United States v. Jensen ( 1994 )

UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 93-1126
UNITED STATES of AMERICA,
Plaintiff-Appellee,
versus
PAUL ARLIN JENSEN,
Defendant-Appellant.
Appeal from the United States District Court
for the Northern District of Texas
(December 20, 1994)
Before WIENER, EMILIO M. GARZA, and BENAVIDES, Circuit Judges.
BENAVIDES, Circuit Judge:
Paul Arlin Jensen (Jensen) appeals his convictions on 18
counts stemming from a fraudulent scheme which lead to the failure
of certain savings and loan institutions. We affirm.
I. FACTS AND PROCEDURAL HISTORY
In 1982, Jensen, Van Zinnis, and William Tar were partners in
a California mortgage brokerage company called Mountain West. The
company was seeking borrowers through an advertisement. Clifton
Brannon, a builder in the Dallas area, answered the ad. As a
result, Jensen flew to Dallas and met with Brannon. Jensen
introduced himself as a medical doctor with an impressive business
-1-
career and told Brannon that he wanted larger projects than the one
presented by Brannon. He further stated that he and his employer
at Mountain West were interested in acquiring a savings and loan.
Brannon introduced Jensen to Weldon Hays, who owned Lancaster First
Federal Savings and Loan (Lancaster) in Colony, Texas. Jensen met
with Hays' father, James Hays, to discuss the purchase of that
institution.
Brannon also introduced Jensen to David Faulkner, a real
estate developer, and Jim Toler, a real estate developer and former
mayor of the City of Garland. Those two men were involved in the
development of real estate projects in an area known as the I-30
corridor in Dallas, Texas. To attract participants for the various
projects, Faulkner would arrange elaborate Saturday morning
breakfast meetings where high profile individuals and dignitaries
would meet with the investors and developers. Faulkner and Toler
bought large tracts of land and sold them to "investors," "builder-
investors," or "builder-developers" at inflated prices. United
States v. Faulkner, 17 F.3d 745, 752 (5th Cir.), cert. denied, __
U.S. __, 115 S. Ct. 193 (1994).1 The property would then change
hands in a series of "land flips" which were frequently on the same
day. Id.
After meeting with Faulkner and Toler, Jensen moved to Texas
and became involved in funding the loans for the projects in the I-
30 corridor. Jensen set up an office in Dallas, and employed Tim
1
Faulkner provides a most comprehensive recitation of the
parties and the circumstances involved in this immense scheme.
-2-
Jensen, Bjornar Fredricksen, loan processors Ellen Burns and
Kateland Curly, and accountant Jay Housley. Additionally, Jensen
operated several entities which obtained financing for the I-30
corridor projects, including Antum Financial Corporation, Mountain
West Mortgage, Snowball Investment Corporation, and Helaman
Investment Corporation.
The loans made in connection with the I-30 development were
provided by federally insured institutions: Lancaster and Bell
Savings (which were controlled by Jensen); and Empire Savings and
Loan (which was controlled by Spencer Blain). The borrowers,
however, did not necessarily have to be financially qualified to
take out these loans.
Faulkner referred individuals to Clifford Sinclair to put
together loan packages for the condominium deals. Sinclair and
Mike Faldmo2 were associated with a company called Kitco. Kitco
would put together these packages for the borrowers. Faldmo
testified that Toler and Faulkner would acquire the land and then
decide how much money needed to be made out of a transaction. The
personnel at Kitco would calculate the valuation amount of the land
necessary to generate the cash requested. The Kitco employees
would contact the appraisers and advise them of the needed amount
per square foot. The personnel at Kitco would assist the borrowers
in preparing the financial statement. The personnel would use
false tax returns to insure the borrowers would qualify for the
2
Faldmo testified for the government and had previously
plead guilty.
-3-
loans. The borrowers would receive "rebates" or "kickbacks" at
closing. Frequently, the properties would undergo "land flips" on
the closing date among intermediate buyers and others who were
designated to make money on the ultimate loan taken by the last
purchaser. Faldmo testified that the deals were not driven by
market demand but rather, they were based on the amount available
to be loaned.
LANCASTER SAVINGS AND LOAN
To obtain control of Lancaster, Jensen purchased the
resignations of the board of directors for $150,000 pursuant to an
agreement. The board members signed undated letters of
resignation, which Jensen never exercised. Jensen was named
chairman of the board, and Hays introduced Jensen to the employees
of Lancaster as the new boss. After acquiring control of
Lancaster, Jensen and his companies continued brokering loans to
Lancaster. Jensen also taught the Lancaster personnel how to
obtained brokered funds.3 Jensen testified that the brokers were
anxious to do business with Lancaster because it was federally
insured. Jensen instructed Carole Harris, Hays' secretary, "how
much money" to order on a certain day and "how high to negotiate
rates." Numerous such brokered funds transactions were conducted
3
A "brokered funds" transaction was described at trial as
follows. "If I had a million dollars I would break my million
dollars up into ten $100,000 investments. And rather than myself
calling to savings and loans and banks all around the country, I
would call a local brokerage house who would, in turn, know who was
paying the best interest rates at banks and savings and loans for
me to invest my money and they would invest it for me for a
commission." A brokered funds transactions in and of itself was
legal.
