1228-29 (7th Cir. 1990).
Ronnanita has maintained throughout that she had
no knowledge of the scheme being a sham; element one
is easily satisfied. The testimony presented at trial
satisfied the second element as well: Ronnanita was
described as being “second in command” to Roy Jr. and
the person to go to with questions or concerns. She was
intimately familiar with the 200% returns promised to
participants as well as MTE’s expenses, both necessary
(rent) and extravagant (trips and cars). Ronnanita
opened bank accounts for Roy Jr. and MTE and made
monetary transfers between the accounts. She also
knew when the Housing Program had difficulties
meeting its payment obligations. Based on Ronnanita’s
access to this information, she could have chosen at
any point to investigate what investments MTE was
making and what returns MTE was generating. This
would have immediately demonstrated the fraudulent
nature of the schemes. Ronnanita claims she simply
followed Roy Jr.’s orders, but her failure to inquire
further in light of the information she possessed is evi-
dence that could lead a reasonable jury to conclude she
Nos. 11-1013, 11-3008 & 11-3082 23
deliberately avoided learning the truth about MTE’s
programs. See Craig, 178 F.3d at 897-98; see also United
States v. Leahy, 464 F.3d 773, 796 (7th Cir. 2006) (holding
that “red flags” and a failure to ask questions
about them demonstrates deliberate avoidance). This is
precisely the type of situation that warrants an ostrich
instruction. See United States v. Paiz, 905 F.2d 1014, 1022
(7th Cir. 1990) (“Such a scenario, one in which ‘the de-
fendant acknowledges [her] association with the group
but, despite circumstantial evidence to the contrary,
denies knowledge of the group’s illegal activity,’ is a
paradigm case for use of the ‘ostrich’ instruction.” (quoting
United States v. Diaz, 846 F.2d 544, 550 (7th Cir. 1988))). We
find the district court appropriately gave the ostrich
instruction.
C. Sentencing Calculations 7
Having addressed the Appellants’ complaints about the
trial, we turn our attention to Ronnanita and Roy III’s
sentencing objections. We review the district court’s
application of the Sentencing Guidelines de novo and
its findings of fact for clear error. United States v. McCauley,
659 F.3d 645, 652 (7th Cir. 2011). Findings of fact are
clearly erroneous only when, “after considering all the
evidence, the reviewing court is left with the definite
and firm conviction that a mistake has been made.”
7
The Appellants’ PSR offense level calculations were deter-
mined pursuant to the November 2009 edition of the Guide-
lines Manual.
24 Nos. 11-1013, 11-3008 & 11-3082
United States v. Rice, 673 F.3d 537, 540 (7th Cir. 2012)
(quoting United States v. Cruz-Rea, 626 F.3d 929, 938
(7th Cir. 2010)).
1. Ronnanita
Over Ronnanita’s objection, the district court accepted
the PSR’s findings, which included several sentencing
enhancements. After the application of these enhance-
ments, the district court determined Ronnanita’s final
offense level to be 36 and her criminal history category
to be II, resulting in an advisory Guidelines range of
210 to 262 months’ imprisonment. The district court
went below the advisory range and sentenced
Ronnanita to 96 months’ imprisonment and two years’
supervised release on each count to be served concur-
rently. Ronnanita challenges her sentence, contending it
would have been less had her guideline range been lower.
a. Role in the Scheme Enhancement
Ronnanita first argues that the district court erred
in applying U.S.S.G. § 3B1.1(b), which calls for a three-
level enhancement if “the defendant was a manager or
supervisor . . . and the criminal activity involved five
or more participants or was otherwise extensive[.]” (em-
phasis added). The Sentencing Guidelines define “partici-
pant” as “a person who is criminally responsible for the
commission of the offense, but need not have been con-
victed.” § 3B1.1 cmt. n.1. We have explained that this
means a participant “could have been charged,” even if only
Nos. 11-1013, 11-3008 & 11-3082 25
as an accessory; but “mere knowledge of a conspiracy” is
insufficient to establish that a person was “criminally re-
sponsible.” United States v. Pabey, 664 F.3d 1084, 1097 (7th
Cir. 2011). Ronnanita claims five people were not “crimi-
nally responsible” for the scheme, so the three-level
enhancement was inappropriate.
The parties agree that the Appellants were each “partici-
pants” in the scheme; that makes three. The dispute
between them focuses on whether other individu-
als—Jacqueline Hawkins and Jennifer Washington
(MTE employees) and Phillip Rowe, Eric Blount, and
Clarence Jones (mortgage company employees)—qualify
as participants under Section 3B.1(b). We decline
to decide whether these other individuals qualify as
participants because we believe the entire scheme
easily satisfies the “otherwise extensive” provision, so
the number of “participants” does not matter. See
United States v. Hussein, 664 F.3d 155, 162 (7th Cir. 2011).
