United States v. Rochelle K. Whatley , 133 F.3d 601 ( 1998 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 97-1661
___________
United States of America, *
*
Appellee, *
*
v. * Appeals from the United States
* District Court for the Western
Rochelle K. Whatley, * District of Missouri.
*
Appellant. *
___________
No. 97-1663
___________
United States of America, *
*
Appellee, *
*
v. *
*
J. Victor Whatley, *
*
Appellant. *
___________
No. 97-1789
___________
United States of America, *
*
Appellee, *
*
v. *
*
Michael Todd Landess, *
*
Appellant. *
___________
No. 97-1790
___________
United States of America, *
*
Appellee, *
*
v. *
*
Harold B. Barnett, Jr., *
*
Appellant. *
___________
Submitted: September 8, 1997
Filed: January 7, 1998
___________
-2-
Before HANSEN, JOHN R. GIBSON, and MORRIS SHEPPARD ARNOLD, Circuit
Judges.
___________
MORRIS SHEPPARD ARNOLD, Circuit Judge.
Rochelle Whatley and her husband, Victor Whatley, were the principals in a
telemarketing firm called Midwest Marketing Concepts (MMC). Mrs. Whatley was
president and sole shareholder, while Mr. Whatley served variously as a consultant and
a general manager. MMC employed the two other appellants in this case, Michael
Landess and Harold Barnett, as telemarketing salesmen.
We state the facts as the evidence would support a reasonable jury in finding.
Working from phone lists obtained from other telemarketing firms, an MMC salesman
would call an individual and say that he or she had been selected for MMC’s “V.I.P.
Bonus Round,” and was guaranteed to win one prize from a list that typically included
a new Saturn automobile, a pair of Lucien Picard watches, a $10,000 savings bond, and
a pound of gold, along with other, much less valuable items ("gimme gifts"). All that
MMC asked in exchange was that the individual purchase “Say No To Drugs”
materials and donate them to a local church or school.
If a customer expressed interest, he or she was sold a “starter box” of the “Say
No to Drugs” materials, which ranged in price from $400 to $800. The materials were
in fact shipped to the specified organization, but the total cost to MMC of those
materials was only about $40. The MMC sales representative pushed each customer
into having the materials delivered directly to the designated organization, so that the
customer would not be disappointed with the amount of materials that his or her money
had purchased.
-3-
Customers were chosen for their susceptibility to this scheme. Sales
representatives focused their sales efforts on people whom they perceived to be old or
particularly lonely. They used a variety of tactics to get individuals to send money to
MMC. Although it was nowhere in MMC’s internal phone scripts, some of the people
called were promised that they would win a specific big prize and were given false
statements as to the value of the “gimme gift.” When a customer asked what the odds
were of receiving the car or other prizes, sales representatives were told to change the
subject and to repeat the promise that the customer was certain to win one of the four
major prizes.
Individuals who purchased the materials would invariably receive only the
cheapest gift on the list. Their names, however, would be put back in MMC’s file to
be “reloaded,” and they would be called again and told that they had a chance to win
one of the larger prizes if they bought additional “Say No to Drugs” materials. If a
customer tried his or her luck again, he or she would again receive a “gimme gift.” No
one, whether a one-time donor or one who was “reloaded,” ever received an award
other than a “gimme gift.”
The Whatleys were indicted on one count of conspiracy to commit wire fraud
and 106 counts of wire fraud, in violation, respectively, of 18 U.S.C. § 371 and 18
U.S.C. § 1343. In addition, Mrs. Whatley was indicted on six counts of money
laundering, in violation of 18 U.S.C. § 1957(a), § 1957(d)(1). A jury convicted the
Whatleys of conspiracy but acquitted them on all 106 counts of wire fraud; the jury
convicted Mrs. Whatley on five of the six money-laundering counts against her.
Mrs. Whatley was sentenced to 60 months in prison on the conspiracy charge and 63
months in prison on the money-laundering counts; Mr. Whatley received a 60-month
prison sentence on the conspiracy charge. Mr. Landess and Mr. Barnett each pleaded
guilty to one count of conspiracy to commit wire fraud and one count of wire fraud and
were sentenced, respectively, to 30 months and 24 months in prison.
-4-
The Whatleys appeal their convictions and their sentences. Mr. Landess and
Mr. Barnett appeal their sentences. We affirm the judgments of the district court.1
I.
