United States v. John Graves , 593 F. App'x 164 ( 2014 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 12-5037
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
JOHN ROBERT GRAVES,
Defendant - Appellant.
Appeal from the United States District Court for the Eastern
District of Virginia, at Richmond. James R. Spencer, Senior
District Judge. (3:11-cr-00246-JRS-1)
Argued: October 30, 2014 Decided: November 21, 2014
Before WILKINSON, MOTZ, and FLOYD, Circuit Judges.
Affirmed by unpublished per curiam opinion.
ARGUED: Patrick L. Bryant, OFFICE OF THE FEDERAL PUBLIC
DEFENDER, Alexandria, Virginia, for Appellant. Kevin Brian
Muhlendorf, UNITED STATES DEPARTMENT OF JUSTICE, Washington,
D.C., for Appellee. ON BRIEF: Michael S. Nachmanoff, Federal
Public Defender, Alexandria, Virginia, Carolyn V. Grady,
Assistant Federal Public Defender, OFFICE OF THE FEDERAL PUBLIC
DEFENDER, Richmond, Virginia, for Appellant. Jeffrey H. Knox,
Chief, Criminal Division, Fraud Section, UNITED STATES
DEPARTMENT OF JUSTICE, Washington, D.C.; Neil H. MacBride,
United States Attorney, Alexandria, Virginia, Jamie L.
Mickelson, Assistant United States Attorney, OFFICE OF THE
UNITED STATES ATTORNEY, Atlanta, Georgia, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
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PER CURIAM:
John Robert Graves and his wife engaged in an elaborate
scheme to swindle at least eleven clients out of approximately
$1.3 million. On appeal, he challenges his convictions for
making a false statement in the course of a government
investigation and committing fraud while serving as an
investment adviser, as well as a two-level sentencing
enhancement applied for conducting fraud through sophisticated
means. We find no merit in his contentions, and hereby affirm.
I.
After resigning from the FBI, Graves registered as an
investment adviser and broker to offer tax advice and estate
planning services through his company, Brook Point Management,
Inc. (“BPM”). He was also employed by, and served for a time as
president of, an Indiana-based investment company called Compass
Financial Advisors (“Compass”). His wife, Sara Graves, served as
the managing member of another company, Dupont Auburn Real
Estate (“DARE”), which was created to facilitate the purchase of
an office building in Indiana in which Compass could rent office
space. In time, the couple used these three entities, along with
several personal accounts, to further their fraudulent
transactions.
Graves’s victims were generally elderly or inexperienced
investors seeking a safe haven for large sums of money they had
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acquired, often through inheritance or insurance payments.
Graves would pitch investments in BPM or DARE to them, while
neglecting to mention that DARE was nominally owned by his wife.
For example, Graves became Janice Robinson’s investment adviser
for funds she inherited from her late husband. He advised her to
invest $200,000 in BPM and DARE, which she did. She later gave
Graves another $23,000 to hold in escrow, which he and his wife
instead put into the DARE account to use for other purposes. Of
the $223,000 she invested, Robinson was only able to recover
$9,000.
In 2008, Barbara Wren sent Graves $150,000 to invest from
money inherited from her mother. Graves used the funds to
purchase and offer for rent a house in Partlow, Virginia --
where Wren herself lived. When Wren raised questions in 2009
about the lack of paperwork, he offered her $150,000 in AIC
stock -- another company associated with the defendant -- which
turned out to be virtually worthless.
Around the same time, Christine Taugher and her two sons
contacted Graves to invest money they had obtained from
retirement savings and life insurance funds after Taugher’s
husband passed away. Graves recommended investing in real estate
as a safe investment with reasonable returns and eventually
received $578,000 from the family to invest in DARE. He
neglected to mention his connection to DARE, and the family
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never recovered its investment. Other victims recounted similar
experiences, also resulting in a complete loss of their savings.
In the fall of 2008, Graves and his business partner, John
Lauer, arranged to acquire a controlling ownership interest in
Compass by making several significant payments in 2009 and 2010.
Several of these payments, including one for $200,000 due June
30, 2009, were personally guaranteed by Graves and his partner.
