United States v. Curtis Colwell , 140 F. App'x 64 ( 2005 )

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FILED
FOR THE ELEVENTH CIRCUIT
U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
July 06, 2005
No. 04-10789 THOMAS K. KAHN
________________________ CLERK
D. C. Docket No. 00-00260-CR-1-1
UNITED STATES OF AMERICA,
Plaintiff-Appellee-
Cross Appellant,
versus
CURTIS COLWELL,
Defendant-Appellant-
Cross Appellee.
________________________
No. 04-11111
________________________
D. C. Docket No. 00-00260-CR-2-1
UNITED STATES OF AMERICA,
Plaintiff-Appellant,
versus
DOUGLAS L. COLWELL,
Defendant-Appellee.
________________________
No. 04-14758
________________________
D. C. Docket No. 00-00260-CR-2-1
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
DOUGLAS L. COLWELL,
Defendant-Appellant.
________________________
Appeals from the United States District Court
for the Northern District of Georgia
________________________
(July 6, 2005)
Before BLACK and HULL, Circuit Judges, and HODGES*, District Judge.
PER CURIAM:
Defendants Curtis and Douglas Colwell appeal their criminal convictions
for participation in a conspiracy to commit mail and wire fraud in violation of 18
*
Honorable William Terrell Hodges, United States District Judge for the Middle District
of Florida, sitting by designation.
2
U.S.C. § 371. Curtis Colwell also appeals his convictions for wire fraud, in
violation of 18 U.S.C. § 1341, and mail fraud, in violation of 18 U.S.C. § 1343.
The government appeals the district court’s grants of a four-level downward
departure to Curtis Colwell and a three-level downward departure to Douglas
Colwell.1 After review and oral argument, we affirm the defendants’ convictions
and sentences.
I. BACKGROUND
The defendants in these cases defrauded various insurance companies in
obtaining worker’s compensation insurance for the defendants’ businesses. By
law, employers in Georgia are required to carry worker’s compensation insurance
for all employees. The employer’s premium is determined by the number of
employees, the amount of payroll, the employees’ jobs, and the employer’s loss
history. The defendants defrauded the insurance companies by submitting false
paperwork regarding the number of employees, the amount of the payroll, the type
of work the employees were to perform, and the companies’ loss history. We thus
begin by discussing the details of the defendants’ insurance fraud.
A. The Fraudulent Conduct
1
Curtis Colwell filed the first appeal from his conviction (Appeal No. 04-10789). The
government filed a cross appeal from the sentences for both Curtis and Douglas Colwell (Appeal
No. 04-11111). The two appeals were consolidated on March 26, 2004. Douglas Colwell
initiated a separate appeal from his conviction (No. 04-14758) on August 26, 2004. We hereby
consolidate Appeal No. 04-14758 with Appeal Nos. 04-10789 and 04-11111.
3
1. Fireman’s Fund
Defendants Curtis and Douglas Colwell operated several granite
quarry/road paving companies in Georgia. William Plemons was the Colwells’
insurance agent and Russell Smith provided the Colwells with accounting
services. Beginning in April 1989, Curtis Colwell, Plemons, and Smith provided
inaccurate job classification and understated payroll information to Fireman’s
Fund Insurance Company (“Fireman’s Fund”) to avoid paying the worker’s
compensation premium that would have otherwise been due. Plemons submitted
the insurance application to Fireman’s Fund and Smith provided inaccurate
information in the annual audits through April 1995. In total, the Colwell
businesses defrauded Fireman’s Fund out of an estimated $740,849 in lost
premiums.2
In March 1995, Curtis Colwell, Plemons, and Bob Carr met to discuss how
to handle worker’s compensation coverage after Fireman’s Fund ceased providing
coverage. Plemons suggested that a new employee leasing company, essentially a
shell company, be formed to enable the Colwell businesses to avoid paying higher
premiums due to the Colwell businesses’ loss history. Curtis Colwell suggested
that Douglas Colwell set up the employee leasing company.
2
In 1995, Fireman’s Fund ceased writing this type of insurance in Georgia.
4
2. Douglas Colwell Joins the Conspiracy
On March 30, 1995, Plemons, Carr, and Curtis and Douglas Colwell met to
discuss their insurance needs. Prior to the meeting, the Colwells had set up a shell
company named Wildhorse Land Development (“Wildhorse”). Plemons brought
an insurance application to the meeting and instructed Carr to write in the number
of Wildhorse employees as 11 and the payroll amount as $245,000. In reality, the
actual number of employees of the Colwell businesses was over 100 with a total
payroll of approximately $2.4 million.