Section 3B1.1, commentary note 3 states, “In assessing
whether an organization is ‘otherwise extensive,’ all
persons involved during the course of the entire offense
are to be considered. Thus, a fraud that involved only
three participants but used the unknowing services of
many outsiders could be considered extensive.” In deter-
mining whether a scheme is otherwise extensive, we
have considered: (1) the monetary benefits obtained
during the scheme; (2) the length of time the scheme
continued; (3) the number of people utilized to operate
the scheme; and (4) the scheme’s geographic scope. See,
e.g., United States v. Figueroa, 682 F.3d 694, 696 (7th Cir.
26 Nos. 11-1013, 11-3008 & 11-3082
2012); Pabey, 664 F.3d at 1097; Hussein, 664 F.3d at 162;
United States v. Knox, 624 F.3d 865, 874 (7th Cir. 2010).
We have also held that a scheme is otherwise extensive
if the number of participants plus outsiders who unwit-
tingly advance a conspiracy is greater than five. See, e.g.,
United States v. Tai, 41 F.3d 1170, 1174-75 (7th Cir. 1994).
At the bare minimum, the participation of the Appel-
lants, plus at least Hawkins, Washington, and one other
MTE Board Member, satisfies this “greater than five”
standard, regardless of whether Hawkins and Wash-
ington were “criminally responsible.” See Pabey, 664 F.3d
at 1097 (citing Tai, 41 F.3d at 1174-75). This number does
not even include the additional MTE Board Members,
the other MTE employees who helped organize venue
meetings in numerous states, the mortgage company
employees, or the numerous A-Buyers used to further
the Housing Program. We believe the scheme was also
extensive with respect to the amount of money obtained
(over $18 million), the intended geographic scope (at
least six states), the number of people affected (over
3,000), and the overall complexity (using straw buyers
to facilitate Housing Program transactions). Thus, the
scheme qualifies as “otherwise extensive” under U.S.S.G.
§ 3B.1(b), and the three-level enhancement was correct.
b. Assignment of Criminal History Category
Ronnanita next contests the district court’s calculation
of her criminal history category. The PSR assessed one
criminal history point to Ronnanita pursuant to U.S.S.G.
§ 4A1.1(c) for a conviction of larceny by conversion
Nos. 11-1013, 11-3008 & 11-3082 27
on July 18, 2005. Ronnanita received a twelve-month
probation sentence, plus a fine, for that conviction.
Section 4A1.1(d) states that two points should be added
“if the defendant committed the instant offense while
under any criminal justice sentence, including proba-
tion[.]” Accordingly, the PSR applied two additional
criminal history points because Ronnanita’s criminal
charges were committed while Ronnanita was still on
probation for the larceny conviction, which she was not
discharged from until May 15, 2006. A criminal history
category II was thus designated, which corresponds to
the three criminal history points assigned to Ronnanita.
Ronnanita claims this criminal history category was
incorrect because four of the eight counts on which she
was convicted occurred after she was discharged from
probation on May 15, 2006. We first note Ronnanita’s
failure to object to her criminal history calculation in
the district court, so we only review for plain error. See
United States v. Vasquez, 673 F.3d 680, 684 (7th Cir. 2012).
But regardless of the standard applied, Ronnanita’s
argument easily fails because all that is required under
U.S.S.G. § 4A1.1(d) is for “any relevant conduct” of the
offense to have been committed while the defendant
was on probation, see § 4A1.1 cmt. n.4, not the instant
offense “in its entirety” as Ronnanita claims. Therefore,
because the evidence at trial established that Ronnanita’s
participation in the overall scheme began in early 2005
and continued at least into 2007, Ronnanita engaged in
conduct related to her convictions while on probation,
and the district court did not err in calculating her
criminal history category.
28 Nos. 11-1013, 11-3008 & 11-3082
c. Loss Calculation
Ronnanita also contests the district court’s calculation
of the loss attributable to her offenses. The PSR calculated
the loss suffered by the individuals involved in the
Spend and Redeem Program and the Housing Program
to be between $8,579,052 and $10,783,961. Under the
Sentencing Guidelines, a loss in excess of $7,000,000
but less than $20,000,000 corresponds to a twenty-level
increase in the defendant’s offense level, see U.S.S.G.
§ 2B1.1(b)(1)(K); Ronnanita’s offense level was, therefore,
increased by twenty levels.
