United States v. Mark Pelle , 263 F. App'x 833 ( 2008 )

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
January 31, 2008
No. 06-16602 THOMAS K. KAHN
Non-Argument Calendar CLERK
________________________
D. C. Docket No. 06-20114-CR-JEM-1
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
MARK PELLE,
Defendant-Appellant.
________________________
Appeal from the United States District Court
for the Southern District of Florida
_________________________
(January 31, 2008)
Before CARNES, MARCUS and WILSON, Circuit Judges.
PER CURIAM:
This is Mark Pelle’s appeal of his conviction and sentence for mail fraud,
wire fraud, and conspiring to commit mail and wire fraud.
I.
Mark Pelle was a salesman for Pantheon Holdings, a “business opportunity
business” that sold Internet kiosks to would-be entrepreneurs. The kiosks
supposedly had features ranging from email access to dispensing flowers.
Pantheon salespeople told potential purchasers that Pantheon would assign them an
exclusive territory for their kiosks, find good locations for them, install the kiosks,
and provide technical support. Salespeople also told the purchasers about deals
Pantheon had brokered whereby ads would be would pre-loaded onto the kiosks,
and businesses would pay a monthly rate for the ads to be displayed.
As part of the sales pitch, salespeople, including Pelle, would tell purchasers
that each kiosk had a projected monthly income of $1,500 to $5,500 and provide a
list of current kiosk owners as references. One kiosk cost between $10,980 and
$19,980, and Pantheon would offer discounted rates on additional purchases.
The reality of Pantheon’s business was very different from its image. Its
owners were a group of ex-convicts who had run a number of other business
opportunity businesses. Richard Goodman was responsible for all of Pantheon’s
day-to-day operations, but a series of apparently respectable people were brought
in to be “puppet president[s]” because he had a criminal record that would have to
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be disclosed to potential purchasers. Of the approximately 1,200 kiosks sold,
about 900 were shipped, and only about 350 were ever installed. Pantheon sold
kiosks to multiple purchasers in the same “exclusive” area. The projected income
claim was entirely speculative. The kiosks did not have pre-loaded ads, and
Pantheon had no deals with advertisers. Pelle was told that Pantheon had never
found a single advertiser to place a single ad on a single kiosk.
Pantheon paid the references $15 per call, and not all of the references even
owned a kiosk. One of the references, Joe Lieberman, had been a salesman with
Pelle for a company that Pantheon’s owners ran before they started Pantheon.
Another, Frank DePierre, was sent a kiosk for free after about three months as a
reference, but he did not bother to install it, even after Goodman paid a friend who
owned a local deli to allow the kiosk to be installed there. DePierre was brought in
as a reference because he told Goodman that he was an “expert sales closer” and
“there wouldn’t be any reference in the world better than him.” Some Pantheon
salespeople would also pay references an additional sum for help convincing
purchasers to buy. For example, Pelle would pay Liberman $100 every time
Lieberman would show his kiosk to one of Pelle’s leads.
After a while, angry purchasers began posting complaints about the
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company on the Internet, including on a website called “Ripoff Report.”1 Fearful
that the complaints would impact sales, the company started doing business as
“Pantheon,” instead of under its corporate name “Pantheon Holding.” After the
complaints continued to pile up, Pelle suggested that salespeople tell prospective
that the complaints were misinformation by competitors who wanted to sabotage
Pantheon’s business. Pelle even coined the phrased “Internet terrorists” to refer to
them.
Pelle earned $220,000 in commissions from selling the kiosks. As Goodman
testified, although the model sales pitch given to Pantheon salespeople was already
“full of misrepresentations,” Pelle had the “terrible habit . . . of exaggerating the
numbers in the script.” He would generally double the number of people in the
locating division and the kiosks’ projected income. Goodman repeatedly spoke to
Pelle about exaggerating what the locating division would do for purchasers. Pelle
responded that it was all “fake,” “[t]hat it was terrible,” and “that he didn’t really
care.”
In September 2004, federal agents obtained and executed a search warrant
for Pantheon’s offices. Goodman began cooperating with the government shortly
thereafter.
1
Ripoff Report Homepage, http://www.ripoffreport.com (last visited December 21,
2007).
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Pelle and eight other people associated with Pantheon were charged with
mail fraud, wire fraud, and conspiracy to commit mail and wire fraud, in violation
of 18 U.S.C. §§ 1341, 1343, and 1349. Six pleaded guilty, but Pelle and DePierre
pleaded not guilty and were tried jointly. Six days into the eight day trial, toward
the end the government’s case-in-chief, DePierre’s attorney requested a sidebar.