The insurance application also indicated that the Wildhorse employees were
engaged in buying, selling, and developing land, when in fact many Colwell
employees were quarry and road workers. In addition, the application indicated
that Wildhorse had no employee exchange agreements with any other company,
when in fact the Wildhorse business was the shell company used to lease
employees to Colwell businesses.
Douglas Colwell signed the insurance application during the meeting and
submitted it to Granite States Insurance Company (“Granite States”), which
provided insurance to Wildhorse. On the Georgia state tax registration, Douglas
Colwell was listed as Wildhorse’s president and his personal address was listed as
the business location. In contrast to the insurance application, the tax registration
5
indicated that Wildhorse would have 100 employees at full operation.
B. Insurance Investigations
Granite States asked Jim Adkins, a loss control consultant, to investigate
Wildhorse. During a telephone call with Douglas Colwell in July, 1995, Douglas
Colwell told Adkins that Wildhorse was a sole proprietorship, that he was in
charge of the company, that Wildhorse had seven employees, and that the
employees were laborers who cleaned up around the entrance of a development.
Douglas Colwell also told Adkins that Wildhorse was going to grade land for a
condominium complex, that there was nothing going on at present, that Wildhorse
would probably hire subcontractors in the future, and that it was not necessary for
Adkins to visit the business location. Douglas Colwell explained that the reason
Wildhorse had such limited activity was because he had been sick and hospitalized
for a period of time.
Tim Wilson, an insurance auditor, sent a letter to Douglas Colwell in
connection with conducting a “pre-audit” of Wildhorse. Upon receiving the letter,
Douglas Colwell brought the letter to Carr. Douglas Colwell also called Plemons
about the letter and was told to call Smith.
On September 8, 1995, Wilson met Douglas Colwell outside a convenience
store in Blairsville, Georgia. Wilson completed an audit questionnaire during the
6
meeting in which he indicated that Douglas Colwell verified the payroll and job
classification information that had been provided in the insurance application.3
Douglas Colwell told Wilson that Wildhorse was a new land development
business that was going to concentrate on land development activities (such as
grading roads and lots and doing building-site preparation for land to be sold for
subdivisions), that he was the sole officer, and that he supervised all of the
operations. Douglas Colwell also took Wilson to some property and let Wilson
take pictures of the property so that Wilson would believe that Wildhorse was in
the business of buying, grading, preparing, and subsequently selling land.4
In December 1995, Granite States asked Wildhorse to provide an IRS
payroll report (a “941 Form”) for the third quarter of 1995. Smith prepared an
inaccurate 941 Form. Carr, who was then working undercover as a government
informant, brought the 941 Form to Douglas Colwell, who refused to sign it.
Curtis Colwell signed the form, and Carr then showed it to Douglas Colwell.
3
Douglas Colwell provided payroll amounts of $1,712 for the second quarter of 1995 and
$2,751 for the third quarter
4
Plemons was arrested on unrelated insurance fraud charges. In October 1995, a family
meeting was convened between Curtis and Douglas Colwell, and their father – Carleton Colwell
– at which time it was decided that the Colwells would terminate the relationship with Plemons
as their insurance broker. However, on November 7, 1995, during a subsequent meeting in
Helen, Georgia, attended by Curtis and Douglas Colwell, Carr, Plemons, and another Colwell
employee, Plemons touted his prior accomplishments on behalf of the Colwells, such as saving
$2.2 million in worker’s compensation premiums, and convinced the Colwells to keep him as
their agent.
7
In 1996, Curtis Colwell and Plemons decided to purchase insurance
coverage from three carriers. In addition to the policy that Wildhorse had with
Granite States, one of the Colwell companies, Colwell Construction, obtained
coverage through Liberty Mutual, while a new Colwell company, Appalachian
Environmental Material Consultants, obtained coverage through National
American Insurance Company. In the applications, all three insurance companies
were provided false information on the number of employees, the payroll amounts,
and the job classifications of the employees. The total amount of lost premiums
was $453,028 to Granite States, $19,228 to Liberty Mutual, and $81,146 to
National American.
C. The Criminal Proceedings
On April 19, 2000, a federal grand jury returned an indictment charging five
defendants in a total of six counts. Douglas and Curtis Colwell were charged with
conspiracy to commit mail and wire fraud, in violation of 18 U.S.C. § 371, as part
of the scheme to defraud worker’s compensation insurance carriers. Curtis
Colwell was also charged with one count of wire fraud, in violation of 18 U.S.C.