Ronnanita did not provide the Probation Office or
the district court with any information regarding a
loss figure. Her challenge to the calculation is nonethe-
less two-fold: (1) her participation and responsibilities
were almost entirely related to the Housing Program,
so she should only be attributed losses related to the
Housing Program (roughly $2,600,000); and (2) the losses
attributed to Roy III at his sentencing hearing on
August 16, 2011, eight months after she was sentenced,
were only $7,336,957.49, so the amount attributed to
her was approximately $3,400,000 too high. We address
each argument in turn.
From the outset, Ronnanita’s argument that the
evidence demonstrated she only had “tangential conduct
with the Spend and Redeem Program” is completely
without merit. As discussed above, Ronnanita actively
facilitated participation in both the Spend and Redeem
Program and the Housing Program. She was “second in
command” and the person to go to with problems. She
Nos. 11-1013, 11-3008 & 11-3082 29
also transferred money between numerous accounts,
and that money was connected to both programs. The
evidence presented at trial established that Ronnanita
was fully involved with both the Spend and Redeem
Program and the Housing Program; the district court
properly attributed the losses of both programs to her.
Generally, because Ronnanita did not raise her second
contention—that the losses attributed to Roy III for the
same programs were $3,400,000 less—until her reply
brief, her argument would be waived. See Griffin v. Bell,
No-11-3389, 2012 U.S. App. LEXIS 18599, at *9 (7th Cir.
Sept. 4, 2012) (“[A]rguments raised for the first time in
a reply brief are deemed waived.”). However, we have
stated that “exceptional circumstances” may allow us to
consider arguments that would otherwise be waived. See
In re Busson-Sokolik, 635 F.3d 261, 268-69 (7th Cir. 2011).
This issue is one of those rare situations. Ronnanita
filed her amended brief with this Court on June 1, 2011;
Roy III was not sentenced until August 16, 2011. It
would have been impossible for Ronnanita to know
what the loss amount attributed to Roy III would be two
months into the future, so we will reach the merits of
Ronnanita’s second contention.
Ronnanita correctly points out that the loss amounts
attributed to her and Roy III were inconsistent, but she
fails to explain why this difference is consequential. Even
if we assume that Ronnanita had been sentenced on the
same day as Roy III and the district court accepted the
same loss calculation given to Roy III ($7,336,957.49), that
amount is still greater than the $7,000,000 threshold of
30 Nos. 11-1013, 11-3008 & 11-3082
U.S.S.G. § 2B1.1(b)(1)(K). Ronnanita’s loss calculation
would still result in a twenty-level increase of her
offense level. “To find clear error we must be persuaded
that the sentencing court made a fundamental error
which resulted in a complete miscarriage of justice.”
United States v. Schaefer, 384 F.3d 326, 332 (7th Cir. 2004)
(quoting United States v. Hatchett, 31 F.3d 1411, 1423-24
(7th Cir. 1994)). Ronnanita has not put forth any
support for the proposition, and we perceive no reason
to believe, that this difference had any effect on the ad-
ministration of justice, so we find that no clear error
occurred.
d. Calculation of Victims
The PSR concluded that approximately 3,000 indi-
viduals participated in the programs and approximately
1,900 individuals lost money in the scheme. Pursuant
to U.S.S.G. § 2B1.1(b)(2)(C), the PSR applied a six-level
increase because the offense involved more than
250 victims. Ronnanita again claims the number of
victims apportioned to her is erroneous because she
was only actively involved in the Housing Program. For
the same reasons we believe the losses allocated to
her were correct, we believe the calculation of victims
was also appropriate.
2. Roy III
The district court accepted a loss calculation of
$7,336,957.49 before it sentenced Roy III to, among other
Nos. 11-1013, 11-3008 & 11-3082 31
conditions, ninety-six months’ imprisonment. Roy III
contends he did not have “the requisite mens rea” to be
held liable for the losses from either the Spend and
Redeem Program or the Housing Program because he
was fooled just like the investors. In his eyes, he should
not be held accountable for any of the losses. The
problem for Roy III is the evidence demonstrates that
the overall scheme he was convicted of participating
in included both programs. As the district court stated
at Roy III’s sentencing, “[The Spend and Redeem and
Housing Programs] were not two separate operations.
They were interrelated components of the same MTE,
More Than Enough, operation.” We think the evidence
regarding Roy III’s participation at venue meetings,
involvement with the Norwood transaction, and knowl-
edge of the “inherent implausibility” of the promised
returns (for both programs) amply support a finding
that Roy III knew both programs were fraudulent, yet
continued to actively participate in their operation.
There was no error in the calculation of the losses attrib-
uted to Roy III.
III. CONCLUSION
Finding that the Appellants’ contentions lack merit,
we A FFIRM the Appellants’ convictions and sentences.
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