He told the court that DePierre was complaining of dizziness and asked for a brief
recess. The judge excused the jury, explaining that the sidebar “might take us a
couple minutes” and suggesting that everyone “take a short break.” Before the jury
returned, DePierre was taken to the hospital. The trial court dismissed the jurors
for the day rather than have them return to find DePierre’s absent.
The following day the court learned that DePierre had suffered a serious
stroke, and it granted the unopposed motion of DePierre’s counsel’s for a mistrial
as to his client. Pelle also moved for a mistrial based on what had happened to
DePierre, but the district court denied his motion. The court did, however, instruct
the jury that it was “not to speculate as to the absence of or why Mr. DePierre is no
longer standing trial” and that “[h]is absence should not control or influence [its]
verdict in any way whatsoever with respect to the defendant, Mark Pelle.” The
trial then proceeded.
Following the government’s case, Pelle testified in his own defense. He
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claimed that he believed Pantheon was a legitimate business and that he had not
knowingly defrauded anyone. He testified that he had simply been “unbelievably”
stupid. The court then charged the jury. Along with the rest of the jury charge, the
district court gave a deliberate ignorance instruction, telling the jury that willful
blindness is equivalent to knowledge. The jury returned a verdict finding Pelle
guilty on all of the counts in the indictment.
The probation office then prepared a presentence investigation report, which
assigned Pelle a base offense level of seven under United States Sentencing
Guideline § 2B1.1 (Nov. 2005), the guideline applicable to convictions for fraud.
The PSR also attributed $2,812,652 in losses to Pelle, enhancing his offense level
by eighteen. See U.S.S.G. § 2B1.1(b)(1)(J) (providing for an eighteen level
enhancement for losses between $2,500,000 and $7,000,000). Finally, the PSR
recommended both a four-level enhancement under U.S.S.G. § 2B1.1(b)(2)(B)
because Pelle caused losses to at least fifty but fewer than two hundred fifty
victims, and a two-level enhancement under U.S.S.G. § 3C1.1 because Pelle had
obstructed justice by committing perjury at trial. With a total recommended
offense level of thirty-one and a criminal history I, the PSR calculated Pelle’s
advisory guideline to be 108 to 135 months imprisonment.
Pelle made numerous objections to the PSR, including that: (1) the loss
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amount in the PSR did not account for the value of the kiosks actually delivered to
the purchasers and (2) the loss amount and number of victims in the PSR violated
Pelle’s Sixth Amendment rights because they were neither found by the jury nor
admitted by him.
The district court overruled the defendant’s objections, arriving at the same
advisory guideline range that the PSR had. Considering the guideline range and
the 18 U.S.C. § 3553(a) factors, the district court sentenced Pelle to 108 months
imprisonment, the lowest sentence within the advisory guideline range.
Pelle now appeals, contending that the district court erred by: (1) denying
his motion for a mistrial; (2) instructing the jury on deliberate indifference; (3)
failing to decrease the amount of loss by the value of the kiosks delivered when
calculating the amount of loss for U.S.S.G. § 2B1.1(b)(1) purposes; (4) sentencing
him based on facts neither admitted by him nor found by the jury; and (5)
enhancing his sentence for obstruction of justice.
II.
As for Pelle’s contention that the district court erred by denying his motion
for a mistrial, we review that decision only for an abuse of discretion, which
requires that the defendant have suffered compelling prejudice. See United States
v. Knowles, 66 F.3d 1146, 1158–1159 (11th Cir. 1995) (“To demonstrate that the
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district court abused its discretion, a showing of ‘compelling prejudice’ is
required.”). The burden of showing compelling prejudice is heavier when the
district court issues a curative instruction. See United States v. Ramirez, 426 F.3d
1344, 1352 (11th Cir. 2005) (“A jury is presumed to follow the instructions given
to it by the district judge.”).
Pelle first argues that he suffered compelling prejudice by being forced to
continue in DePierre’s absence, because the jury could have improperly inferred
that DePierre suffered a stroke as a physiological response to testimony, inferring
that he was guilty and so, too, must be Pelle. Even setting aside the utterly
conjectural nature of this argument, its core factual premise lacks any support in
the record. DePierre complained quietly to his attorney about being dizzy, at
which point the attorney requested a sidebar. The jury was then dismissed, and,
when it was reconvened the next day, DePierre was absent. No one told the jury
why.