After closing arguments in this case, the jurors began deliberating at 12:30 p.m.;
at 4:00 p.m., they informed the district judge that they were unable to reach a verdict.
The jurors then retired for the evening and resumed their deliberations the following
morning. After two and a half more hours of deliberating, they were still unable to
reach a verdict. The court, on its own motion, and over the objection of the defense,
then gave the jury an Allen charge, see Allen v. United States, 164 U.S. 492, 501-02
(1896), to encourage it to continue deliberating and, after four more hours, it reached
verdicts on all counts.
The Whatleys assert that the district court erred because it did not give the
complete Allen charge contained in Eighth Circuit Model Criminal Jury Instruction
10.02. It is true that the district court failed to read any part of the third paragraph of
this instruction, which reiterates the burden of proof; the instruction was otherwise
correct and complete, however, directing jurors to deliberate with a view to reaching
a verdict, so long as one could be reached without violating any juror’s convictions
about the ultimate truth of the matter before them.
We examine the correctness of jury instructions as a whole and not atomistically,
see United States v. Park, 421 U.S. 658, 674-75 (1975), and we will not reverse a
conviction based on an alleged error in instructing the jury unless that error was
prejudicial. In the case of an Allen charge, we look to the text of the instruction, the
time that the jury deliberated before and after receiving the charge, and the context in
1
The Honorable Fernando J. Gaitan, Jr., United States District Judge for the
Western District of Missouri.
-5-
which the charge was given, to determine whether the jury was coerced into reaching
a guilty verdict. United States v. Smith, 635 F.2d 716, 721 (8th Cir. 1980).
We see no evidence of coercion here. Indeed, the fact that the jury deliberated
for four hours after the district court gave the Allen charge suggests to us that the jurors
carefully considered the case. We have held that a verdict returned only forty-five
minutes after an Allen charge was not coerced. See Smith, 635 F.2d at 720-21; see also
United States v. Cook, 663 F.2d 808, 810-11 (8th Cir. 1981) (per curiam) (verdict not
coerced when returned at least one hour after charge given).
The Whatleys argue that the verdicts themselves prove coercion because the
jury, which had not reached any verdicts at the end of the first day of deliberation,
ultimately came to verdicts on all counts after receiving the Allen instruction. We find
no merit in this argument. The jurors had a total of 113 counts in front of them against
four defendants (the Whatleys and two defendants not part of this appeal). They
acquitted two defendants and reached a mixed verdict for both Mr. and Mrs. Whatley.
Unless we assume that ten hours is not enough time to reach verdicts on that number
of counts, which we will not do, there is nothing in this record tending to show that this
Allen charge coerced the jury into reaching its verdict.
II.
The Whatleys maintain that because the jury acquitted all of the defendants on
the underlying wire fraud counts, there was no scheme to defraud and thus no
conspiracy. There are a number of infirmities in this argument, but it is sufficient for
present purposes to note that conspiracy is a crime in itself and is punishable whether
it succeeds or fails. See Pereira v. United States, 347 U.S. 1, 11 (1954). Even if the
acquittals to which the Whatleys point are inconsistent with their convictions on the
conspiracy charge, there are numerous cases that indicate that a conviction must stand
if there is sufficient evidence in the record to sustain it. See United States v.
-6-
Pemberton, 121 F.3d 1157, 1168-69 (8th Cir. 1997). This record is replete with such
evidence, as we have already indicated, so there is no error here.
The Whatleys also complain that the jury instructions dealing with the conspiracy
charge misstate the law in several important respects. The Whatleys lodged no
objections to these instructions in the district court, however, and we therefore review
them only for plain error. See Fed. R. Crim. P. 30; see also United States v. Beasley,
102 F.3d 1440, 1452 (8th Cir. 1996), cert. denied, 117 S. Ct. 1856 (1997). Having
examined the instructions, we are of the view that they were carefully crafted and
tailored to the case. There is certainly nothing plainly erroneous about them, nor can we
say that it is likely that any error in them affected the outcome of the case adversely to
the Whatleys. See United States v. Olano, 507 U.S. 725, 734-35 (1993).
Mrs. Whatley contends that she cannot be convicted of money laundering in
violation of 18 U.S.C. § 1957(a), § 1957(d)(1), since she was not convicted of the
offense by which she allegedly obtained the money. But the fact that the jury did not
convict her on the relevant underlying wire fraud charges does not undermine the money-
laundering convictions here. Mrs. Whatley relies principally on United States v.