-4-
from out of state using wire transfers to Lancaster in $100,000
increments. Jensen hired Charles Brizius as executive vice-
president of Lancaster in November 1982. Brizius was an
experienced savings and loan executive and was to implement
policies and procedures. Brizius testified that he examined the
loan files and discovered that the loans were poorly underwritten
and much documentation was missing. Brizius also noticed that fees
were being paid to companies affiliated with Jensen, and so Brizius
confronted Jensen and informed him that there was a conflict of
interest for the institution to fund loans with fees paid to
entities controlled and owned by Jensen. Brizius further explained
that affiliated party transactions required approval of the Federal
Home Loan Bank Board. Jensen expressed surprise and indicated that
he was not aware of the regulation on conflicts of interest.
Brizius testified that Jensen's surprise appeared sincere. As a
result of this conversation, Jensen resigned as chairman of the
board of Lancaster. Jensen was made an advisory director.4
Brizius further recommended that no further loans be funded until
he returned from his Christmas vacation. Contrary to that advice,
Lancaster funded the Oates Corners project, a multi-million dollar
transaction, in Brizius' absence.
During Lancaster's annual audit in 1982, Kenneth Stein, an
auditor, noticed that the assets had grown at an "unusual" and
"very fast" rate: from $17,000,000 (August) to $55,000,000
4
Jensen testified that initially he was not aware that the
board had made him an advisory director.
-5-
(September) to $105,000,000 (December). Stein and the other
auditors became very concerned about: loans in apparent violation
of the limit to individual borrowers; potential conflicts of
interest; concentrations of credit in the I-30 corridor; the
validity of appraisals made in such a short period of time prior to
purchase; and whether the transactions were at arms' length.
In December of 1982, the Federal Home Loan Bank Board
conducted an examination of Lancaster. An examiner asked Jensen
about the brokerage fees received by companies owned by Jensen.
Jensen responded that after he learned that such an affiliation was
inappropriate, he separated himself from those institutions and
resigned as chairman of the board at Lancaster. Jensen wrote a
letter stating that he had no interest in either Snowball or
Helaman. The evidence, however, showed that Jensen did receive
proceeds from Snowball and Helaman. Jensen testified that his
attorney drafted that letter and that, according to his attorney's
advice, he understood that he had no conflict of interest because
he was not an officer or a director.
In early 1983, a meeting was held to discuss the conversion of
Lancaster from a mutual institution to a stock institution. During
that meeting, Jensen revealed that he had purchased the resignation
of the board of directors. Brizius was concerned because no
application for change of control had been filed with the Federal
Home Loan Bank Board. The Federal Home Loan Bank Board was then
notified, and Lancaster's board was neutralized by bringing in
outside directors. Jensen was then removed as an advisory
-6-
director.
BELL COUNTY FEDERAL SAVINGS AND LOAN
In September 1982, Jensen met with Kenneth Law, a lawyer and
the president of Bell Savings and Loan, to discuss the acquisition
of Bell. Jensen again represented that he was a medical doctor.
An oral agreement was reached in which Jensen, James Hays, and
Weldon Hays would purchase Bell's outstanding stock subject to the
approval of the Federal Home Loan Bank Board.
While the application for change of control was pending, Law
requested that Jensen buy some stock that certain Bell shareholders
wanted to sell. Law advised Jensen that he could not put the stock
in his own name so Jensen bought the stock in the name of other
persons. Jensen told Law that he was interested in funding some
loans in the five to ten million dollar range, and Law informed him
that Bell did not have that amount of money to loan. Jensen
responded that was not a problem and suggested brokering funds.
Jensen then ran an ad for Bell offering rates on jumbo certificates
of deposit and instructed the personnel how to offer brokered
funds. Jensen indicated to personnel at Bell the amount of money
needed for a project, and they would receive the money through
brokered funds transactions. Law testified that Bell had no reason
to take these brokered funds except to fund the large loans brought
by Jensen.
Law examined the loan documents and found them to be
incomplete. Law advised Jensen of the problem and Jensen responded
that his people would take care of it. Certain remarks Jensen had
-7-
made gave Law the impression that Jensen owned or was connected
with a company that received proceeds funded by Lancaster.
Consequently, Law told Jensen that, as an owner of a savings and
loan, he could not receive money other than the brokerage fees.
Jensen assured Law that he understood and that it would not happen
at Bell.
