United States v. James D. Victery

NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with Fed. R. App. P. 32.1
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Submitted February 11, 2019
Decided February 11, 2019
Before
WILLIAM J. BAUER, Circuit Judge
AMY C. BARRETT, Circuit Judge
MICHAEL Y. SCUDDER, Circuit Judge
No. 18-1011
UNITED STATES OF AMERICA, Appeal from the United States District
Plaintiff-Appellee, Court for the Southern District of Indiana,
Indianapolis Division.
v.
No. 1:17CR00024-001
JAMES D. VICTERY,
Defendant-Appellant. Michael J. Reagan,
Chief Judge.
ORDER
A jury found James Victery guilty of two counts of wire fraud, 18 U.S.C. § 1343,
and two counts of money laundering, 18 U.S.C. § 1957, for perpetrating a scheme to
defraud the United States Air Force and its contractors. He was sentenced to 48 months’
imprisonment, below the Sentencing Guidelines range of 51–63 months, and three
years’ supervised release. He filed a notice of appeal, but his appointed counsel asserts
that the appeal is frivolous and moves to withdraw under Anders v. California, 386 U.S.
738 (1967). Victery opposes counsel’s motion. See CIR. R. 51(b). Counsel’s brief explains
the nature of the case and addresses potential issues that this kind of appeal might
involve. Because the analysis in counsel’s brief appears thorough, we limit our review
No. 18-1011 Page 2
to the subjects he discusses and those that Victery raises. See United States v. Bey,
748 F.3d 774, 776 (7th Cir. 2014).
At trial, the government submitted evidence that Victery owned and operated a
business known as TEAM, a bonding and escrow company that served as a liaison
between the Air Force and various small contractors. Through TEAM, Victery
facilitated the sale of contractor invoices to financing companies including FedSTAR,
the victim in this case, for a percentage of their face value. This process is referred to as
“factoring” an invoice, and it is often utilized in government contracts to ensure that the
contractors receive payment for their work sooner. As part of his scheme, Victery
fabricated two invoices, forged the purported contractors’ signatures and the Air Force
contracting officer’s on a factoring agreement, and sold them to FedSTAR, which paid
him almost $590,000 that he then used for his own business expenses. He also
purported to supply surety bonds for two small contractors who lost their Air Force
contracts when it was revealed that the bonds were false. To win FedSTAR’s trust,
Victery falsely represented that he was a graduate of the Air Force Academy,
established a business called “Old National” that FedSTAR would believe was affiliated
with Old National Bank, and used social media to create a fake profile for his fictitious
business associate.
Counsel concludes that it would be frivolous for Victery to challenge his
conviction. Because a jury found Victery guilty, we would review the evidence in the
light most favorable to the government. See United States v. Maldonado, 893 F.3d 480, 484
(7th Cir. 2018). To establish wire fraud, the government needed to show that Victery
was involved in a scheme to defraud, had the intent to defraud, and used the wires in
furtherance of that scheme. See United States v. Johnson, 874 F.3d 990, 998–1000 (7th Cir.
2017). As mentioned above, the government offered evidence that demonstrated that
Victery created fraudulent invoices; engaged in acts meant to trick the victim;
defrauded FedSTAR of over $500,000; and caused the wire transmissions that
transferred money from FedSTAR to his company.
Additionally, to prove money laundering, the government needed to show that
Victery knowingly disbursed the illicit proceeds in a manner to conceal the fraud. See
United States v. Stewart, 902 F.3d 664, 682 (7th Cir. 2018). The evidence showed that
Victery attempted to legitimize the ill-gotten proceeds by using them to provide a loan
from TEAM to another business. Thus, it would be pointless to contend that no rational
jury could find Victery guilty of wire fraud and money laundering.
No. 18-1011 Page 3
Likewise, any challenge to the jury instructions would be doomed to fail. Victery
did not object to the instructions, so we would review them only for plain error, see
United States v. Natale, 719 F.3d 719, 729 (7th Cir. 2013). But, like counsel, we do not see
any obvious and prejudicial mistake in the instructions. Further, it does not appear that
the district court abused its discretion when ruling on evidentiary challenges, and no
other trial errors stand out from the record.