O’Hagan, 92 F.3d 612, 628 (8th Cir. 1996), rev'd on other grounds, 117 S. Ct. 2199
(1997), for the proposition that a money-laundering conviction cannot stand without a
conviction on an underlying offense. But we ruled in that case that as a matter of law
the acts that the defendant committed were not illegal and therefore that there was no
predicate offense for the money-laundering charge. Id. at 613-14, 622, 628. In the
present case, by contrast, there is no doubt that the district court properly submitted the
wire fraud charges to the jury, because there was sufficient evidence presented at trial
that violations of the law had occurred.
The only relevant question when reconciling inconsistent verdicts, as we have
already said, is whether there was enough evidence presented to support the conviction.
Nesbitt v. Hopkins, 86 F.3d 118, 121 (8th Cir. 1996), cert. denied, 117 S. Ct. 528
-7-
(1996) . Inconsistent verdicts are not, on their own, sufficient grounds for reversal or a
new trial. A jury may acquit a defendant as to one or more charges for any number of
reasons, including an inclination to be merciful, and yet come to the reasonable
conclusion that the defendant was guilty of other related charges. See United States v.
Powell, 469 U.S. 57, 64-65 (1984).
III.
With respect to their sentences, all of the defendants suggest that the Supreme
Court's recent decision in United States v. Watts, 117 S. Ct. 633 (1997) (per curiam),
obligates district courts to make specific findings detailing precisely how acquitted
conduct used for sentencing purposes has been proved by a preponderance of the
evidence. We disagree. Watts holds only that a sentencing court may consider the
conduct underlying an acquitted charge "so long as that conduct has been proved by a
preponderance of the evidence." Id. at 638. The case contains no requirement even that
a district court state on the record that its sentencing findings are supported by a
preponderance of the evidence, much less that such a court provide a detailed account
of all of the facts that underlie these findings. We believe that it is enough if a district
court simply makes the factual findings necessary to support the relevant sentencing
adjustments.
A district court's factual findings for sentencing must, of course, be supported by
evidence sufficient to convince a reasonable fact finder that that evidence preponderates
in favor of those findings. We review those findings for clear error and reverse only if
we are left with the definite and firm conviction that the district court erred. United
States v. Garrido, 995 F.2d 808, 812 (8th Cir. 1993), cert. denied, 510 U.S. 926 (1993).
Here, the district court made such findings on the amount of loss, on whether the
defendants misrepresented their operation as a charity, and on whether the victims were
unusually vulnerable.
-8-
All of the defendants challenge the calculation of the loss occasioned by their
fraud, a figure that determines an enhancement to their respective base offense levels
under the federal sentencing guidelines. See U.S.S.G. § 2F1.1(b)(1). The court's method
for calculating the loss must, of course, be a reasonable one, but the loss "need not be
determined with precision." United States v. Berndt, 86 F.3d 803, 811 (8th Cir. 1996).
In this case, the district court calculated the loss by determining MMC's gross revenues,
minus the money lost to MMC from refunds and checks on which payment was stopped,
the money that MMC spent on prizes, and the money that MMC spent on the "Say No
to Drugs" products.
The defendants suggest first that the amount of loss should be reduced by
allowances for a reasonable profit and the overhead of running their business, that is, the
costs of salaries for employees, of handling of the prizes and the "Say No to Drugs"
products, and of shipping those prizes and products. But the district court found that the
defendants' business was a conspiracy to commit wire fraud, and we are not inclined to
allow the defendants a profit for defrauding people or a credit for money spent
perpetuating a fraud.
Mr. Landess and Mr. Barnett suggest that the amount of loss used to fix their
sentences should reflect only their own conduct. We held in United States v. Earles,
955 F.2d 1175, 1180 (8th Cir. 1992), however, that the amount of loss charged to a
particular defendant need not be limited to the money that he or she personally handled.
Instead, the amount of loss may include those losses caused by reasonably foreseeable
acts that co-workers committed to further the scheme to defraud. Id.; see also United
States v. Sandow, 78 F.3d 388, 392-93 (8th Cir. 1996). There was sufficient evidence
in this case for the district court to conclude that co-workers' actions that caused losses
were reasonably foreseeable to Mr. Landess and Mr. Barnett and were part of the same
conspiracy to commit wire fraud in which they engaged.
-9-
Mr. Landess, who worked for the organization for only the first four of the ten
months that it operated, challenges the amount of loss that the district court employed
to fix his sentence. The district court determined the amount of loss for which
Mr. Landess was responsible by taking the total amount of loss caused by the operation,
dividing it by the ten months of MMC's operation, and multiplying the result by four.