Subsequently, Law began to suspect that Jensen was secretly
taking money from the projects. Because of those suspicions, Law
and Brizius went to the scheduled closing of a project named
Tiffany Cove. Jensen was out of state at the time, and Fredricksen
represented him at the closing. None of the borrowers appeared at
the closing. Law and Brizius then called the borrowers involved in
the Tiffany Cove project to determine whether they were to receive
money from the deal. They also talked to the Dallas Title Company
to determine whether the property was changing hands. As a result
of these conversations, Law and Brizius called Jensen and told him
that they "were satisfied that he lied to us," and they were not
going to fund the transaction. They also told Jensen that
Fredricksen admitted that he was to receive $150,000 of the
proceeds, that the loan was going through three or four different
hands, and that the borrowers were to receive cash from the
proceeds. This information had been concealed because it was not
on the borrower's statement, it was on another disclosure
statement.
In March 1983, the board of directors of Bell terminated the
agreement in which Jensen, Weldon Hays, and James Hays were to
-8-
acquire the Bell stock. Law and others borrowed the money to buy
back the stock Jensen had purchased.
In his defense, Jensen testified that he did not realize he
was violating any regulation or law. He was relying on the advice
of his attorneys and other individuals who he believed had more
expertise in the area of savings and loans.
RESULT OF LOANS
During 1982 and 1983, loans totaling over 300 million dollars
were made on the real estate projects in the I-30 corridor. Of
that amount, Jensen received approximately $25,000,000.5 The
Federal Deposit Insurance Corporation suffered financial losses
totaling $327,942,431, in connection with the above scheme. As a
result of the above activities, an 88-count indictment was filed
charging Jensen and seven other defendants with numerous offenses.
Ultimately, Jensen was severed from the other defendants and tried
on 18 counts of the indictment. The jury found him guilty on all
the following 18 counts: count 1, conspiracy (18 U.S.C. § 371);
counts 7, 15, 22, 24, 27, and 36, fraudulent participation in loan
monies and false entries (18 U.S.C. § 1006); counts 14, 16, 21, and
23, fraudulent misapplication of bank funds (18 U.S.C. § 657);
counts 52, 53, 65, and 66, wire fraud (18 U.S.C. § 1343); counts 84
and 85, interstate transportation of property taken by fraud (18
U.S.C. § 2314); and count 88, RICO conspiracy (18 U.S.C. §
1962(d)).
5
In one real estate transaction, Jensen received a
$4,000,000 mansion for what he termed as "equity participation."
-9-
The court sentenced Jensen to: 5 years on count 1; 5 years on
counts 7, 15, 22, 24, 27, and 36 (concurrent to each other but
consecutive to count 1); 5 years on counts 14, 16, 21, and 23
(concurrent with each other and the preceding group, but
consecutive to count 1); 5 years on counts 52, 53, 65, and 66
(concurrent with each other and the preceding two groups, but
consecutive to count 1); 10 years on counts 84 and 85 (concurrent
to each other and concurrent with the preceding three groups but
consecutive to count 1); and 20 years on count 88 (concurrent with
all counts). The court, pursuant to the jury's finding, entered an
order of forfeiture against Jensen in the amount of $23,000,000.
II. THE DISTRICT COURT'S DENIAL OF JENSEN'S REQUEST FOR
CERTAIN JURY INSTRUCTIONS
Jensen contends that the district court erred in refusing his
request for a jury instruction to limit the use of evidence
regarding extrinsic offenses for purposes of impeachment. He also
contends the district court erred in refusing his request for an
instruction on his theory of the case.
A trial court's refusal to include a requested instruction
in the jury charge is reviewed under an abuse of discretion
standard, and the court is afforded substantial latitude in
formulating its instructions. United States v. Rochester, 898 F.2d
971, 978 (5th Cir. 1990). Refusal to include an instruction
constitutes reversible error only upon the occurrence of all three
of the following conditions: (1) the requested instruction is
substantially correct; (2) the actual charge given to the jury did
not substantially cover the content of the proposed instruction;
-10-
and (3) the omission of the instruction would seriously impair the
defendant's ability to present his defense. United States v.
Daniel, 957 F.2d 162, 170 (5th Cir. 1992).
Jensen contends that the court erred in refusing his requested
instruction which limited the jury's use of certain evidence of
extrinsic offenses to purposes of impeachment.6 Jensen identifies
the following evidence which he contends required the limiting
instruction: (1) evidence regarding false statements he provided
on a bankruptcy document; (2) a false tax return; and (3) false
loan documents.
Jensen relies on Rule 105 of the Federal Rules of Evidence
which provides that "[w]hen evidence which is admissible as to one
party or for one purpose but not admissible as to another party or
for another purpose is admitted, the court, upon request, shall
restrict the evidence to its proper scope and instruct the jury
accordingly."
