United States v. Solesbee , 94 F. App'x 207 ( 2004 )

United States Court of Appeals
Fifth Circuit
F I L E D
Revised
April 6, 2004
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT Charles R. Fulbruge III
Clerk
______________________
No. 02-10829
______________________
UNITED STATES OF AMERICA
Plaintiff-Appellee
versus
WILLIAM STEPHEN SOLESBEE
Defendant-Appellant
___________________________________________________
Appeal from the United States District Court for
the Northern District of Texas
(No. 3:01-CR-027-R)
___________________________________________________
Before DeMOSS, DENNIS, and PRADO, Circuit Judges.
DENNIS, Circuit Judge: *
William Stephen Solesbee appeals his conviction for two counts
of bankruptcy fraud, eight counts of wire fraud, one count of money
laundering, and one count of bank fraud, all based on a jury
verdict. We REVERSE the conviction for bank fraud and AFFIRM the
others.
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
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BACKGROUND
On January 24, 2001, the grand jury returned an indictment
charging Solesbee with one count of bankruptcy fraud in violation
of 18 U.S.C. § 157; one count of transferring and concealing assets
from the bankruptcy court, trustee, and creditors in violation of
18 U.S.C. § 1952(7); eight counts of wire fraud in violation of 18
U.S.C. § 1343; one count of bank fraud in violation of 18 U.S.C. §
1344; and two counts of money laundering in violation of 18 U.S.C.
§ 1956(a)(1)(B)(I). The court dismissed one money laundering count
during trial upon the government’s motion, and the jury found
Solesbee guilty of the remaining counts.
Count 1 (Bankruptcy Fraud)
As to Count 1, the indictment charges the following. In May
1995, Solesbee negotiated the purchase of a residence in Dallas
Texas and represented to the seller that the purchaser of the
property was the Galloway Special Trust (“Trust”). Solesbee claimed
that he was the trustee and primary beneficiary of the trust.
Solesbee provided the seller with a financial statement for the
trust knowing that it contained materially false and fraudulent
information concerning trust assets and liabilities.
Based on the materially false and fraudulent representations
made by Solesbee, the seller sold the residence to the Trust along
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with some personal property. Under the terms of the sale, the Trust
was required to make monthly payments of approximately $4,700 in
principal, interest, and property taxes. The Trust defaulted on the
first four monthly payments, and the seller gave notice of default
and posted the residence for foreclosure. Prior to the date noticed
for foreclosure, Solesbee transferred the residence from the Trust
to himself individually for no consideration. Solesbee then filed
Chapter 13 bankruptcy in the Bankruptcy Court for the Northern
District of Texas, Dallas Divison, In re William S. Solesbee, No.
395-35447-SAF-13, to prevent foreclosure of the residence as well
as collection actions by other creditors through operation of the
bankruptcy automatic stay provision. Solesbee knowingly and
intentionally omitted information from his bankruptcy filing
concerning his creditors because disclosure of those amounts would
have made him ineligible for chapter 13.
Thus, the indictment charges that Solesbee intentionally
devised a scheme and artifice to defraud the seller, and for such
purpose knowingly filed a bankruptcy petition, preventing the
recovery of the residence while Solesbee claimed the protection of
the automatic stay provisions to avoid making payments. Also,
Solesbee filed documents in a bankruptcy proceeding containing
materially false statements, all in violation of 18 U.S.C. § 157.
The jury charge adequately instructed the jury as to the alleged
offense, and the jury found Solesbee guilty on Count 1.
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Counts 2-6 (Wire Fraud)
As to Counts 2-6, the indictment charged the following. From
in or about January 1996 until July 1996, Solesbee devised and
intended to devise a scheme and artifice to defraud commercial
airlines and hotels of their right to payment for airline tickets
and hotel accommodations vouchers. Solesbee began a travel agency,
Imperial Tours, which he operated from his personal residence. He
also incorporated President’s Travel, Inc., a Texas corporation that
conducted business as Imperial Tours.
Solesbee planned and promoted a meeting to be held at the
Aloha Bowl in Hawaii called Mission Meeting ‘96 (“MM96"). MM96 was
held July 26-31, 1996, and was attended by missionaries and
children of missionaries (“missionary kids” or “MKs”) from all over
the United States. Travel arrangements for MM96 attendees were
required to be made exclusively through Imperial Tours.