§ 1341, and one count of mail fraud in violation of 18 U.S.C. § 1343. The
Colwells entered not guilty pleas and went to trial. Smith and Plemons, two of
their co-defendants, plead guilty and testified at the Colwells’ trial.
8
1. The Prior Fraud Testimony
The Colwells’ trial commenced on May 28, 2003. Both Smith and
Plemons, on direct examination, admitted that they had partaken in similar
fraudulent conduct not involving the Colwell businesses on previous occasions
over a period of years. During Plemons’s cross-examination, counsel for Curtis
Colwell attempted to elicit the identities of the persons with whom Plemons had
previously engaged in the similar fraudulent conduct. The government objected
on relevancy grounds. Noting that the evidence raised “a very plain 403 problem,”
the district court sustained the objection, stating that:
given the considerable evidence that points to bias, interest and the
like, and his own admission that he has done this on many other
occasions over an extended period of time. . . I’m going to sustain the
government’s objection to that evidence.
The district court, however, did permit defense counsel for Curtis Colwell to
inquire into the nature of the prior fraudulent activity, stating that “[i]f you want to
inquire of him [Plemons] more to confirm that it is the same sort of activity in
terms of matters that deal with premium reductions, false premium reductions, I’ll
permit you to do that.” The district court also gave Curtis Colwell the opportunity
to proffer what information he expected to elicit were the unidentified persons
called to testify. Counsel for Curtis Colwell proffered that the witnesses would
9
testify that they were unaware that Plemons was submitting inaccurate information
to insurance companies and that Plemons hid the fraudulent conduct from them.5
Following a four-week trial, a jury convicted the Colwells on all counts.
2. Sentencing
At the sentencing hearing, Ted Robertson, an IRS investigating officer,
testified that the Colwell businesses had paid Fireman’s Fund $353,708 in
premiums and that Fireman’s Fund anticipated paying a total of $633,344 in
claims. Robertson testified that no worker’s compensation claims were filed
against (or paid by) Granite States, Liberty Mutual, or National American during
the period that they provided worker’s compensation insurance to the Colwell
businesses.
Carlton Colwell, the father of the defendants, testified that Curtis Colwell
had run Colwell Construction for approximately 30 years, that only Curtis was
capable of running the company, and that if Curtis was unable to run the
businesses, they would fail. Robbie McClure, an office manager for the Colwell
businesses, testified that the businesses employed fifty-eight full-time employees
and that if Curtis Colwell were not able to manage the businesses, they “would go
5
At the close of Smith’s testimony, Curtis Colwell renewed the argument that he be
permitted to learn the identities of the individuals with whom Plemons and Smith had previously
engaged in similar fraudulent conduct, and the district court again declined to permit inquiry into
the identities of these persons.
10
under.” In addition, McClure testified that approximately eleven trucking
companies (employing seventy-seven people) and approximately ten paving
companies (employing approximately 135 people) rely on Colwell Construction
for all or nearly all of their business. He also testified that private contractors,
which provide approximately 45% - 50% of the Colwell business, would not want
to do business with the Colwell businesses if Curtis Colwell was not running the
businesses.
The district court determined that the loss attributable to Curtis Colwell’s
conduct was $1,170,000 — $740,000 in unpaid premiums to Fireman’s Fund and
$430,000 in unpaid premiums to Granite States, Liberty Mutual, and National
American. Curtis Colwell’s base offense level of 6 was increased by (a) 11 levels
due to this loss amount, and (b) 2 levels because the offense involved more than
minimal planning. This resulted in a total offense level of 19. Based on a criminal
history of category I and a total offense level of 19, the guidelines range was 30 to
37 months’ imprisonment.
The district court then granted Curtis Colwell a 4-level downward departure
to offense level 15, which reduced the guidelines range to 18 to 24 months’
imprisonment. The district court based the departure on its finding that the loss
amount of $1,170,000 as to Curtis Colwell overstated the seriousness of his
11
offenses and that Curtis Colwell’s imprisonment would have a detrimental effect
on the Colwell businesses and thus the employees of those businesses. The
district court sentenced Curtis Colwell to 18 months’ imprisonment, the low end
of the guidelines range.