Jensen requested the following instruction:
[Y]ou have heard evidence concerning alleged false
statements made by the Defendant concerning matters
separate from those alleged in the Indictment. The
Defendant is not charged with an offense for making these
statements. You should not find him guilty of the
charges in this Indictment based upon his allegedly
making those statements.
The trial judge denied Jensen's request for the limiting
6
Jensen acknowledges that the district court apparently
admitted this evidence pursuant to Rule 608(b) of the Federal Rules
of Evidence, which provides that the trial court, in its
discretion, may allow inquiry of specific instances of conduct
during cross-examination concerning the witness' character for
truthfulness.
-11-
instruction, stating that he thought it was "covered." In
pertinent part, the court's charge provided as follows:
The testimony of a witness may be discredited by
showing that the witness testified falsely concerning a
material matter, or by evidence that at some other time
the witness said or did something, or failed to say or do
something, that is inconsistent with the witness's
testimony at this trial. If you believe that a witness
has been discredited in this or any other manner, you are
to give this testimony such weight as you may think it
deserves.
* * *
You are to determine the guilt or innocence of the
defendant from the evidence in this case. The defendant
is not on trial for any act or conduct or offense not
alleged in the indictment.
The instruction requested by Jensen was substantially covered
in the charge given to the jury. Therefore, the trial court did
not abuse its discretion in denying the limiting instruction
requested by Jensen.
Jensen also contends that the trial court erred in denying the
requested jury instruction on his theory of the case.
Specifically, Jensen requested the following instruction:
Mr. Jensen's theory of the defense is that he did not
wilfully violate any of the laws he's charged with
violating. Mr. Jensen's defense is that the Government
has failed to prove beyond a reasonable doubt that he
knowingly and wilfully did an act which the law forbids
with the intent to violate the law. If you believe that
the Government has failed to prove beyond a reasonable
doubt that Mr. Jensen wilfully and knowingly did acts,
which the law forbids, with the intent to violate the
law, you must find Mr. Jensen not guilty.
The district court did not abuse its discretion in refusing to
submit the above instruction because the charge properly set forth
the government's burden of proving the defendant guilty beyond a
-12-
reasonable doubt. Further, as the government asserts, the charge
defines the terms "knowingly," "willfully," and "intent to
defraud."7 See United States v. Cartwright, 6 F.3d 294, 302 (5th
Cir. 1993) (district court did not err in refusing requested
instruction on presumption of innocence because instruction was
substantially covered by charge given to jury), petition for cert.
filed, (U.S. July 19, 1994) (No. 94-5410). The requested
instruction was substantially covered by the charge given to the
jury. Moreover, Jensen has not demonstrated that his ability to
present his defense was impaired. Consequently, the refusal of the
requested instructions did not constitute an abuse of discretion.
III. SUFFICIENCY OF THE EVIDENCE
Jensen contends that the evidence is insufficient to support
his convictions. He contends that although the evidence shows that
he received money from loan proceeds that he should not have
received, the evidence is insufficient to prove that he acted
willfully or with the intent to defraud. When reviewing the
sufficiency of the evidence, we view all evidence, whether
circumstantial or direct, in the light most favorable to the
government with all reasonable inferences and credibility choices
to be made in support of the jury's verdict. United States v.
Salazar, 958 F.2d 1285, 1290-91 (5th Cir.), cert. denied, __ U.S.
__, 113 S. Ct. 185 (1992). The evidence is sufficient to support a
7
The instructions on the terms "knowingly" and "willfully"
follow those approved in this circuit. See United States v. St.
Gelais, 952 F.2d 90, 93-94 (5th Cir.), cert. denied, __ U.S. __,
113 S. Ct. 439, 121 L. Ed. 2d 358 (1992); Rochester, supra.
-13-
conviction if a rational trier of fact could have found the
essential elements of the crime beyond a reasonable doubt. Id.
The evidence need not exclude every reasonable hypothesis of
innocence or be completely inconsistent with every conclusion
except guilt, so long as a reasonable trier of fact could find that
the evidence established guilt beyond a reasonable doubt.
Faulkner, 17 F.3d at 768.
Jensen does not dispute that "[t]he evidence at trial showed
various acts by different persons that were fraudulent and
illegal." Nevertheless, Jensen claims that "the evidence wholly
failed to prove that Mr. Jensen was aware of the illegality of
these acts by other persons." In other words, Jensen simply
challenges the sufficiency of the evidence proving his intent or
mental state, but does not challenge any of the other elements of
his 18 convictions.
To prove a conspiracy, the government must show that an
agreement between two or more persons to violate the law, that the
defendant had knowledge of the agreement, and that the defendant
voluntarily participated in the conspiracy. United States v.
