United States v. Kara Singleton Adams , 612 F. App'x 565 ( 2015 )

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
Nos. 12-11084, 13-15343
________________________
D.C. Docket No. 1:10-cr-00006-CAP-JFK-1
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
KARA SINGLETON ADAMS,
Defendant - Appellant.
________________________
Appeal from the United States District Court
for the Northern District of Georgia
________________________
(June 11, 2015)
Before MARCUS and JILL PRYOR, Circuit Judges, and HINKLE, * District
Judge.
PER CURIAM:
*
Honorable Robert L. Hinkle, United States District Judge for the Northern District of
Florida, sitting by designation.
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Kara Adams appeals her convictions and sentence of 210 months’
imprisonment for running Georgia-based telemarketing businesses that defrauded
their customers. At trial, a jury heard testimony that the businesses represented
themselves as third-party negotiators who could influence credit card companies to
reduce customers’ interest rates, when in fact Ms. Adams’s businesses frequently
failed to secure rate reductions and typically only provided customers with meager,
unsolicited financial planning advice instead. The jury found her guilty of
conspiracy to commit mail and wire fraud, in violation of 18 U.S.C. §§ 371, 1341,
and 1343; wire fraud, in violation of 18 U.S.C. §§ 1343 and 2326; illegally
structuring financial transactions, in violation of 31 U.S.C. §§ 5324(a)(1) and
5324(a) and 31 CFR Part 103; and conspiracy to commit obstruction of justice, in
violation of 18 U.S.C. §§ 371 and 1512(c)(2).
On appeal, Ms. Adams argues that the district court erred by (1) denying her
motion to continue trial even though she needed more time to mine information
from a database she argues was critical to the defense or, in the alternative,
denying her motion for new trial after she gleaned some of that information;
(2) admitting evidence of a Florida state civil investigation into her previous
business ventures; (3) admitting testimony from a Florida investigator that
referenced consumer complaints about those businesses; and (4) imposing a
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sentence that was substantively unreasonable. With the benefit of oral argument,
and after careful review, we affirm her convictions and sentence.
I.
In 2008 and 2009, Ms. Adams’s various businesses initiated phone calls
from Georgia to consumers across the country in which a live representative or a
prerecorded message invited consumers to speak about lowering their credit card
interest rates.1 Then, reading from a script, live representatives explained that, for
a fee, the business would negotiate with credit card companies for rate reductions
on its customers’ behalf. The representatives claimed that Ms. Adams’s businesses
had special relationships with credit card companies and guaranteed the service
would save customers at least $4,000 in their credit card payments over time. The
representatives promised that if the guaranteed savings were not achieved, the
customer would receive a refund of the cost of the program, which was typically
between $749 and $1,495. Using this pitch, Ms. Adams’s businesses attracted
thousands of customers and generated revenue in the tens of millions of dollars. At
trial, the government sought to prove the business model was a fraud. Customers
testified that there appeared to be no special relationships between Ms. Adams’s
businesses and the credit card companies because, on three-way calls with the
1
Though the business model remained the same, Ms. Adams and her associates cycled
through many different corporate entities and business names. They switched entities whenever
a business generated too many complaints or lost a merchant account due to excessive
chargebacks.
3
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customer, Ms. Adams’s representatives simply made requests for reductions that
the credit card companies denied. Ms. Adams’s employees testified that no such
special relationships existed. Despite the emphasis that representatives placed on
rate reduction in sales calls, the primary service the businesses provided was a
financial analysis that described how customers should structure their credit card
payments to achieve the promised savings. Employees and customers testified
that, at best, these analyses merely instructed customers to follow an aggressive
payment plan, and, at worst, they also contained inaccurate calculations and
overestimated savings.