Around March 1, 1996, Solesbee moved his operation for
Imperial Tours into the Bonaventure Travel Agency in Dallas and
began using Bonaventure’s Airline Reporting Corporation account
(“ARC account”) at NationsBank in Dallas to pay for airline tickets
issued by Imperial Tours. On or about April 2, 1996, Solesbee set
up a new ARC account under the name of Bonaventure at NationsBank.
The ARC functions as a clearinghouse for travel agencies and
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airlines. Travel agencies are required to maintain a bonded AR
account from which ARC debits the travel agency’s receipts to pay
the airlines for airline tickets that have been issued by the
travel agency and used for travel and for vouchers issued by the
travel agency and used to obtain hotel accommodations. Receipts
from the sale of airline tickets and hotel accommodations by a
travel agency are required to be deposited into the ARC account for
this purpose.
Solesbee caused payments for airline tickets issued to persons
planning to attend MM96 to be collected. He caused those
individuals to pay for the tickets by credit card charges payable
to Answer USA, an answering service controlled and operated by
Solesbee. When the payments were received by Answer USA on the
credit card charges, Solesbee caused the wire transfer of funds in
Answer USA’s acccount at MBNA America Bank in Wilmington, Delaware
to the account of President’s Travel, Inc., d.b.a. Imperial Tours
account at NationsBank in Dallas, Texas, instead of the Bonaventure
ARC account at NationsBank. Solesbee also caused the wire transfer
of payments from purchaser bank accounts to the President’s Travel,
Inc., d.b.a. Imperial Tours account at NationsBank, in Dallas,
Texas rather than to the ARC account. Solesbee then caused payments
from the Imperial Tours account to be made to his personal
creditors, thereby diverting funds from the ARC account and
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defrauding the airlines of payment for tickets and hotel vouchers
which had been issued in connection with MM96. The indictment then
lists a number of these specific transfers, all made in violation
of 18 U.S.C. § 1343. The jury charge adequately instructed the jury
as to the alleged offenses, and the jury found Solesbee guilty on
Counts 2-6.
Count 7 (Bankruptcy Fraud)
As to Count 7, the indictment charged the following. Solesbee
owned and controlled Stephens Communications, Inc. (“SCI”), a Texas
corporation that operated telephone answering services under the
names “Answer USA” and “Cascade Communications.” Around September
10, 1997, Solesbee caused the filing of a petition for voluntary
Chapter 11 bankruptcy for SCI in the U.S. Bankruptcy Court in the
Northern District of Texas, Dallas Division, In re Stephens
Communications, Inc., Case No. 397-38422-HCA-11. Solesbee signed
the voluntary petition as President of SCI. The bankruptcy case was
subsequently converted to a chapter 7 proceeding by order of the
Bankruptcy Court, and Jeff Mims was appointed as trustee. At all
times pertinent to this indictment, the bankruptcy case was a case
under Title 11 of the United States Code.
Around October 11, 1997, Solesbee, with intent to defeat the
provisions of Title 11, did knowingly and fraudulently transfer and
conceal and caused to be transferred and concealed from the
6
bankruptcy court, trustee and creditors, certain property of the
bankruptcy estate, that being Cadcom answering service equipment
(previously purchased from Cascade) transferred to Answer Bay Area
for the sale price of $15,000. Solesbee concealed the fraudulent
transfer of the assets by failing to disclose this transfer to the
court and the trustee and by making the transfer without seeking
approval of the bankruptcy court in violation of 18 U.S.C. § 152(7).
The jury charge adequately instructed the jury as to the alleged
offenses, and the jury found Solesbee guilty on Count 7.
Counts 8-9 (Money Laundering)
As to Counts 8 and 9, the indictment charged the following.
The grand jury incorporated the allegations of Count 7. Further, at
all times pertinent to the indictment, Solesbee controlled Answer
USA Georgia, a Georgia corporation. Solesbee knowingly and
willfully conducted and attempted to conduct financial transactions
affecting interstate commerce that involved the proceeds of a
specified unlawful activity: bankruptcy fraud in violation of 18
U.S.C. § 152(7), knowing that the financial transactions were
designed in whole or in part to conceal and disguise the nature,
source, ownership, and control of the proceeds of said specified
unlawful activity. The indictment noted a 10/16/97 deposit of a
cashier’s check of $11,250 drawn on the Answer Bay Area, Inc.