Casilla, 20 F.3d 600, 603 (5th Cir.), cert. denied, __ U.S. __, 115
S. Ct. 240 (1994). Each element of a conspiracy may be inferred
from circumstantial evidence. Id. The agreement may be inferred
from a "concert of action." Id. (citation omitted). "Once the
government has produced evidence of a conspiracy, only `slight'
evidence is needed to connect an individual to that conspiracy."
Id. (quoting United States v. Duncan, 919 F.2d 981, 991 (5th Cir.
-14-
1990), cert. denied, 500 U.S. 926, 111 S. Ct. 2036 (1991)).
"Knowledge of a conspiracy and voluntary participation in a
conspiracy may be inferred from a `collection of circumstances.'"
Id. (citation omitted).
The evidence at trial was largely undisputed. In fact, it was
undisputed that Jensen received approximately $25,000,000 in a
matter of months from the transactions at issue. From the
beginning of trial, the defense focused the jury on the issue of
whether Jensen had the intent to commit the charged offenses.
During opening statement, defense counsel argued as follows:
Now, I don't mean to imply and I don't want to
mislead you. I'm not trying to tell you that the things
that Paul did were all right. Paul Jensen took some
money. He took a lot of money out of these savings and
loans, out of these deals that were -- that he took in
violation of laws and regulations. He should not have
taken that money. There is no question about that.
That is not the issue of this case. Don't -- don't waste
one second worrying about that because we can set that
aside right now. Paul Jensen took money that he should
not have taken.
As I said before, that's not what this case is
about. The question is: Did he know that he was taking
money he should not have taken. . . .
* * *
The Government's evidence is going to show, and this is
another thing that is totally uncontested, there was a
conspiracy. The conspiracy involved Faulkner, Toler,
Blain, Clifford Sinclair and others. And this was a
conspiracy that was going on long before Paul Jensen ever
came to Dallas. It is a conspiracy that continued after
he left Dallas. That is not an issue in the case. These
people were engaged in illegal activity. There is no
question about that.
The question is: Did Paul [Jensen] willfully and
knowingly engage in illegal activity with those people?
The answer to that is no. So don't worry about trying to
decide whether there's something illegal going on.
-15-
Faulkner, Toler, Blain, Sinclair, they're all doing
things that are illegal. That's not the question for
this trial.
Jensen was a central figure in this scheme. As the government
asserts, Jensen personally participated in the planning of the
deals when he negotiated the high points for his mortgage companies
and instructed the personnel at Lancaster and Bell how to obtain
brokered funds to have money available to loan on the various real
estate projects. He purchased the resignation of the board of
directors at Lancaster to gain control of that institution. Jensen
gained control of both Lancaster and Bell to finance these
projects. Without the funding Jensen organized, the scheme would
not have been possible or at least not on such a grand scale. In
addition, his actions were accompanied by deceit and
misrepresentations. For instance, although Jensen still received
proceeds from Snowball and Helaman, he represented to the Federal
Home Loan Bank Board that he had no interest in either company.
Jensen knew that the mortgage companies were receiving high points
without the proper underwriting, that buyers were receiving
"upfront" money or "kickbacks," and that the property would undergo
a series of "land flips" at inflated prices on the day of closing.
As a result of these intermediate transactions, Jensen received
millions of dollars in loan proceeds.
Although Jensen testified at length regarding his lack of
intent to defraud, the jury obviously did not believe him. Intent
to defraud was properly before the jury for a factual
determination. After a review of the record, we conclude that a
-16-
rational jury could have inferred Jensen's knowledge of and
participation in the conspiracy beyond a reasonable doubt.
Jensen also blanketly contends that the evidence is
insufficient to demonstrate that he had the requisite intent
regarding the substantive counts. However, "under the Pinkerton
rule `[a] party to a conspiracy may be held responsible for a
substantive offense committed by a coconspirator in furtherance of
a conspiracy, even if that party does not participate in or have
any knowledge of the substantive offense.'" Faulkner, 17 F.3d at
771 (quoting United States v. Garcia, 917 F.2d 1370, 1377 (5th Cir.
1990)). Accordingly, because we have determined that Jensen's
conspiracy conviction should stand, Jensen may be held responsible
for any substantive offenses committed by coconspirators in
furtherance of the conspiracy regardless whether he had knowledge
of or participated in the substantive offenses.
Jensen does not challenge any element of the substantive
convictions except for his requisite mental state. Again, Jensen's
intent was a question for the fact finder. We find there is
sufficient evidence to support the jury's conclusion that Jensen
had the requisite mental state to commit the substantive offenses.
IV. WHETHER PROOF WAS OF ONE OR MANY CONSPIRACIES
Jensen claims the government failed to prove that one
conspiracy existed as charged in the indictment. He claims that
the evidence introduced demonstrated multiple conspiracies rather
than the single overarching conspiracy alleged in count one,
resulting in a material variance that prejudiced his substantial
-17-
rights.