The district court determined that the loss attributable to Douglas Colwell’s
conduct was $400,000 in unpaid premiums to Granite States. Douglas Colwell’s
base offense level of 6 was increased by (a) 9 levels due to this loss amount, and
(b) 2 levels because the offense involved more than minimal planning. The
district court then subtracted 4 levels due to Douglas Colwell’s minimal role in the
offense. This resulted in a total offense level of 13. Based on a criminal history of
category I and a total offense level of 13, the guidelines range was 12 to 18
months’ imprisonment.
The district court then granted Douglas Colwell a 3-level downward
departure to offense level 10, which reduced the guidelines range to 6 to 12
months’ imprisonment. The district court based the departure on its finding that
the loss amount as to Douglas Colwell overstated the seriousness of his offense.
The district court sentenced Douglas Colwell to 6 months’ home confinement.
Curtis and Douglas Colwell appeal their convictions. The government
appeals both of their sentences.
12
II. DISCUSSION
After review and oral argument, we conclude that the government has not
shown reversible error as to the sentences of defendants Curtis Colwell or Douglas
Colwell.6 We further conclude that the defendants’ appeals of their convictions
clearly lack merit. In fact, only two of the issues in this case warrant further
discussion: (1) the sufficiency of the evidence to support Douglas Colwell’s
conviction; and (2) the evidentiary ruling regarding the prior fraudulent conduct of
witnesses Plemons and Smith.
A. Douglas Colwell’s Conviction
We first explain why we reject Douglas Colwell’s contention on appeal that
there was insufficient evidence to support his jury conviction for conspiracy to
commit mail and wire fraud in furtherance of the scheme to defraud the worker’s
compensation carriers.7
6
Neither party raises any issue of a violation of the Sixth Amendment or any issue under
United States v. Booker, 125 S. Ct. 738 (2005). Instead, the defendants do not challenge their
sentences at all, and the government challenges only the downward departures.
7
Count I of the indictment charged the defendants with conspiracy to commit both mail
and wire fraud. The district court instructed the jury that they must unanimously agree on what
substantive offense or offenses that the defendants conspired to commit but that the government
was not required to prove both substantive offenses. The jury returned a general verdict finding
the defendants guilty of “Count I — Alleged Conspiracy.” Because the verdict was not limited to
conspiracy to commit only mail fraud or only wire fraud, the implication from the general verdict
form is that the jury found the defendants guilty of the conspiracy as charged in the indictment.
However, the “Judgment” entered by the district court described the nature of the offense in
Count I as “Conspiracy to Commit Wire Fraud” and does not mention mail fraud. We need not
resolve any inconsistency between the indictment/general verdict documents and the Judgment
13
For a defendant to be convicted of a conspiracy, the government must
demonstrate, beyond a reasonable doubt: “(1) an agreement among two or more
persons to achieve an unlawful objective; (2) knowing and voluntary participation
in the agreement; and (3) an overt act by a conspirator in furtherance of the
agreement.” United States v. Hasson, 333 F.3d 1264, 1270 (11th Cir. 2003), cert.
denied, 541 U.S. 1056, 124 S. Ct. 2195 (2004). An agreement may “be proved by
circumstantial as well as direct evidence.” United States v. Hernandez, 921 F.2d
1569, 1575 (11th Cir. 1991) (quotation marks and citation omitted). It may be
based upon the reasonable inferences from the relationship of the parties, their
overt acts and concert of action, and from the totality of their conduct. United
States v. Guerra, 293 F.3d 1279, 1285 (11th Cir. 2002), cert. denied, 537 U.S.
1141, 123 S. Ct. 934 (2003).
To prove wire or mail fraud, the government must show that the defendant
(1) intentionally participated in a scheme or artifice to defraud, and (2) used the
United States mails or an interstate wire to further that scheme or artifice. See
Hasson, 333 F.3d at 1270 (wire fraud); United States v. Waymer, 55 F.3d 564, 568
(11th Cir. 1995) (mail fraud).
document as it is not material to any issues before this Court on appeal.
14
To reverse a jury verdict based on the insufficiency of the evidence, the
defendant must show that a reasonable trier of fact could not find the defendant
guilty of the offense beyond a reasonable doubt. United States v. Vera, 701 F.2d
1349, 1356-57 (11th Cir. 1983). In evaluating such a claim, the record is viewed
in the light most favorable to the jury verdict, drawing all reasonable inferences
and resolving all questions of credibility in favor of the government. Id. The
verdict is affirmed if a reasonable juror could conclude that the evidence
establishes guilt beyond a reasonable doubt. See id at 1357. It is not necessary
that the evidence exclude every reasonable hypothesis of innocence. Id. “A jury
can choose among reasonable constructions of the evidence.” Id. (quotation marks
and citation omitted).