Account at Central Bank of Tampa, Florida to the account of Answer
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USA of Georgia at NationsBank in Atlanta, Georgia, which was
partial payment for the purchase of Cadcom equipment belonging to
the bankruptcy estate of SCI. The indictment also noted a 10/20/97
wire transfer of $3,000 between the same accounts as partial
payment for the Cadcom equipment belonging to the bankruptcy estate
of SCI. All these acts were taken in violation of 18 U.S.C. §
1956(a)(1)(B)(I). The district court dismissed Count 9 upon the
governments motion. Whether or not the indictment sufficiently
instructed the jury as to Count 8 is a topic of discussion below.
The jury found Solesbee guilty on Count 8.
Count 10 (Wire Fraud)
As to count 10, the indictment charged as follows. Around
April 1997 through September 1997, Solesbee devised and intended to
devise a scheme and artifice to defraud Sylvian Green of funds and
property. Solesbee persuaded Green to invest her money in his
business, Stephens Communications, Inc. (“SCI”) and to loan money
to SCI. Solesbee represented to Green that she would receive a high
rate of return on her investment and that the return of her
investment would be guaranteed by him personally. Solesbee made
material false representations to Green concerning SCI to persuade
her to provide him with funds when he was in fact obtaining the
funds for his own personal use. As part of this scheme, Solesbee
caused a wire transfer of $30,000 to be transmitted from Green’s
8
account at Union Planters Bank in Crystal Springs, Mississippi to
the account of SCI at NationsBank in Dallas, Texas, in violation of
18 U.S.C. § 1343. The jury charge adequately instructed the jury as
to the alleged offense, and the jury found Solesbee guilty on Count
10.
Count 11 (Bank Fraud)
As to count 11, the indictment charged Solesbee with knowingly
executing and attempting to execute a scheme and artifice to
defraud Bank One, a federally-insured financial institution. The
indictment charged that Solesbee caused check number 1122, drawn on
the account of SCI d.b.a. V.I.P. Answering Service at Bank One, to
be drawn payable to the City of Dallas in the amount of $7,644.27,
for property taxes on his residence, when Solesbee knew the account
had previously been closed for lack of funds in violation of 18
U.S.C. § 1344. The jury charge adequately instructed the jury as to
the alleged offense, and the jury found Solesbee guilty on Count
11.
Counts 12-13 (Wire Fraud)
As to counts 12 and 13, the indictment alleged the following.
From around May 27, 1998 until around January 30, 1999, Solesbee
devised and intended to devise a scheme and artifice to defraud
Wade Sommer of funds and property. Solesbee persuaded Sommer to
9
invest $30,000 in a Florida corporation named Sommer
Communications. In exchange, Sommer was to own fifty percent of the
company, with the remaining fifty percent owned by a trust of which
Solesbee was the beneficiary. Sommer Communications was to operate
“Lasting Impressions,” an answering service business in Tallahassee,
Florida. Solesbee was to operate “Custom Communications,” an
answering service business in Fort Myers, Florida, which was
purchased by Answer USA of Georgia.
To persuade Sommer to invest his money, Solesbee made false
representations to Sommer. Solesbee represented to Sommer that
Solesbee’s prior answering service business, Answer USA of Georgia,
had been debt free when in fact it owed more than $150,000 to its
creditors. Solesbee also represented to Sommer that he needed a
cashier’s check for $4,500 payable to Robert J. Fordham for the
purchase of answering service equipment when the money was actually
to repay Fordham for a previous loan. Along these lines, Solesbee
caused a $20,000 wire transfer to be made from Sommer’s account at
Bank of America in Dallas, Texas, to Sommer’s account at First Union
Bank in Tallahassee, Florida. Solesbee also caused a $10,000 wire
transfer to be made from Sommer’s account at Bank of America in
Dallas, Texas, to the account of Lasting Impressions at First Bank
of Tallahasse in Tallahassee, Florida, all in violation of 18
U.S.C. § 1343. The jury charge adequately instructed the jury as to
10
the alleged offenses, and the jury found Solesbee guilty on Counts
12 and 13.