When reviewing a claim of fatal variance, we will reverse only
if the evidence at trial varied from what the indictment alleged,
and the variance prejudiced the defendant's substantial rights.
Faulkner, 17 F.3d at 760. The following factors are considered to
determine whether one or multiple conspiracies existed: (1) a
common goal; (2) the nature of the scheme; and (3) an overlapping
of participants in the various transactions. Id. at 761.
Jensen has not set forth with any specificity the facts
necessary to support his claim that more than one conspiracy
existed or that there was a material variance between what was
charged and the facts adduced at trial. Nevertheless, as in
Faulkner, the evidence at Jensen's trial demonstrated that the
defendants "shared a common goal of enriching themselves by
profiting from the leveraged selling and reselling of real estate
along I-30." 17 F.3d at 761 (citing United States v. Richerson,
833 F.2d 1147, 1153 (5th Cir. 1987)). Likewise, "[t]he nature of
the scheme was such that different participants played different
but important functions necessary to its success." Id. As for the
third factor, Jensen implicitly acknowledges that there were
overlapping participants in the various transactions when he states
that the existence of common participants does not demonstrate only
one conspiracy.
Assuming arguendo that more than one conspiracy existed,
Jensen is not entitled to relief. In Faulkner, we concluded "that
where the indictment alleges a single conspiracy and the evidence
-18-
established each defendant's participation in at least one
conspiracy a defendant's substantial rights are affected only if
the defendant can establish reversible error under general
principles of joinder and severance." 17 F.3d at 762. Jensen was
tried separately, and thus, the jury could not have been confused
as to compartmentalizing evidence against other defendants. Jensen
has not shown improper joinder or severance.
V. COMMISSION OF PREDICATE ACTS UNDER RICO STATUTE
Jensen was convicted of conspiring to violate the RICO
statute, 18 U.S.C. § 1962(d), as alleged in Count 88 of the
indictment. Jensen claims insufficiency of the evidence,
contending that the law of this Circuit requires the government to
prove that a RICO conspirator, and thus Jensen himself, agreed to
personally commit two racketeering acts.8
The court below instructed the jury that the evidence must
show beyond a reasonable doubt:
That at the time the Defendant knowingly and wilfully
agreed to join in such conspiracy, he did so with the
specific intent either to personally participate in the
commission of two "racketeering acts," as elsewhere
defined in these instructions, or that he specifically
intended to otherwise participate in the affairs of the
enterprise with the knowledge and intent that other
members of the conspiracy would commit two or more
"racketeering acts" as a part of a "pattern of
racketeering activity."
8
Jensen cites, inter alia, the following cases: United
States v. Elliott, 571 F.2d 880 (5th Cir.), cert. denied, 439 U.S.
953, 99 S. Ct. 349 (1978); United States v. Martino, 648 F.2d 367
(5th Cir. 1981), cert. denied, 456 U.S. 943, 102 S. Ct. 2006 (1982).
-19-
(emphasis added).9
The government argues that we have not definitely resolved the
personal agreement argument presented by Jensen,10 and urges us to
resolve it in favor of the majority of the Circuits that require
only that there is evidence of an agreement that members of the
conspiracy will commit two proscribed acts.
Faulkner controls the disposition of this insufficiency claim.
There, we held that regardless whether the conviction for
conspiracy to violate RICO required the defendant to agree to
personally commit two predicate acts or only that he agree with the
other conspirators that two predicate acts be committed pursuant to
the conspiracy, the RICO conviction was supported by the jury's
finding that each had committed the requisite predicate acts. 17
F.3d at 774. Likewise, in this case, the jury found Jensen guilty
of four counts of wire fraud (counts 52, 53, 65, and 66). There is
sufficient evidence to support the wire fraud convictions, which
are racketeering acts. Jensen is not entitled to relief on this
claim, and we need not resolve the personal agreement argument
presented by Jensen.
VI. EXTRINSIC OFFENSES
Jensen argues that the district court erred in allowing the
government to cross-examine him regarding three extrinsic offenses.
9
Additionally, the court below instructed the jury that it
was not to find Jensen guilty unless it unanimously agreed that he
committed at least two particular racketeering acts.
10
The government cites United States v. Neapolitan, 791 F.2d
489, 496 n.3 (7th Cir.), cert. denied, 479 U.S. 940, 107 S. Ct. 422
(1986).
-20-
The extrinsic offenses involved false statements he made on a
bankruptcy document, a false tax return he provided in connection
with the purchase of a car, and submission of false loan documents
concerning a project called Riverbend. He also contends that the
admission of evidence regarding those extrinsic offenses was
error.11 This Court reviews evidentiary rulings for abuse of
discretion. United States v. Lopez, 979 F.2d 1024, 1032 (5th Cir.
1992), cert. denied, __ U.S. __, 113 S. Ct. 2349 (1993).