Failing to pay on time would cost both of them their shares in
the company and any investment made to date. Graves used his
fraudulent transactions to pay off these debt obligations, as
well as to fund other personal expenses for himself and his
wife.
FBI Special Agent Tyler Kennedy, who investigated the
Graveses’ scheme, traced the Taughers’ money through the
defendants’ various accounts. Graves received Christine
Taugher’s money June 29, 2009, the day before the $200,000
payment was due for Compass. After only a few days in the DARE
account, Taugher’s money was transferred to a joint personal
savings account on July 1, 2009. That day, Sara Graves closed
the joint account and opened a new account in her name only with
Taugher’s funds. The money was disbursed from there to pay
various personal debts, including the funds owed to Compass.
Taugher’s sons’ investment was likewise only in the DARE account
a few weeks before being moved to other accounts. A portion of
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it was used to fund the purchase of the AIC stock given to Wren
for her investment. However, when Graves was specifically asked
about the repayment to Wren during the investigation, he
represented that she had been paid using money his wife had
inherited from her mother.
On October 4, 2011, the Graveses were indicted for
conspiracy to commit mail and wire fraud in violation of 18
U.S.C. § 1349, mail fraud in violation of 18 U.S.C. § 1341, and
four counts of wire fraud in violation of 18 U.S.C. § 1343. In
addition, John Graves was indicted for three counts of fraud in
violation of the Investment Advisers Act, 15 U.S.C. §§ 80b-6 and
80b-17, and one count of making false statements in a “matter
within the jurisdiction of the executive . . . branch of the
Government” in violation of 18 U.S.C. § 1001. After a four-day
jury trial, the Graveses were convicted on all counts. John
Graves was sentenced to 135 months of imprisonment and three
years of supervised release, and was ordered to pay nearly $1.3
million in restitution. The 135 months of imprisonment was the
minimum amount of time recommended by the Sentencing Guidelines
range, which included a two-level enhancement for sophisticated
means.
On appeal, Graves challenges the sufficiency of the
evidence supporting the false statement conviction. He claims
that the FBI agent’s question was ambiguous and that his answer
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was also ambiguous and in fact true, and therefore could not
constitute a false statement. He also challenges the sufficiency
of the evidence for the Investment Advisers Act conviction by
arguing that the government failed to prove that he was serving
as an investment adviser rather than a broker-dealer -- which is
an exception under the Act -- when he committed the fraud.
Finally, he challenges the two-level sentencing enhancement for
sophisticated means. Because we find that there was more than
sufficient evidence to support the convictions and sentencing
enhancement, we affirm.
II.
Graves first contends that there was insufficient evidence
to support the false statement conviction. A jury verdict must
be upheld on appeal if a reasonable factfinder could “accept
[the evidence] as adequate and sufficient to support a
conclusion of a defendant’s guilt beyond a reasonable doubt.”
United States v. Burgos, 94 F.3d 849, 862 (4th Cir. 1996) (en
banc). The evidence must be viewed in the light most favorable
to the government and “in cumulative context” rather than
piecemeal. Id. at 862-63.
Graves claims the government failed to introduce sufficient
evidence to prove that he knowingly made a “materially false,
fictitious, or fraudulent statement or representation” in a
matter within the jurisdiction of the federal government. 18
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U.S.C. § 1001(a). He singles out the following exchange as the
“false statement” he is alleged to have made:
Agent Kennedy: And that’s where the $150,000
went, came from to go to Barbara Wren?
Graves: I guess.
J.A. 924. Graves argues that both the question and answer were
ambiguous and that, in part owing to the ambiguity, the answer
was factually correct. Though literal truth and ambiguity are
both defenses to false statement claims, see United States v.
Good, 326 F.3d 589, 592 (4th Cir. 2003); cf. Bronston v. United
States, 409 U.S. 352, 360-62 (1973) (overturning perjury
conviction), these exceptions are narrow, and must account for
the context of the statement and the intention of the witness.
United States v. Sarwari, 669 F.3d 401, 406 (4th Cir. 2012); see
also United States v. Strohm, 671 F.3d 1173, 1179-80 (10th Cir.
2011).