It is also not necessary for the government to show that Douglas knew every
detail or all participants in the conspiracy. United States v. Pedrick, 181 F.3d
1264, 1272 (11th Cir. 1999). He is a member of the conspiracy if he “participates
in some affirmative conduct designed to aid in the success of the venture with
knowledge that h[is] actions would further the venture.” Id. (citation omitted). In
addition, a defendant may be convicted of conspiracy even though he joined the
conspiracy later and played a minor role in it. United States v. Knowles, 66 F.3d
1146, 1155-57 (11th Cir. 1995).
15
After considerable record review, we conclude that there was ample
evidence of Douglas Colwell’s agreement to commit mail and wire fraud in
furtherance of the scheme to defraud the worker’s compensation carriers. For
example, there was evidence that Douglas Colwell signed the draft of the
Wildhorse insurance application which contained gross inaccuracies as to the
number of employees and annual payroll and which falsely stated that Wildhorse
had no employee exchange agreements. There was also evidence that he provided
false information to Jim Adkins during an insurance investigation. In addition,
there was evidence that Douglas Colwell provided false information to Tim
Wilson during a pre-audit and took Wilson to see a property in an effort to
corroborate the false information contained in the insurance application.
The evidence also showed that Douglas Colwell agreed to continue to work
with Plemons after Plemons reminded him of the frauds which had been
perpetuated. Although Douglas Colwell might not have been so sophisticated as
to know all of the particulars of the conspiracy, and even though he needed to call
Plemons to learn the details as to what misrepresentations were made on the
insurance application prior to meeting with Wilson, the fact that he called Plemons
16
suggests, if anything, that he knew enough about the scheme to realize that he had
to call Plemons to determine what should be disclosed to Wilson.8
While there may not have been any smoking guns, there was a substantial
body of evidence from which a reasonable juror could find that Douglas Colwell
participated in the conspiracy beyond a reasonable doubt.
B. The Challenged Evidentiary Ruling
Both defendants argue that the district court erred when it precluded inquiry
into the identities of the unnamed persons with whom Plemons and Smith had
previously engaged in similar frauds.
A district court enjoys wide discretion in determining whether to admit or
exclude evidence. Hamling v. United States, 418 U.S. 87, 108, 94 S. Ct. 2887,
2903 (1974). To challenge a verdict on an incorrect evidentiary ruling, a
defendant must demonstrate that the objection was adequately preserved, that the
district court abused its discretion in interpreting or applying the evidentiary rule,
and that the error affected a substantial right. United States v. Stephens, 365 F.3d
967, 974 (11th Cir. 2004). Moreover, “a conviction will not be overturned on the
basis of a violation of Rule 403 absent a clear abuse of discretion.” United States
8
Douglas appears to argue that when he refused to sign the 941 form in December 1995,
he withdrew from the conspiracy and that this somehow negated his earlier participation in it.
Whether he withdrew has been disputed by the parties throughout these proceedings, but is of no
moment for purposes of determining whether there was sufficient evidence that Douglas
participated in the conspiracy in the first place for at least some period of time.
17
v. Cross, 928 F.2d 1030, 1051 (11th Cir. 1991) (citation omitted). We readily
conclude that the district court did not clearly abuse its discretion in relying on
Rule 403 to exclude certain evidence related to separate frauds not involving the
Colwells.
Federal Rule of Evidence 403 provides in pertinent part that relevant
evidence “may be excluded if its probative value is substantially outweighed by
the danger of unfair prejudice, confusion of the issues, or misleading the jury, or
by considerations of undue delay, waste of time, or needless presentation of
cumulative evidence.” Fed. R. Evid. 403. In determining whether to admit
evidence under Rule 403, a district court may consider the amount of time it would
have taken the parties to present the evidence, how the evidence would affect the
focus of the trial, and whether it would have “diverted the jury’s attention from the
real issue in the case.” United States v. Gilliard, 133 F.3d 809, 815-16 (11th Cir.
1998).
The district court did not clearly abuse its discretion for several reasons.
First, the district court allowed the jury to know that Plemons and Smith were
involved in prior insurance fraud. However, the nature of the dealings between
Plemons and Smith and their earlier clients had nothing to do with Plemons’s and
Smith’s dealings with the Colwells. Thus, the probative value of Plemons’s and
18
Smith’s separate frauds was extremely attenuated. Indeed, the prior acts evidence
was not offered to show Plemons and Smith were aware of the fraud in this case
but to show the Colwells were aware of the fraud in this case, even though the
Colwells were undisputedly not involved in the prior fraud. Moreover, even
assuming the Colwells could elicit testimony concerning Plemons’s and Smith’s
ability to engage in fraud undetected by others, it only provides a weak inference,
at best, that the Colwells were unaware of Plemons’s and Smith’s fraud in this
case. Thus, the probative value of such evidence was rather unsubstantial.