Naturally, some unsatisfied customers asked for refunds. Employees
testified that Ms. Adams instituted policies to protect her sales regardless of the
merit of a customer’s complaint: she set quotas for refunds, fought all chargebacks
from credit card companies,2 and instructed employees to alter analyses if they did
not reflect the guaranteed savings. Accordingly, customers testified that they
failed to obtain refunds despite their persistent attempts. The government also
introduced evidence of a Florida state civil investigation into similar business
operations Ms. Adams ran in that state, to demonstrate both that she knew her
2
A chargeback is a process by which a credit card company challenges the validity of a
transaction in which a business has charged a customer. The process requires the business to
respond to the customer’s complaint with a justification of the transaction, called a rebuttal.
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practices were illegal and that she had a reason to flee to Georgia to begin her
scheme anew.
The trial took place between October 24, 2011 and November 7, 2011, over
twenty-one months after a grand jury returned the first indictment in the case in
January 2010. Trial had originally been set for December 6, 2010, but the parties
filed several motions to continue due to voluminous discovery. Not long after Ms.
Adams filed her first motion to continue trial on April 15, 2011, she discovered
that one of her businesses’ computer servers, which had been in the possession of a
Federal Trade Commission (“FTC”) receiver for over a year due to a related civil
case, contained a database called “ApSuite” (the “database”) that included
customer tracking information that might support a defense theory that she ran
legitimate businesses. On August 30, 2011, due to technological barriers that
prevented her from accessing information in the database, Ms. Adams filed—and
the district court granted—another motion to continue trial. Finally, at a pretrial
conference on October 20, 2011, Ms. Adams made an oral motion to continue trial
again for the same reason. The district court denied this motion, and the trial
proceeded as planned four days later.
The jury convicted Ms. Adams of one count of conspiracy to commit mail
and wire fraud, nine counts of wire fraud, seven counts of structuring financial
transactions, and one count of conspiracy to commit obstruction of justice. On
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February 9, 2012, the district court sentenced her to 210 months’ imprisonment.
Ms. Adams timely appealed the judgment. In the meantime, she continued trying
to access the database. Once she was able to glean usable information from the
database, Ms. Adams filed a motion for new trial, which the district court denied
on September 20, 2013. She appealed that order, and we consolidated her appeals.
II.
Ms. Adams first argues that the district court erred in denying her final
motion to continue trial and her later motion for new trial because information
extracted from the database would have been critical to her defense. According to
Ms. Adams, the database contains customer tracking information showing that
many customers received rate reductions and were satisfied with the program.
Although Ms. Adams failed to satisfy all her customers, she contends these mixed
results could persuade a jury that at least she did not intend to defraud her
customers. We disagree. Given the negligible value of the evidence she ultimately
extracted from the database and her failure to pursue the contents of the database
diligently before trial, we affirm both of the district court’s orders.
A.
“We review a district court’s denial of a motion for continuance only for an
abuse of discretion.” United States v. Valladares, 544 F.3d 1257, 1261 (11th Cir.
2008). “To prevail on such a claim, a defendant must show that the . . . abuse of
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discretion . . . resulted in specific substantial prejudice.” United States v.
Verderame, 51 F.3d 249, 251 (11th Cir. 1995). “There are no mechanical tests for
deciding when a denial of a continuance is so arbitrary as to violate due process.
The answer must be found in the circumstances present in every case, particularly
in the reasons presented to the trial judge at the time the request is denied.” Id.(quoting Ungar v. Sarafite, 376 U.S. 575, 589 (1964)).
[T]he following factors [are] highly relevant in assessing claims of
inadequate preparation time: the quantum of time available for
preparation, the likelihood of prejudice from denial, the accused’s role
in shortening the effective preparation time, the degree of complexity
of the case, and the availability of discovery from the prosecution.
United States v. Garmany, 762 F.2d 929, 936 (11th Cir. 1985) (quoting United
States v. Uptain, 531 F.2d 1281, 1286-87 (5th Cir. 1976)).3
Although we must consider only the reasons that Ms. Adams presented at
the time of her motion to continue trial, we also must “examine the trial court’s
denial of a continuance in light of what an examination of the discovery material
reveals to defense counsel after the trial.” United States v. Medina-Arellano, 569
F.2d 349, 354 (5th Cir. 1978). In effect, we may examine the record supporting
Ms. Adams’s motion for new trial to determine if the database would have been as
useful as Ms. Adams hoped during the pretrial conference. The evidence included
3
This Court adopted as binding precedent all Fifth Circuit decisions prior to October 1,
1981. Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc).