Sentencing
The district court judge signed a judgment referencing the
jury’s findings of guilt and pronounced a sentence of 60 months each
on Counts 1 through 7, 10, 12, and 13; the judge pronounced a
sentence of 97 months each on Counts 8 and 11, the sentences on all
counts to run concurrently. The judge also imposed a restitution
obligation of $857,332 to be distributed among several of Solesbee’s
victims, but the court did not impose any fine and announced that
the restitution obligation will not carry any interest. The court
further ordered a five year period of supervised release and a $100
per count special assessment, totaling $1,200. Solesbee timely
appealed.
ISSUES
Solesbee raises several issues on appeal.
1. Solesbee argues that the district court should have given
the jury an instruction to disregard and should have declared a
mistrial based on testimony by a government witness that implied
Solesbee’s sexual orientation to the jury.
2. Solesbee argues that the district court improperly admitted
11
evidence of “extrinsic transactions.”
3. Solesbee argues that the evidence is insufficient to sustain
his conviction as to Counts 1, 2, 4, 8, 10, 11, 12, and 13.
4. Solesbee argues that the district court erred in charging
the jury on Count 8 that the underlying activity for the charged
money laundering was wire fraud instead of bankruptcy fraud,
thus constructively amending the indictment.
5. Solesbee argues that the district court erred by considering
his conviction as to Count 8 in sentencing because venue for
Count 8 was not proper in the Northern District of Texas.
6. Solesbee argues that the district court erred in ordering
Solesbee to pay restitution to three persons who Solesbee argues
were not harmed by any offense of which Solesbee was convicted.
7. Solesbee argues that the district court erred in using
certain loss figures in analyzing the sentencing guidelines.
We will address each of Solesbee’s claims in turn.
ANALYSIS
1. Whether this court should reverse based on the district
court’s refusal to give an instruction to disregard or grant a
mistrial because of testimony by a government witness that
communicated Solesbee’s sexual orientation to the jury
Ms. Parks, a witness for the government, was a former employee
12
of Solesbee who also happened to live in Solesbee’s apartment
complex. Ms. Parks eventually quit her job and moved out of the
apartment. During the government’s direct examination of Ms. Parks,
the following exchange took place.
Q: Did you move out first or did you quit your job first?
A: I moved out first.
Q: Why did you move out?
A: Well, I was awakened in the middle of the
night with banging on my wall. And the next
morning I found out that he brought this guy
home that he met at a bar.
Solesbee’s Attorney: Objection, Your Honor. May I
approach the bench?
The Court: Yes.
Solesbee’s Attorney: Your Honor, it’s obvious
to me that they are trying to go into some
kind of homosexual incident. They can’t do
that. I don’t see what that has to do with
anything in the trial other than prejudicial
to Mr. Solesbee.
The Court: I don’t see.
Government Attorney: I’m trying to show that he
is not who he is portrayed to everyone. He is
portrayed to everyone that he is a genuine
missionary kid when, in fact, he’s not.
The Court: Well, I’m going to sustain the objection.
Government Attorney: Okay.
(Open Court)
Solesbee’s Attorney: Your Honor, may I have an
instruction for the jury to disregard?
The Court: I’ve sustained the objection to that question.
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Solesbee’s Attorney: Move for a mistrial, Your Honor.
The Court: I’m sorry?
Solesbee’s Attorney: Move for a mistrial, Your Honor.
The Court: That’s denied.
Solesbee argues that the district court’s refusal to give an
instruction to disregard and declare a mistrial violated Federal
Rules of Evidence (“FRE”) 403 and 404. Along these lines, Solesbee
also argues that the evidence was so prejudicial that its erroneous
admission rendered the trial fundamentally unfair, thus violating
his right to due process.
Evidentiary rulings are reviewed for an abuse of discretion.
United States v. Coleman, 997 F.2d 1101, 1104 (5th Cir. 1993). The
grant or denial of a mistrial is also reviewed under an abuse of
discretion standard. United States v. Willis, 6 F.3d 257, 263.
Further, the harmless error rule dictates that any error that does
not affect the defendant’s substantial rights must be disregarded.
FED. R. CRIM. PROC. 52(a).
FRE 404(b) provides that “[e]vidence of other crimes, wrongs,
or acts is not admissible to show action in conformity therewith.”