Graves distorts the issue here by extracting the slightest
snippet of the exchange between himself and Agent Kennedy. The
brief exchange cited by Graves followed a more extensive
discussion that began with questions about where the defendant
had obtained the money to repay Wren. In response to questions
about the $150,000, Graves stated falsely that Sara Graves paid
the $150,000 to Wren out of the $714,000 Sara received from her
mother’s estate. Discussions about the inheritance followed and
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eventually resulted in the tidbit quoted by the defendant.
Graves had recorded this entire exchange, unbeknownst to Agent
Kennedy, and the recording was played at trial for the jury. The
jury thus had the opportunity to gauge for itself, in the
context of the full conversation, whether Graves had made a
false statement in the course of a government investigation. It
determined beyond a reasonable doubt that he had.
The jury had the chance to observe firsthand and weigh in
its totality all witness testimony and other evidence. We will
not disturb its verdict when, taken in context, the evidence
reasonably supports the conclusion that Graves falsely stated
and intentionally concealed the origins of the funds given to
Wren. As that was clearly the case here, we affirm the false
statement conviction.
III.
Graves also contends that his convictions on Counts Seven,
Eight, and Nine, charging violations of the criminal fraud
provisions of the Investment Advisers Act, were not supported by
sufficient evidence and must therefore be overturned. The
Investment Advisers Act prohibits investment advisers, as
defined by the Act, from defrauding their clients and
prospective clients. See 15 U.S.C. § 80b-6. Graves argues that
the government failed to prove that he was in fact acting as an
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investment adviser rather than a broker-dealer when he committed
the fraudulent acts.
Graves’s contention fails for several reasons. First, he
stipulated at trial that “for purposes of 15 U.S.C. Sections
80(b)(6) and 80(b)(17), Section 206 of the Investment Advisers
Act, John Robert Graves was an Investment Adviser from 2006 to
2010.” J.A. 144. The broker-dealer exception is contained within
the definition of an “investment adviser” and prevents brokers
and dealers from being drawn into the Act’s prohibitions by
their incidental investment advising activities; the exception
cannot rescue someone who has already stipulated that he meets
the Act’s definition of an investment adviser. See 15 U.S.C.
§ 80b-2(11). Furthermore, he did not, and indeed could not
because of the stipulation, object to the proof of that element
of the crime at trial, raising the whole matter for the first
time on appeal. Finally, as a practical matter, Graves was
registered as an investment adviser during the relevant time
period, and providing investment advice for a fee to his victims
to prompt them to invest in his and his wife’s companies was
essential to his fraudulent scheme. For the foregoing reasons,
we affirm the conviction.
IV.
Finally, Graves disputes the two-level sophisticated means
enhancement applied to his advisory Sentencing Guidelines
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calculation. Whether a defendant used sophisticated means is a
finding of fact that we review for clear error. United States v.
Adepoju, 756 F.3d 250, 256 (4th Cir. 2014).
Defendants are subject to a two-level enhancement under the
Sentencing Guidelines if they perpetrate their fraudulent
schemes using “sophisticated means.” U.S.S.G. § 2B1.1(b)(10).
The Guidelines describe this term as “especially complex or
especially intricate offense conduct pertaining to the execution
or concealment of an offense.” U.S.S.G. § 2B1.1 cmt. n.9(B).
Though the Guidelines identify conduct that would merit the
enhancement, these examples are merely illustrative. Any given
element of the scheme need not itself be particularly complex or
intricate; rather, the scheme should be viewed as a whole. See
United States v. Jinwright, 683 F.3d 471, 486 (4th Cir. 2012).
The district court had ample basis for its finding that the
Graveses’ scheme was sophisticated. Graves and his wife
transferred the funds multiple times through multiple accounts,
in one case channeling Taugher’s money through four accounts in
a matter of days. J.A. 662-66. Defendants did not merely move
money from one account to another; they engaged in a veritable
shell game, switching money here and there between personal and
business accounts, to conceal the source of the funds and hide
their fraud. The district court did not clearly err in applying
the two-level sophisticated means enhancement.
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The judgment is in all respects affirmed.
AFFIRMED
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