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affidavits from the defense team describing the difficulty of accessing the database
and the team’s follow-up investigation into its contents and listing six witnesses
identified through that investigation who could testify that their credit card interest
rates were reduced after purchasing Ms. Adams’s program.
We conclude that very little, if any, prejudice resulted from Ms. Adams’s
inability to access the database to her satisfaction in time for trial. The testimony
of six witnesses who received rate reductions would have been wholly insufficient
to rebut the government’s theory of prosecution, which contemplated that credit
card companies might occasionally respond positively to the straightforward
requests that Ms. Adams’s businesses made on behalf of customers. Indeed,
employees testified that some rate reductions occurred. The government’s theory
of fraud was that Ms. Adams misrepresented that her businesses had special
relationships with credit card companies and that she would refund any customer
who did not obtain the guaranteed savings. Even a customer who received a rate
reduction might still have been injured by Ms. Adams’s fraud if the customer
received a fabricated financial statement or failed to obtain a deserved refund.
Thus, the database would not have been useful to the defense in rebutting the
government’s case at trial.
Further, Ms. Adams herself played a large role in shortening the time
available before trial to access the database. She argues that she only learned of
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the database’s location in May 2011 when her technician examined property in the
FTC receiver’s possession. Contrary to her insistence that the government gave
her no guidance in finding the database, however, the government had mailed her a
letter a year earlier, in May 2010, disclosing that the FTC possessed, among other
things, computers and servers seized in the related civil case. We cannot say that
the five months between May and October of 2011 was too small a window for
Ms. Adams to access the database when she waited a year to investigate the
contents of those computers and servers. Ms. Adams had promised in her second
motion to continue trial that “[t]he defense [would] not request another
continuance in this case.” United States v. Adams, No. 1:10-CR-00006-CAP-JFK-
1, Doc. 268 at 13 (N.D. Ga. Aug. 30, 2011). By the time of the pretrial conference,
when the district court ruled on the oral motion to continue, witnesses’ travel
arrangements had been set. The district court did not abuse its discretion by
proceeding to trial as planned.
B.
“We review the district court’s denial of a motion for new trial based on
newly discovered evidence for abuse of discretion.” United States v. Vallejo, 297
F.3d 1154, 1163 (11th Cir. 2002). The district court’s analysis in considering a
motion for new trial based on new evidence is similar to, if distinct from, the
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analysis required in considering a motion to continue trial in order to examine
discovery further.
When a defendant discovers new evidence after trial that was
unknown to the government at the time of trial, a new trial is
warranted only if: (1) the evidence was in fact discovered after trial;
(2) the defendant exercised due care to discover the evidence; (3) the
evidence was not merely cumulative or impeaching; (4) the evidence
was material; and (5) the evidence was of such a nature that a new
trial would probably produce a different result.
United States v. Thompson, 422 F.3d 1285, 1294 (11th Cir. 2005) (internal
quotation marks omitted). In the context of a motion for new trial, we are
expressly instructed that “[t]he failure to satisfy any one of these elements is fatal”
to the motion. Id. (internal quotation mark omitted).
The facts informing our review of the district court’s denial of Ms. Adams’s
motion for new trial are identical to those justifying the denial of her motion to
continue trial. She failed to exercise due care in locating and accessing the
database between May 2010 and May 2011, and the affidavits attached to her
motion failed to demonstrate that the database yielded non-cumulative evidence
that would probably produce a different result in a new trial. See id. The district
court did not abuse its discretion in denying the motion.
III.