Though he explores whether Victery could challenge his sentence, counsel
correctly concludes that any such argument would be frivolous. The district court
correctly calculated Victery’s 51- to 63-month guidelines range based on his criminal
history category of I and total offense level of 24. The court reached that offense level
based on Victery‘s intent to cause over $550,000 in loss, U.S.S.G. § 2B1.1(b)(1), his use of
sophisticated means (including creating a Facebook profile for the non-existent vice
president of Victery’s non-existent bank), id. § 2B1.1(b)(10)(c), and his conviction for
money laundering under 18 U.S.C. § 1957, U.S.S.G. § 2S1.1(b)(2)(A). The court
thoroughly explained its sentence based on Victery’s age, lack of prior criminality, and
the sophistication involved in the offense.
Victery received the 2-level sophisticated means enhancement under U.S.S.G.
§ 2B1.1(b)(10)(c). But counsel concludes that, although the district judge said that
Victery’s offense “might be a rather sophisticated scheme, [but] not to the point that it
received any additional points,” it would be frivolous to argue that this “misstatement”
was reversible error. We agree. Based on the facts that the government offered at trial,
the sophisticated-means enhancement, which was recommended in the presentence
investigation report, easily applied to Victery’s scheme. See U.S.S.G. § 2B1.1, cmt. 9(B).
Victery did not object to the PSR’s guidelines calculation, and the judge adopted the
PSR in full. Therefore, we agree with counsel that the judge’s misstatement did not
affect the sentence, and any argument otherwise would be frivolous.
In his response brief, Victery argues that he could make a nonfrivolous argument
that the district court’s loss calculation—to which he did not object—was wrong
because it failed to account for money recouped by FedSTAR. But, as counsel correctly
recognizes, no money was returned “by the defendant or other persons acting jointly
with the defendant,” and not “before the [fraud] was detected.” See U.S.S.G. § 2B1.1
cmt. n.3(E)(i). It would, therefore, be frivolous to contend that Victery was entitled to an
offset in the loss amount, although the money returned to the victim was appropriately
deducted from the restitution obligation.
No. 18-1011 Page 4
Counsel next explores whether it would be frivolous to argue that the district
court erred in denying Victery’s pretrial motion to substitute his appointed counsel.
When reviewing the denial of such a request, we analyze whether it was timely,
whether the district court adequately inquired into the matter, and whether the asserted
breakdown between counsel and defendant “was so great as to result in a total lack of
communication, precluding an adequate defense.” United States v. Ryals, 512 F.3d 416,
419 (7th Cir. 2008).
Victery moved to substitute counsel three days before trial was to begin, and the
judge immediately held a hearing at which he investigated Victery’s allegation of a
breakdown with his attorney; so the first two factors would work against Victery. In
regard to the third, Victery claimed that his attorney was disclosing confidential
information to third parties and that he no longer trusted him. If true, as counsel on
appeal posits, that could constitute an ethical violation, and Victery could make a
nonfrivolous argument that the district court abused its discretion. But after considering
what both Victery and his attorney had to say at the hearing, the judge did not believe
that Victery’s appointed attorney was acting inappropriately. Rather, the judge credited
the attorney’s contention that he was reaching out to potential witnesses and enlisting
Victery’s son to persuade Victery to be more cooperative. On the other hand, the judge
found that it was Victery who apparently refused, unreasonably, to interact with
counsel despite counsel’s attempts to communicate.
Given the district court’s findings, we agree that it would be frivolous to argue
that it abused its discretion when denying Victery’s last-minute motion to substitute
counsel. See United States v. Thomas, 833 F.3d 785, 792 (7th Cir. 2016). Despite the
breakdown, Victery’s appointed counsel was still responding to Victery’s questions
about defense strategies, documents, and witnesses that Victery thought important to
his case. But counsel found them to be irrelevant or damaging, and arguments over trial
strategy do not constitute grounds for substitution of counsel. See United States v.
Volpentesta, 727 F.3d 666, 673–74 (7th Cir. 2013).
Counsel next questions whether Victery could make a nonfrivolous argument
that his appointed attorney was ineffective. But we agree with counsel that Victery
should pursue any claim of ineffective assistance through a motion under 28 U.S.C.
§ 2255, so that a record can be made. See Massaro v. United States, 538 U.S. 500, 504–06
(2003); United States v. Flores, 739 F.3d 337, 341 (7th Cir. 2014) (“[I]t is imprudent to
present an ineffective-assistance argument on direct appeal.”).
No. 18-1011 Page 5
Accordingly, we GRANT counsel’s motion to withdraw and DISMISS Victery’s
appeal.