Mr. Landess suggests that this method is unfair, since, he says, the operation probably
generated less revenue during its earlier stages. We believe, however, that the district
court's method of calculating the loss attributable to him was reasonable. As we have
already said, the loss need not be determined with precision. Furthermore,
Mr. Landess's actions at the beginning of the operation may have created benefits reaped
long after his departure. The district court was in the best position to evaluate these
competing concerns, and we will not reject its factual findings unless we think that they
are clearly erroneous, which we do not.
Mr. and Mrs. Whatley challenge the district court's findings that the defendants
represented falsely that they were acting on behalf of a charity and that they defrauded
unusually vulnerable victims. We believe that there was sufficient evidence for the
district court to conclude that Mr. and Mrs. Whatley's organization misrepresented that
it was acting on behalf of a charity. The telemarketing script indicates that the "Say No
to Drugs" products bought by victims of the Whatleys' scheme were going to schools and
churches. The script also uses the term "donation" to describe the transfer of funds from
the victims to the Whatleys' operation. An enhancement of their sentence for
misrepresenting that they were acting on behalf of a charity, in accordance with U.S.S.G.
§ 2F1.1(b)(3)(A), was therefore proper.
Nor do we see any reason to reverse the district court's imposition of a sentencing
enhancement on the basis that the victims in this case were unusually vulnerable. See
U.S.S.G. § 3A1.1(b). This sentencing enhancement applies when a defendant chooses
to target a particular victim or group of victims on the basis of age or of physical or
mental condition. See United States v. Callaway, 943 F.2d 29, 31 (8th
-10-
Cir. 1991). A reasonable person could conclude on the basis of the evidence presented
at trial and at the sentencing hearing that the defendants targeted the elderly and those
who were known to be susceptible to the sort of operation that the Whatleys ran.
Indeed, one piece of evidence introduced at sentencing indicates that MMC purchased
so-called "response leads" that listed customers who would "buy from anyone and
everyone that has sales ability," and there was also evidence that Mr. Whatley described
these customers as "dupes." We believe, therefore, that this record provided a sufficient
basis for the district court's application of the vulnerable-victim enhancement. See
United States v. Jackson, 95 F.3d 500, 506-08 (7th Cir. 1996), cert. denied, 117 S. Ct.
404, 532, 717 (1996).
Finally, Mrs. Whatley appeals the district court's finding as to the total amount of
money that she laundered. We conclude, however, that we need not review this finding,
as the amount of money laundered does not affect Mrs. Whatley's sentence. The offense
level calculated in accordance with the sentencing guidelines for Mrs. Whatley's
conspiracy conviction was greater than the offense level calculated for her money-
laundering conviction. Under the sentencing guidelines provision for grouping related
counts, the higher offense level applies to calculate the sentence for both convictions.
See U.S.S.G. § 3D1.2(d). Thus, even if we were to find that Mrs. Whatley laundered
less money than the district court concluded, Mrs. Whatley's sentencing range would not
be affected, and since her sentence was at the very bottom of that range, we conclude
that the amount of money that Mrs. Whatley laundered did not affect her sentence in any
way.
IV.
We have considered the other assignments of error advanced by the defendants
and find no merit in them. We therefore affirm the judgments of the district court in all
respects.
-11-
JOHN R. GIBSON, Circuit Judge, concurring.
I concur in the affirmance of the conviction and sentences under appeal and
concur in the court's opinion.
I write separately only to underscore that nothing the court says today should be
read by district judges as an unqualified approval of the Allen charge given in this case
which made no reference to the burden of proof. This was one of the factors that led to
a reversal in Potter v. United States, 691 F.2d 1275, 1278 (8th Cir. 1982), although the
instruction in Potter had at least three other substantive variations from the Allen charges
that have been approved by courts of appeals. As the court recognizes, a general
objection to the Allen charge was made, but after the instruction was read omitting the
third paragraph, appellants concede that further specific objection was not made. Thus,
with respect to the contents of the instruction and the omission of the language
concerning burden of proof, the court's review today is only for plain error. The burden
of proof was referred to nine times in the instructions given to the jury at the conclusion
of the evidence.
The central issue argued by appellant is the coercive effect of the instruction and,
as the court holds today, under the record before us there was no coercion.
A true copy.
Attest:
CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.
-12-