Both parties agree that the district court apparently admitted
the impeachment evidence pursuant to Rule 608(b) of the Federal
Rules of Evidence, which provides as follows:
Specific instances of the conduct of a witness, for the
purpose of attacking or supporting the witness'
credibility, other than conviction of crime as provided
in rule 609, may not be proved by extrinsic evidence.
They may, however, in the discretion of the court, if
probative of truthfulness or untruthfulness, be inquired
into on cross-examination of the witness . . .
concerning the witness' character for truthfulness or
untruthfulness . . . .
Jensen, however, argues that the cross-examination regarding
the extrinsic offenses should not have been allowed because the
probative value was substantially outweighed by the danger of
unfair prejudice. Fed.R.Evid. 403. We disagree. As the
government argues, the evidence regarding false statements made by
Jensen was probative of his character for untruthfulness as
contemplated by Rule 608(b). He has not shown that the court
abused its sound discretion in allowing such examination.
11
Regarding the false loan documents connected with the
Riverbend project, the government only questioned Jensen; it did
not introduce the documents into evidence.
-21-
Moreover, as discussed below, this testimony was probative to rebut
Jensen's defense theory that he was an innocent dupe and without an
intent to defraud.
Jensen also argues that the district court erred in admitting
into evidence the documents showing his previous false statements.
As quoted above, Rule 608(b) prohibits proof of specific instances
of the conduct of a witness for the purpose of attacking the
witness' credibility. The documents were not admissible into
evidence under Rule 608(b).
That is not the end of the inquiry, however. If the evidence
was admissible on any ground, the district court's reliance on
other grounds does not affect the defendant's substantial rights.
United States v. Blake, 941 F.2d 334, 339 (5th Cir. 1991), cert.
denied, __ U.S. __, 113 S. Ct. 596 (1992). In part, Rule 404(b)
provides that:
Evidence of other crimes, wrongs, or acts is not
admissible to prove the character of a person in order to
show action in conformity therewith. It may, however, be
admissible for other purposes, such as proof of motive,
opportunity, intent, preparation, plan, knowledge,
identity, or absence of mistake or accident . . . ."
The evidence introduced regarding Jensen's intentional false
statements and misrepresentations was admissible under Fed.R.Evid.
404(b) to prove Jensen's knowledge of the fraud. As the government
asserts, Jensen's defense was that he lacked a culpable state of
mind and did not intentionally mislead people. Under Rule 404(b),
the government properly introduced the evidence to rebut Jensen's
defense of lack of intent. Jensen has not shown that his
substantial rights were prejudiced.
-22-
VII. WHETHER EVIDENCE WAS RELEVANT
Jensen next contends the district court erred in admitting
into evidence testimony that he purported to be a medical doctor
and testimony regarding how he spent the money he acquired through
the loan transactions at issue. Jensen contends that the evidence
was not relevant under Fed.R.Evid. 401, and further, any probative
value was outweighed by the danger of prejudice.
Rule 401 defines relevant evidence as "evidence having any
tendency to make the existence of any fact that is of consequence
to the determination of the action more probable or less probable
than it would be without the evidence." Clearly, the challenged
evidence was relevant as it tended to prove Jensen's efforts to
take control of the lending institutions and to further the overall
fraudulent scheme of the defendants. Additionally, in regard to
the evidence of large expenditures of money, such evidence is
relevant to prove the funds were obtained illegally when "a
defendant is on trial for a crime in which pecuniary gain is the
usual motive for or natural result of its perpetration and there is
other evidence of his guilt." United States v. Chagra, 669 F.2d
241, 256 (5th Cir.), cert. denied, 459 U.S. 846, 103 S. Ct. 102
(1982). Jensen has failed to show that the admission of the
evidence was improper.
Moreover, after the introduction of the evidence, the district
court orally instructed the jurors as follows:
There was testimony concerning statements that were
allegedly made by the Defendant that he was a doctor.
There was testimony concerning money, large sums of money
that were spent. I just want to emphasize to you the
-23-
Defendant's not being charged in this case with making
misrepresentations that he was a doctor. He's not being
charged with spending a lot of money. He's charged with
bank fraud, conspiracy to commit bank fraud and the other
crimes that were described to you. So I'm cautioning you
that on that evidence I don't want you to go back in the
jury room during deliberation and say we're going to find
Mr. Jensen guilty because he represented that he was a
doctor and that he spent a lot of money. That's not what
he's charged with.
Assuming arguendo the evidence was erroneously admitted, it did not
affect Jensen's substantial rights given the court's oral
instructions.
VIII. DISTRICT COURT'S FAILURE TO MAKE EXPLICIT FINDINGS
REGARDING THE ADMISSIBILITY OF CO-CONSPIRATOR
STATEMENTS.