Nor did the simple fact of DePierre’s absence prejudice Pelle. In United
States v. Rapp, 871 F.2d 957 (11th Cir. 1989), we affirmed the district court’s
denial of a mistrial even though the court told the jury that a co-defendant had been
dismissed from the case because the evidence against him was insufficient; we said
that the court’s curative instruction prevented any resulting prejudice. Id. at
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967–68. We did, however, note that “the better practice in this situation is simply
to acknowledge a defendant’s absence to the jury and instruct that it should not
affect their deliberations as to the remaining defendants,” id. at 968, which is
exactly what the district court did here. It told the jury that DePierre was “no
longer a part of the trial,” instructed the jury “not to speculate as to the absence of
or why [he was] no longer standing trial,” and told the jury that “[h]is absence
should not control or influence [its] verdict in any way whatsoever with respect to”
Pelle. The district court followed the best possible course in dealing with
DePierre’s stroke.
Pelle also argues that he suffered compelling prejudice from being forced to
continue as the only defendant because the evidence that had been admitted against
DePierre tainted the jury against Pelle. His theory is that, as a result of DePierre’s
mistrial, DePierre did not put on a defense to refute the government’s evidence,
which caused spill over prejudice to Pelle. As we stated in United States v.
LeQuire, 943 F.2d 1554 (11th Cir. 1991), “[c]ompelling prejudice cannot be solely
proved by the quantity of evidence presented against codefendants. Instead, we
must determine whether the jury could sift through all of the evidence and render
an impartial verdict as to each defendant.” Id. at 1563 (citations omitted); see
United States v. Garcia, 405 F.3d 1260, 1272 (11th Cir. 2005) (“[A] defendant
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does not suffer compelling prejudice simply because much of the evidence
admitted at trial is applicable only to co-defendants.”). The district court directed
the jury that to consider only the evidence against Pelle, and that instruction was
enough to avoid any prejudice. Id. (“When a curative instruction is given, this
court reverses only if the evidence is so highly prejudicial as to be incurable by the
trial court’s admonition.” (citation and quotation marks omitted)).
In addition, Pelle has not identified a single piece of evidence introduced at
trial that would not have been admissible against him had he been tried separately.
He has not explained why the evidence against DePierre was so inflammatory or
confusing that “the jury could not make an individualized determination as to his
guilt or innocence.” Ramirez, 426 F.3d at 1352.
Finally, Pelle argues that DePierre might have testified in his own defense at
a joint trial and, if he did, his testimony might have corroborated Pelle’s. This
argument is utterly speculative. At the time the district court denied Pelle’s motion
it was not even clear that DePierre would survive his serious stroke or, if he did,
that he would be in good enough health to be retried in a reasonable period of time.
There was nothing to indicate that if he survived and was able to be tried jointly
with Pelle that DePierre would elect to testify. Nor was there any basis for
believing that if DePierre did testify, his testimony in his own interest would help
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Pelle. There was no proffer by Pelle about what DePierre’s testimony would be if
he survived in good enough shape to be retried and if he elected to testify. Cf.
United States v. Pepe, 747 F.2d 632, 651–52 (11th Cir. 1984) (holding that, absent
a “concrete showing that [a co-defendant] would testify for [the appellant] if they
were tried separately” or a “proffer [of] what his testimony would be,” an appellant
cannot show compelling prejudice from a denial of a motion for severance).
For all of these reasons, the district court did not abuse its discretion in
refusing to grant Pelle’s motion for a mistrial based on the fact that one had been
granted for DePierre.
III.
Pelle’s second contention focuses on the deliberate ignorance instruction the
court gave the jury. He makes two arguments against it. First, Pelle argues that no
deliberate ignorance instruction at all should have been given because there was no
evidentiary basis for one in this case. There was no evidentiary basis for one, he
asserts, because the government’s evidence, if believed—and it was
overwhelming—proved that he had specific knowledge of the fraud; there was no
evidence that he deliberately kept himself ignorant of the falsity of the statements
in order to avoid learning what he only suspected. While not denying that its
evidence proved Pelle’s guilty knowledge many times over, the government
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responds that the deliberate ignorance instruction was justified by Pelle’s own
testimony that he had merely been “unbelievably” stupid.
The law of this circuit is that giving a deliberate indifference instruction
which is not supported by evidence that the defendant kept himself ignorant of the
wrongdoing is not reversible error because giving this type of instruction in that
circumstance will at worst be harmless error. United v. Kennard, 472 F.3d 851,
858 (11th Cir. 2006), cert. denied, 128 S. Ct. 454 (2007); United States v. Stone, 9
F.3d 934, 937–40 (11th Cir. 1993). The Kennard and Stone decisions foreclose
Pelle’s argument based on the lack of evidence that he was deliberately ignorant.