Ms. Adams next argues that the district court improperly admitted evidence
of a Florida civil investigation and settlement negotiations arising out of similar
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conduct not specified in the indictment. At trial, she renewed a motion in limine to
exclude this evidence under Federal Rules of Evidence 403 and 404(b) on the
grounds that it was impermissible character evidence. To be admissible under
Rule 404(b), “other crimes” evidence must satisfy a three-part test: “(1) the
evidence must be relevant to an issue other than the defendant’s character; (2) the
act must be established by sufficient proof to permit a jury finding that the
defendant committed the extrinsic act;” and (3) any undue prejudice must not
substantially outweigh its probative value, “and the evidence must meet the
requirements of Rule 403.” United States v. Zapata, 139 F.3d 1355, 1357 (11th
Cir. 1998). Although the grounds for Ms. Adams’s Rule 404(b) objection were
more extensive at trial, her only argument in support of this objection on appeal is
that the government failed to prove that she actually did engage in similar conduct
in Florida.
Because Ms. Adams preserved her evidentiary challenge at trial, we review
the district court’s ruling for an abuse of discretion. United States v. Baker, 432
F.3d 1189, 1202 (11th Cir. 2005). We conclude that the evidence properly was
admitted. The requirement that the government provide “sufficient proof so that a
jury could find that the defendant committed the extrinsic act” is “part of the
relevance analysis” the district court must conduct. United States v. Miller, 959
F.2d 1535, 1538 (11th Cir. 1992) (en banc). In other words, Ms. Adams’s
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evidentiary challenge on appeal is, in essence, a broad challenge to the relevance of
the civil investigation. Even if there were no evidence that Ms. Adams was
responsible for the fraud suspected in the Florida civil investigation, evidence of
the investigation remains relevant to her intent because it shows she was on notice
that certain telemarketing practices were fraudulent. Ms. Adams’s argument that
the government failed to prove she actually committed fraud in Florida is therefore
misplaced. The district court did not abuse its discretion in admitting evidence of
the Florida civil investigation.
IV.
Ms. Adams appeals one other evidentiary ruling by the district court
pertaining to related conduct in Florida. At trial, she objected on hearsay grounds
to the admission of a Florida state investigator’s testimony summarizing consumer
complaints about the businesses she ran there before moving to Georgia. The
district court overruled her objection. The investigator then testified that the
primary complaint he received regarding Ms. Adams’s businesses was that they
made misrepresentations to consumers. His testimony included a brief, general
account of the businesses’ sales pitch, the nature of their interactions with
consumers, and their pattern of failing to respond to complaints and issue refunds.
On appeal, Ms. Adams challenges the hearsay ruling and newly asserts that the
admission of this testimony also violated her rights under the Confrontation Clause
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of the Sixth Amendment because she had no opportunity to cross-examine the
consumers, whose statements to the investigator were testimonial in nature.
We review the district court’s ruling on Ms. Adams’s hearsay objection for
an abuse of discretion, see Baker, 432 F.3d at 1202, but, because it was not made
below, we review her new Confrontation Clause argument for plain error. See
United States v. Chau, 426 F.3d 1318, 1321-22 (11th Cir. 2005) (“[A] hearsay
objection does not preserve the Crawford [Confrontation Clause] issue . . . .”). In
either case, we find no error. The investigator described the nature of the
complaints generally, rather than any specific statements that were made. Further,
the government did not introduce any individual complaints or a summary of
complaints to prove their truth. Instead, the testimony explained the purpose and
nature of the investigator’s own work in Florida and clarified the sequence of
events that led him to refer the investigation to interested authorities in Georgia.
Accordingly, his testimony was not hearsay, 4 and its admission did not violate the
Confrontation Clause. See Fed. R. Evid. 801(c)(2); Crawford v. Washington, 541
4
Because we conclude the investigator’s testimony was not inadmissible hearsay, we
need not perform a harmless error analysis. In his concurrence, Judge Hinkle concludes that
some of the testimony was inadmissible hearsay because the investigator went beyond the nature
of the complaints to “what Ms. Adams’s businesses actually did.” United States v. Adams, __
Fed. App’x __ (11th Cir. 2015) (Hinkle, J., concurring). In our view, the investigator’s brief
description of what the businesses purported to offer and how they interacted with consumers
was necessary to understand, and thus integral to, the nature of the complaints.