Initially, the district court judge did not admit the evidence in
question; thus, the court did not violate FRE 404. Further, no one
has argued that Solesbee’s sexual orientation in any way indicates
that he is more or less likely to defraud others. Thus, there is
14
not a colorable argument that this testimony coupled with the
judge’s refusal to give an instruction to disregard or to grant a
mistrial violates FRE 404.
FRE 403 provides that evidence should be excluded if its
probative value is substantially outweighed by a danger of unfair
prejudice. Courts have recognized that evidence of a defendant’s
homosexuality is prejudicial and should be excluded in many
situations. See, e.g., People of Territory of Guam v. Shymanovitz,
157 F.3d 1154, 1160 (9th Cir. Guam 1998) (concluding that admitting
contents of gay magazines “served only the highly improper and
offensive purpose of advising the jury that [defendant] was
probably homosexual”); United States v. Gillespie, 852 F.2d 475,
479 (9th Cir. 1988) (“evidence of homosexuality is extremely
prejudicial”).
But the district court judge here did exclude the proffered
evidence. The cases Solesbee cites in support of his argument for
reversal are inapposite. They involve cases in which the district
court admitted evidence regarding the defendant’s homosexuality and
cases in which the jury was much more likely to make an improper
inference of guilt based on evidence of the defendant’s
homosexuality. See Shymanovitz, 157 F.3d 1154 (reversing
conviction of criminal sexual assault involving children because
district court admitted evidence of sexually-explicit gay
magazines); Gillespie, 852 F.2d 475 (reversing conviction for
15
transportation of a person in interstate commerce for illegal
sexual purposes because the district court admitted evidence of
defendant’s homosexuality); United States v. Ham, 998 F.2d 1247 (4th
Cir. 1993) (district court allowed two days of evidence regarding
charges of child molestation within the defendants’ Hare Krishna
community and testimony on defendant’s homosexual relationship);
United States v. Provoo, 215 F.2d 531 (2nd Cir. 1954) (district
court allowed irrelevant testimony regarding defendant’s alleged
homosexuality; the government attempted to justify it as relevant
to credibility); United States v. Birrell, 421 F.2d 665 (9th Cir.
1970) (per curiam) (district court refused to grant mistrial in
conviction for auto theft after government counsel, in closing,
argued that defendant should be in jail “where he belongs”instead
of being turned “loose on society” because he “will be a homosexual
and a car thief ... for the rest of his life”).
Again, in this case the district court sustained Solesbee’s
objection to the testimony in question. The court also instructed
the jury in its charge that the jury should only consider evidence
admitted in trial and should not speculate about matters not in
evidence. Additionally, substantial evidence of Solebee’s guilt
was admitted throughout the course of the trial. There is no
reason to believe that the jury found Solesbee guilty on multiple
counts of fraud based on one vague reference to his homosexuality.
Thus, there was no reason for the district court to declare a
16
mistrial.
While an instruction to disregard may have been warranted
here, the failure to give one was not an abuse of discretion. The
court sustained Solesbee’s objection to the proferred testimony.
The court also instructed the jury only to consider admitted
evidence, and there was ample evidence indicating Solesbee’s guilt.
Thus, far from rendering the trial “fundamentally unfair” as
Solesbee contends, the district court’s failure to give an
instruction to disregard this one vague reference to Solesbee’s
homosexuality was harmless and thus does not require reversal.
2. Whether this court should reverse based on Solesbee’s
argument that the district court improperly admitted evidence of
“extrinsic transactions”
Solesbee next argues that the district court improperly
admitted evidence of extrinsic transactions not alleged in the
indictment. As noted above, FRE 404(b) states that evidence of
other crimes, wrongs, or acts is not admissible to show action in
conformity therewith. The rule goes on to state that such evidence
“may, however, be admissible for other purposes, such as proof of
motive, opportunity, intent, preparation, plan, knowledge,
identity, or absence of mistake or accident.” FED R. EVID. 404(b).
Extrinsic evidence is properly admitted under FRE 404(b) only
if: 1) it is relevant to an issue other than the defendant’s
17
character, and 2) its probative value is not substantially
outweighed by its undue prejudice. United States v. Leahy, 82 F.3d
6724, 636 (5th Cir. 1996) (citing United States v. Beechum, 582 F.2d
898, 911 (5th Cir. 1978) (en banc)). Again, evidentiary rulings are
reviewed for an abuse of discretion. Coleman, 997 F.2d at 1104.