Pelle’s other argument about the deliberate ignorance instruction is that it
misstated the law. “We review the legal correctness of a jury instruction de novo,
but defer on questions of phrasing absent an abuse of discretion.” United States v.
Prather, 205 F.3d 1265, 1270 (11th Cir. 2000) (citation omitted). The particular
part of the instruction about which Pelle complains reads:
So, with respect to the issue of the Defendant’s knowledge in this
case, if you find from all the evidence beyond a reasonable doubt that
the Defendant knew that certain representations were being made by
Pantheon employees or references to prospective customers, and
deliberately and consciously tried to avoid learning the falsity of these
representations in order to be able to say that he did not know that the
representations were false, you may treat such deliberate avoidance of
positive knowledge as the equivalent of knowledge.
The misstatement, according to Pelle, is that the instruction refers to “certain
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representations,” instead of limiting them to those that were material.
Jury instructions are to be considered in the context of the entire charge and
the events at trial. United States v. Johnson, 139 F.3d 1359, 1366 (11th Cir. 1998).
In addition to the challenged instruction, the district court also instructed the jury
that “a Defendant can be found guilty of [fraud] only if all of the following facts
are proved beyond a reasonable doubt” and listed, among the other elements,
“[t]hat the false or fraudulent pretenses, representations or promises related to a
material fact.” Reading the charge as a whole, the instructions properly informed
the jury that Pelle could be found guilty of fraud only if he made a material
misrepresentation, including the “certain representations” referred to in the
deliberate indifference instruction. The district court did not abuse its discretion in
the phrasing of the instruction.
IV.
Pelle’s third contention is that the district court in determining his advisory
guideline range miscalculated the amount of loss resulting from his fraud. We
review de novo the district court’s interpretation and application of the guidelines,
and its loss calculation only for clear error. United States v. Hamaker, 455 F.3d
1316, 1336 (11th Cir. 2006). While the district court needs to make a only
reasonable estimate of the amount of loss, U.S.S.G. § 2B1.1 cmt. n.3(C), if a
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defendant objects to the amount of loss in the PSR, the government must use
“reliable and specific evidence” to prove the amount by a preponderance of the
evidence. United States v. Lawrence, 47 F.3d 1559, 1566 (11th Cir. 1995).
Pelle argues that the district court erred in calculating the amount of loss
because it did not reduce the amount by the actual value of the kiosks that were
delivered. That value, Pelle asserts, is the expense of purchasing, shipping, and
installing the kiosks. The government responds that those expenses were incurred
in perpetrating the fraud and should not be credited to Pelle’s benefit in arriving at
the amount of loss.
Costs incurred in defrauding victims should not be deducted from a
defendant’s loss calculation. See United States v. Craiglow, 432 F.3d 816, 820–21
(8th Cir. 2005) (“We have previously rejected the argument that one who commits
a fraud is entitled to his business expenses ‘in perpetrating a fraud.’” (citation
omitted)); United States v. Schaefer, 291 F.3d 932, 944 (7th Cir. 2002) (declining
to credit the defendant “the cost of matting and framing [counterfeit] artwork”
against the amount of loss caused by the defendant); United States v. Sayakhom,
186 F.3d 928, 947 (9th Cir. 1999) (“[I]f the ‘value’ to the victim is merely a part of
the fraudulent scheme, the defendant is not entitled to a credit.”). This does not
mean, however, that Pelle was not entitled to some credit for these costs.
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When a defendant’s offense level is calculated under U.S.S.G § 2B1.1, the
amount of loss must “be reduced by . . . the fair market value of the property
returned and the services rendered, by the defendant or other persons acting jointly
with the defendant, to the victim before the offense was detected.” U.S.S.G. §
2B1.1 cmt. n.3(E). The district court did not reduce the amount of loss at all for
the value of the kiosks because it found that “in the overall scheme of things, those
machines to the people that they were sent [to] were worthless. They did not have
any value to them under the circumstances.” Arguably, the court applied the
wrong standard by focusing on the value of the machines to the victims, instead of
their value on the market, although it may be there is no distinction—what a
machine is worth on the market is what it is worth to any person, including the
victim. We need not decide that fine point.