Jensen, relying on United States v. Powell, 973 F.2d 885 (10th
Cir. 1992), cert. denied, __ U.S. __, 113 S. Ct. 1598 (1993),
contends that the district court erred in failing to make explicit
findings regarding the admissibility of the co-conspirator
statements.
The government does not deny that the district court failed to
make any findings as to the predicate facts pursuant to Rule
801(d)(2)(E). Instead, the government argues that the omission was
harmless. In United States v. Fragoso, 978 F.2d 896, 900-01 (5th
Cir. 1992), cert. denied, __ U.S. __, 113 S. Ct. 1664 (1993), we
determined that, in denying the defendant's motion for directed
verdict of acquittal, the district court implicitly had found
sufficient evidence to establish a conspiracy. We therefore
reasoned that the error was harmless. Likewise, in the case at
bar, the court denied Jensen's motion for directed verdict of
acquittal. We must follow the decision of the prior panel in
-24-
Fragoso and accordingly, reject Jensen's claim.
IX. DISTRICT COURT'S DISMISSAL OF A PROSPECTIVE JUROR
Jensen contends that his right to a fair trial under the Sixth
Amendment was violated when the district court erred in sua sponte
dismissing a prospective juror because the court found her not
competent to be on the jury. The Sixth Amendment guarantees a
criminal defendant the right to a trial by impartial jury and the
trial judge is entrusted with the implementation of this guarantee.
United States v. Hinojosa, 958 F.2d 624, 631 (5th Cir. 1992). We
will not disturb a trial court's determinations of impartiality
absent a clear abuse of discretion. Id.
During voir dire, the follow colloquy transpired:
[COURT:] Now, I want to make absolutely sure that I've
covered anything that you want to tell me about whether
or not you should be on the jury. Sometimes I may fail
to ask questions that somebody may have a concern in
their mind. I'm going to ask the lawyers to come back
up. And if any of you have anything you want to tell me
in confidence at the bench about whether or not you
should serve on this jury now is your time just to come
up. I'm talking about personal feelings, publicity,
business reasons, just any other reason. If there's
anything at all if you would just raise your hand and
just come up to the bench.
(Side bar)
THE COURT: Just come right up here?
A JUROR: This building, I can't handle the air in this
building.
THE COURT: The air?
A JUROR: Smokers I tried to get -- except they didn't do
it.
THE COURT: You seem to be having trouble since we got
here today?
-25-
A JUROR: Yes, it is worse.
THE COURT: Today?
A JUROR: Because of the cold air. I'm not used to cold
air on me.
THE COURT: I'm just going to excuse you from further
jury service.
* * *
(Juror leaves side bar)
THE COURT: I'm going to excuse that juror on the Court's
own motion. If there's any objection?
MR. UDASHEN: Judge, I would object. I don't think she
gave a specific reason enough that -- of health reasons
than maybe something the Court can do to alleviate her
problem.
THE COURT: Apparently you weren't looking at her or
listening to her because there wasn't a word she said.
It was the manner in which she was talking to me. I
don't think she's competent to be on the jury. That's my
specific finding. This is the same juror that the
Government wanted me to ask to come up because of the way
she had been sitting in Court covered up from the time
she got here.
Jensen argues "that it was improper for the Court to remove
this juror over his objection without further inquiry into the
alleged health problem," and "[w]ithout further inquiry the court
did not have a sufficient basis to conclude that the juror was
unqualified to sit on the jury."
In United States v. Bourgeois, 950 F.2d 980, 987 (5th Cir.
1992), the trial court excused a juror who had called in sick and
replaced her with an alternate juror. The defendant objected
because the court had failed to notify the parties of the excusal,
which "depriv[ed] them of the ability to determine the nature of
her illness and the length of time she would be unavailable."
-26-
Therefore, as in the case at bar, the defendant argued that his
conviction should be overturned because there was an insufficient
factual basis to excuse the juror. We rejected that contention and
found no abuse of discretion.
Here, the trial court observed the actions and the demeanor of
the prospective juror and expressly found her not competent to sit
on the jury. Jensen has not shown that the basis for her excusal
was a clear abuse of discretion.12 Moreover, Jensen does not
contend that any of the jurors on the panel were not impartial. As
such, he has shown no basis for reversal of his convictions. See
United States v. Prati, 861 F.2d 82, 87 (5th Cir. 1988).
CONCLUSION
Accordingly, Jensen's convictions are AFFIRMED.
12
See United States v. Coleman, 997 F.2d 1101, 1106 (5th Cir.
1993) (trial court may remove a juror when convinced that the
juror's abilities to perform his duties have become impaired),
cert. denied, __ U.S. __, 114 S. Ct. 893 (1994); United States v.
Dumas, 658 F.2d 411, 413 (5th Cir. 1981), cert. denied, 455 U.S.
990, 102 S. Ct. 1615 (1982).
-27-