Solesbee complains about the admission of testimony from 21
different witnesses. Unfortunately, Solesbee does not offer
specific explanations as to why each portion of the complained-of
testimony was improper; he just argues generally that none of them
fit within the FRE 404(b) exceptions. A review of the complained-
of testimony reveals that a significant portion of it was actually
relevant to the charged offenses. Several of the witnesses had
loaned money to Solesbee prior to his filing bankruptcy in
September 1995, had not been paid back, and were not listed as
creditors, thus indicating that the bankruptcy petition was simply
filed to delay losing the home in Dallas, as detailed in the facts
relevant to Count 1, and not for the purpose of providing debt
relief. Solesbee complains of the admission of IRS records
indicating that the Galloway Special Trust did not file tax returns
from 1992 to 2000; but this evidence helps establish that the
documents provided in relation to the purchase of the home in Count
1 were fraudulent. Some of the other complained-of witnesses had
loaned money to Answer USA of Georgia that had not been repaid;
this information was relevant to Solesbee’s misleading of Sommer as
18
to the financial situation of Answer USA of Georgia, as outlined in
the facts relevant to Counts 12 and 13.
The rest of the complained-of testimony was relevant to show
Solesbee’s intent. Evidence of similar extrinsic offenses is
relevant to show intent. See Leahy, 82 F.3d at 636-36 (holding
that evidence that the defendants had previously submitted false
invoices to an air force base and a naval air station was relevant
to show that they had the requisite intent to defraud the VA);
United States v. Osum, 943 F.2d 1394, 1404 (5th Cir. 1991) (allowing
evidence of extrinsic offenses because they are relevant based on
“the defendant’s indulging himself in the same state of mind in the
perpetration of both the extrinsic and charged offenses”).
At trial, Solesbee argued that he did not try to defraud
anyone but that he was simply a bad businessman. In his opening
statement, Solesbee’s attorney argued:
Stephen Solesbee, I believe the evidence will show,
was a legitimate businessman, not a very successful
one I’ll admit, but a legitimate businessman. He
wasn’t defrauding anyone.... [H]e couldn’t organize
a Sunday School picnic. He didn’t have the
ability. You’ve seen it. He’s not busting out
answering services. He doesn’t know how to run
them.
Thus, Solesbee’s defense placed the focus on whether or not
Solesbee had the requisite intent for the charged offenses.
Much of the complained-of testimony related to house purchases
and telecommunication company schemes similar to those employed by
19
Solesbee in the charged offenses. Additionally, in its charge to
the jury, the district court instructed the jury that Solesbee “is
not on trial for any act, conduct, or offense not alleged in the
Indictment. The fact that [Solesbee] may have been accused of any
other offense may not be considered by you for any purpose.” In
closing, the prosecutor argued that the jury could consider the
evidence of other offenses for the “limited purpose” of showing
that Solesbee “had the intent to commit the crimes that are charged
in the indictment.” Solesbee objected to that argument as being
contrary to the court’s charge, and the court overruled that
objection. Thus, the jury was aware that it could not consider the
evidence of these other acts for any purpose other than considering
how they beared on Solesbee’s intent. The admission of the
evidence of these other acts was not an abuse of discretion and
does not require reversal.
3. Whether the evidence is insufficient to sustain his
conviction as to Counts 1, 2, 4, 8, 10, 11, 12, and 13
Solesbee argues that the evidence is insufficient to sustain
his conviction as to Counts 1 (bankruptcy fraud), 2 (wire fraud),
4 (wire fraud), 8 (money laundering), 10 (wire fraud), 11 (bank
fraud), and 12-13 (both wire fraud). As to an insufficiency of the
evidence claim, the inquiry for this court is whether the evidence,
viewed in the light most favorable to the verdict, would permit a
reasonable juror to find guilt beyond a reasonable doubt. United
20
States v. Guerrero, 169 F.3d 933, 939 (5th Cir. 1999).