The application of the standard made no difference in this case. There was
no evidence that the machines had any value at all in the market. Their only value
appears to have been as useful instruments of fraud. The victims would not have
purchased the machines without the fraudulent misrepresentations Pelle and his co-
conspirators made. Nor is there any evidence that anyone else would purchase
them absent fraudulent misrepresentations. As to Pelle’s cost in shipping and
handling the machines, that was the cost of doing business and the business was
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fraud. The guidelines do not permit defendants to deduct from the losses they have
caused their victims the cost the defendants incurred in inflicting the fraud.
V.
Pelle’s fourth contention is that his Sixth Amendment right to a jury trial
was violated when the district court found and considered the number of victims
and the amount of loss, because those facts were neither admitted by him nor found
by a jury. Our case law squarely forecloses this argument. See United States v.
Rodriguez, 398 F.3d 1291, 1300 (11th Cir. 2005) (stating that it is not error to
apply “extra-verdict enhancements— enhancements based on facts found by the
judge that were not admitted by the defendant or established by the jury
verdict—that le[a]d to an increase in the defendant’s sentence”). So long as the
district court treats the guidelines as advisory, it may use in sentencing facts that it
finds under a preponderance of the evidence standard. United States v. Smith, 480
F.3d 1277, 1281 (11th Cir.), cert. denied, 128 S. Ct. 175 (2007); United States v.
Chau, 426 F.3d 1318, 1322–23 (11th Cir. 2005). The district court did not violate
Pelle’s constitutional rights when it found by a preponderance of the evidence that
he defrauded ninety-two victims and was responsible for $2,812, 652 in losses.
VI.
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Pelle’s final contention is that the district court erred when it enhanced his
offense level for obstruction of justice. He argues that the district court erred by
finding that he perjured himself because the contradictions between his testimony
and that of the government witnesses could have been the result of mistaken
memory caused by the “huge time span” between the fraud and the trial, not “the
willful intent to provide false testimony” necessary for perjury. See United States
v. Dunnigan, 507 U.S. 87, 96, 113 S. Ct. 1111, 1117 (1993). When reviewing the
district court’s factual findings underlying an obstruction of justice enhancement
for perjury, we review only for clear error and give “great deference to the district
court’s credibility determinations.” United States v. Gregg, 179 F.3d 1312, 1316
(11th Cir. 1999). The district court heard all of the testimony, including Pelle’s,
and found that he intentionally lied. Nothing in the record indicates that Pelle’s
falsehoods were anything else. The court’s finding was not clear error.
Pelle’s second argument that the district court erred in applying an
enhancement for obstruction of justice is that the court failed to specify the
materially false statements.2 The district court, however, specifically stated that
2
In Pelle’s initial brief, he asserts that “the court may have improperly relied upon a
transcript of a recording allegedly between Pelle and a government cooperator, Steven Mishkin,
who never testified at trial.” Aside from that statement, Pelle does not explain in either his initial
or reply brief why that would be error. A party waives an issue on appeal when he “fail[s] to
elaborate or provide any citation of authority in support of . . . [an] allegation.” Flanigan’s
Enters. v. Fulton County, 242 F.3d 976, 987 n.16 (11th Cir. 2001); see also Greenbriar, Ltd. v.
Alabaster, 881 F.2d 1570, 1573 n.6 (11th Cir. 1989) (holding that when a party only refers to an
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Pelle had committed perjury when he testified that he did not know about any
legitimate complaints about the kiosks. There is abundant evidence in the record to
support that finding, which is enough by itself to support the obstruction of justice
enhancement.
Moreover, if a district court makes a general finding of obstruction of justice
that encompasses all of the factual predicates of perjury, then specific findings are
not necessary. United States v. Lewis, 115 F.3d 1531, 1538 (11th Cir. 1997)
(“Although separate and clear findings that address each element of the alleged
perjury are preferable, a general finding that an [obstruction of justice]
enhancement is warranted suffices if it encompasses all of the factual predicates
necessary for a perjury finding.”) Here, the district court found that “there was
ample evidence that [Pelle] was perjurious during his testimony in the case.” The
court’s use of the term “perjurious” obviously conveys that the court found the
factual predicates for perjury. See id. (holding that a district court stating that the
defendant’s testimony was a “concoction” was a sufficient finding to support an
obstruction of justice enhancement.); see also United Statse v. Arguedas, 86 F.3d
1054, 1056 (11th Cir. 1996).
issue “in its Statement of the Case in its initial brief [and] it elaborates no arguments on the
merits as to this issue in its initial or reply brief[,] . . . the issue is deemed waived.”). Because
Pelle makes nothing more than a bare allegation of error without explaining why it is error, we
deem the point waived and will not address it further.
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VII.
The conviction and sentence are AFFIRMED.
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