Second, allowing this type of inquiry would undoubtedly protract an already
lengthy trial and confuse the jury as the government and defense counsel put on
competing witnesses as to Plemons’s and Smith’s prior frauds. Fuller inquiry into
Plemons’s and Smith’s prior frauds would have resulted in a mini-trial about their
prior frauds. Evidence about whether their prior clients knew about the frauds
would have necessarily involved not only the identities of the clients but also more
evidence about the nature of the prior transactions. Such a mini-trial may have
confused jurors into believing that the mini-trial was the main event. Because any
potential probative value of the evidence was substantially outweighed by the
19
dangers of confusion of the issues, misleading the jury, and undue delay, the
district court did not clearly abuse its discretion.9
The Colwells rely heavily on United States v. Cohen, 888 F.2d 770 (11th
Cir. 1989). The Colwells’ case, however, is significantly different from Cohen in
several respects. First, unlike the Cohen brothers, the jury that convicted the
Colwells was fully aware that the Colwells’ co-conspirators, Plemons and Smith,
had committed prior fraudulent acts over an extended period of time.10 The
existence of the prior frauds by Plemons and Smith was elicited during direct
examination by the government, and the district court permitted the defendants to
9
Alternatively, even if we assume arguendo that the district court abused its discretion in
this evidentiary ruling, the defendants have failed to show that the ruling affected their
substantial rights. “[A]n erroneous evidentiary ruling is a basis for reversal only if the defendant
can demonstrate that the error probably had a substantial influence on the jury’s verdict.” United
States v. Stephens, 365 F.3d 967, 977 (11th Cir. 2004) (internal citation and punctuation
omitted). The evidence that both defendants knew that insurance companies were being
defrauded is supported by documentary evidence and substantial testimony from employees and
insurance auditors and investigators. Moreover, Curtis Colwell’s argument is belied by his
position during sentencing that he relied on Plemons’s and Smith’s statements that if they were
caught, they would face only civil liability.
10
In Cohen, Jerry Faw, the Cohen brothers’ co-conspirator, testified that the Cohen
brothers agreed to purchase a financially distressed company on condition that they could “steal a
little” from the company, and that they subsequently did so through an arrangement whereby
service providers overcharged the company in exchange for kick-backs which were shared
among Faw and the Cohen brothers. Cohen, 888 F.2d at 772-73. During cross-examination, the
defendants sought to question Faw about a prior business arrangement involving cash sales
which was perpetuated by Faw without the knowledge of the company’s previous president. The
district court precluded the evidence on grounds that it was outside the scope of direct
examination and irrelevant. Reversing, this Court, noting that the evidence was “crucial to the
defense” theory that Faw was capable of concocting and managing a fraudulent scheme without
the Cohen brothers’ participation, and that Faw was “an essential government witness,”
concluded that the evidence was relevant to the issue of the Cohen brothers’ guilt and that its
exclusion deprived them of a fair trial. Id. at 776-77.
20
confirm that the prior fraudulent activities that Plemons and Smith admitted to
involved the same sort of activity at issue in this case.
Second, unlike co-conspirator Faw in Cohen, Plemons and Smith, as co-
conspirators, were not the essential link in establishing the Colwells’ participation
in the fraudulent scheme. Whereas Faw in Cohen testified that he received the
kickbacks and passed a share on to the Cohen brothers, here the economic benefits
of the fraud inured directly to the Colwells in the form of lower insurance
premiums.11 Third, unlike the Cohen case, the Colwells were not accused of
starting the scheme at issue. It is uncontroverted that Plemons and Smith engaged
in similar conduct in the past and had the wherewithal to do so again. Thus,
nothing in Cohen shows that the district court abused its discretion in its
evidentiary ruling in this case.
III. CONCLUSION
For the foregoing reasons, we affirm the convictions of defendants Curtis
and Douglas Colwell, and affirm both defendants’ sentences.
AFFIRMED.
11
We also note that the Colwells’ theory — that unknown to the Colwells, Plemons and
Smith surreptitiously reduced their clients’ insurance premiums, clearly lacks merit.
21