As to Solesbee’s conviction for bank fraud under Count 11,
Solesbee argues, and the government concedes, that proof of federal
insurance of Bank One is an essential element to the offense of
bank fraud and is required for federal jurisdiction. United States
v. Schultz, 17 F.3d 723, 725 (5th Cir. 1994). It is undisputed that
no evidence was introduced establishing that Bank One was a
federally-insured institution. The evidence is therefore
insufficient to support this conviction, and the district court was
without jurisdiction as to this count. Thus, Solesbee’s conviction
for bank fraud is reversed.
Solesbee’s arguments regarding the insufficiency of the
evidence as to the other counts are unavailing. A review of the
relevant portions of the indictment as well as the evidence
introduced at trial relevant to each of these counts reveals that
the evidence would permit a reasonable juror to find guilt beyond
a reasonable doubt on each of these counts.
4. Whether the district court erred in charging the jury on
Count 8 that the underlying activity for the charged money
laundering was wire fraud instead of bankruptcy fraud
Solesbee argues that the district court constructively amended
the indictment as to Count 8. A constructive amendment occurs when
the trial court, through its instructions and facts it permits in
evidence, allows proof of an essential element of a crime on an
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alternative basis permitted by the statute but not charged in the
indictment. United States v. Griffin, 324 F.3d 330, 355 (5th Cir.
2003) (citations omitted). As Solesbee agrees, because he did not
object to the jury instructions on this basis, this issue is
reviewed for plain error. United States v. Daniels, 252 F.3d 411,
414 (5th Cir. 2001). A jury charge constitutes plain error if: 1)
it was erroneous; 2) the error was plain; and 3) the plain error
affected the substantial rights of the defendant. Id. If those
conditions are met, the court will exercise its discretion to
correct the error only if the error “seriously affect[s] the
fairness, integrity or public reputation of the judicial
proceedings.” Id.
As explained above, the indictment charged Solesbee with money
laundering, with the underlying specified unlawful activity being
bankruptcy fraud. But the jury instructions changed the underlying
specified unlawful activity to wire fraud, thus constructively
amending the indictment. Thus, the question is whether this error
rises to the level of plain error.
This court has held constructive amendments to be harmless in
some circumstances. For example, in U.S. v. Daniels, the
indictment charged Daniels with money laundering by causing the
withdrawal of stolen funds from a bank account; but the court’s
charge would have permitted the jury to convict Daniels based on
either that withdrawal or the deposit of a stolen check. 252 F.3d
22
at 413. The court refused to reverse under the plain error
standard because Daniels could have been charged under either the
deposit or withdrawal theory and because the two acts were so
closely linked. Id. at 414. Thus, the court concluded that the
fairness, integrity or public reputation of the judicial
proceedings were not affected.
The error committed by the district court here did not affect
the fairness, integrity, or public reputation of the judicial
proceedings. The jury convicted Solesbee on Count 7, the
bankruptcy charge that was listed in the indictment as the
predicate offense for Count 8. The jury also found Solesbee guilty
of money laundering; this means that the jury found that Solesbee
was attempting to hide the funds in question. As the jury’s
convictions under Counts 7 and 8 encompass jury findings as to all
the requisite elements of Count 8 as charged in the indictment, it
is a certainty that the jury would have found Solesbee guilty of
Count 8 as charged in the indictment. Because Solesbee was put on
notice to defend the bankruptcy fraud charge and the money
laundering charge as outlined in the indictment and the jury
findings lead to the necessary conclusion that the jury found him
guilty of all the elements of Count 8 as charged, Solesbee was not
prejudiced by the constructive amendment. Thus, the constructive
amendment did not affect the fairness, integrity or public
reputation of the judicial proceedings, and reversal is not
23
required.
5. Whether the district court erred by considering Solesbee’s
conviction as to Count 8 in sentencing because venue for Count
8 was not proper in the Northern District of Texas
Solesbee also challenges Count 8 on the basis of improper
venue. The cashier’s check was drawn on an account in Florida and
deposited into an account in Georgia. The funds never passed
through the Northern District of Texas. Thus, the crime did not
occur in the Northern District of Texas, rendering venue in the
Northern District of Texas improper. See United States v.
Cabrales, 524 U.S. 1 (1998) (concluding that proper venue for money
laundering lies in the state in which the financial transactions
occurred). All questions concerning venue are reviewed under an
abuse of discretion standard. United States v. Asibar, 109 F.3d
1023, 1037 (5th Cir. 1997).