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U.S. 36, 59 n.9 (2004) (“The Clause . . . does not bar the use of testimonial
statements for purposes other than establishing the truth of the matter asserted.”).
V.
Finally, Ms. Adams argues that her sentence of 210 months’ imprisonment
was substantively unreasonable. Specifically, she argues that the district court
failed to consider adequately the sentencing factors articulated in 18 U.S.C.
§ 3553(a) in two ways: (1) the district court ignored the “modesty of the individual
impact” of the fraud on each customer; 5 and (2) the disparity between her sentence
and those of her codefendants was unwarranted because, according to Ms. Adams,
she was penalized for going to trial. We reject these arguments and affirm her
sentence.
We review the substantive reasonableness of a sentence for an abuse of
discretion, vacating the sentence only if we “are left with the definite and firm
conviction that the district court committed a clear error of judgment in weighing
the § 3553(a) factors by arriving at a sentence that lies outside the range of
reasonable sentences dictated by the facts of the case.” United States v. Irey, 612
F.3d 1160, 1190 (11th Cir. 2010) (en banc) (internal quotation marks omitted).
Although the district court must evaluate all the § 3553(a) factors, it is free to
5
Appellant’s Br. at 83.
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assign “great weight” to any one of the factors. United States v. Shaw, 560 F.3d
1230, 1237 (11th Cir. 2009) (internal quotation marks omitted).
The district court noted on the record that it had considered the § 3553(a)
factors in arriving at Ms. Adams’s sentence, which was at the high end of the
guideline range but still within it. We agree with the district court’s reasoning that
the victims in this case were likely vulnerable, even if their losses might appear
modest in comparison to victims’ losses in some other fraud cases. In any event,
the district court did not abuse its discretion in emphasizing the nature of the
offense or the need for deterrence in like cases.
Nor did the district court abuse its discretion in sentencing Ms. Adams to a
significantly higher sentence than cooperating codefendants who entered into plea
agreements. We acknowledge that the district court must “avoid unwarranted
sentence disparities among defendants with similar records who have been found
guilty of similar conduct . . . .” 18 U.S.C. § 3553(a)(6). Nevertheless, “defendants
who cooperate with the government and enter a written plea agreement are not
similarly situated to a defendant who provides no assistance to the government and
proceeds to trial.” United States v. Docampo, 573 F.3d 1091, 1101 (11th Cir.
2009). This analysis precludes comparison of two defendants “even when the
sentence the cooperating defendant receives is ‘substantially shorter.’” Id.15
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(quoting United States v. Williams, 526 F.3d 1312, 1323 (11th Cir. 2008)). Thus,
we cannot say that Ms. Adams’s sentence is substantively unreasonable.
VI.
For the foregoing reasons, Ms. Adams’s convictions and sentence are
AFFIRMED.
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HINKLE, District Judge, concurring:
I concur in the result and in all of the opinion except section IV. Section IV
addresses a hearsay objection to a Florida state investigator’s testimony about
events in Florida prior to the charged conduct in Georgia.
The chronology at trial was this. The government asked the investigator the
nature of the complaints the State of Florida received about Ms. Adams’s
businesses. The defense objected based on hearsay. The court overruled the
objection, saying the investigator could testify about the nature of the complaints.
The ruling was correct, for the reasons explained in section IV of the majority’s
opinion.
The difficulty is that the investigator went further, testifying not just to the
nature of the complaints, but to what Ms. Adams’s businesses actually did. At
least some of that testimony was inadmissible hearsay. But the defense did not
object again. The defense did not ask the court to block or strike the testimony.
In short, the court was asked to rule just once—on the initial hearsay
objection—and the court got it right. The defense should not be heard on appeal to
complain about testimony that came in without further objection after a correct
ruling on the only objection that was made. This makes it unnecessary to address
whether this testimony was harmless.
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