The government responds that Solesbee waived his challenge to
venue by not raising it timely. Generally, objections to venue are
waived if not raised before trial. United States v. Carreon-
Palacio, 267 F.3d 381, 391 (5th Cir. 2001). There are, however,
situations in which the failure to raise a challenge to venue pre-
trial does not waive such a challenge. Failure to object before
trial will not bar a challenge to venue when trial testimony puts
venue at issue and the defendant makes a timely challenge or
requests a jury instruction on venue. Carreon-Palacio at 392.
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Similarly, when an indictment contains an allegation of proper
venue and the defect in venue only becomes apparent during the
government’s case, the defendant can make a timely objection by
objecting at the close of the evidence. Id. at 392-93. But a
defendant indicted by an instrument that lacks sufficient
allegations to establish venue waives any future challenge by
failing to object before trial. Id.
Solesbee’s objection to venue was not timely. The indictment
stated that the offense took place in the Northern District of
Texas, but from the facts of the indictment it was clear that the
transaction only occurred in Florida and Georgia. Thus, the
impropriety of venue was apparent from the face of the indictment
and should have been raised before trial. Solesbee objected to
venue for the first time at sentencing, asking the district court
to disregard the loss as to the money laundering conviction because
venue was improper. Thus, even under the exceptions to the general
rule, Solesbee’s objection would not have been timely as it was not
made at the close of the evidence. Solesbee waived any challenge
to venue by not making a timely objection.
6. Whether the district court erred by ordering Solesbee to
pay restitution to three persons who, Solesbee argues, were not
harmed by any offense of which Solesbee was convicted
The district court ordered Solesbee to pay $857,332.00 in
restitution to a number of people and organizations. Solesbee
25
objected to the restitution order at sentencing, arguing three of
the persons to be compensated under the restitution order were not
named in the indictment and thus were not entitled to restitution.
His objection was overruled.
18 U.S.C. § 3663(a) provides that the court may order the
defendant to make restitution to any victim of the offense.
Section 3663(a)(2) defines victim as:
a person directly and proximately harmed as a
result of the commission of an offense for which
restitution may be ordered including, in the case
of an offense that involves as an element of a
scheme, conspiracy, or pattern of criminal
activity, any person directly harmed by the
defendant’s criminal conduct in the course of the
scheme, conspiracy, or pattern.
Similarly, this court has already held that victims not named in
the indictment may be compensated under a restitution order when
those victims’ losses were caused by a fraudulent scheme outlined
in the indictment. United States v. Pepper, 51 F.3d 469, 473 (5th
Cir. 1995). The legality of the district court’s restitution award
is reviewed de novo. United States v. Hughey, 147 F.3d 423, 436
(5th Cir. 1998).
Solesbee argues that, while there was testimony presented at
trial about losses suffered by these three individuals, the losses
were not caused by any conduct for which Solesbee was convicted.
But a review of the facts surrounding Solesbee’s defrauding of each
of these three persons reveals that each of these persons is
26
properly considered a victim under section 36663(a)(2). Each of
these persons was either 1) directly and proximately harmed as a
result of the commission of an offense for which Solesbee was
convicted or 2) directly and proximately harmed by Solesbee’s
conduct in the course of a scheme that was an element of an offense
for which Solesbee was convicted. Thus, the district court did not
err in ordering restitution for these individuals.
7. Whether the district court erred in using certain loss
figures in analyzing the sentencing guidelines
Finally, Solesbee asserts that, in analyzing the sentencing
guidelines, the district court improperly used loss figures that
were not alleged in the indictment and that were not shown to be
part of a common scheme or plan as the offenses for which Solesbee
was convicted. Solesbee generally alleges that the losses of the
21 witnesses, whose testimony he complained of in issue number 2,
did not stem from “relevant conduct,” as defined in the sentencing
guidelines. Unfortunately, Solesbee does not articulate any
specific argument as to why each of these losses does not stem from
relevant conduct. As Solesbee has not properly argued this point
of error, it is deemed abandoned. United States v. Lindell, 881
F.2d 1313, 1325 (5th Cir. 1989).
CONCLUSION
Solesbee’s conviction for Bank Fraud under Count 11 is
27
REVERSED. Solesbee’s convictions on all of the other counts are
AFFIRMED, as are the restitution order and the sentence pronounced
by the district court.
28