United States District Court, D. Connecticut
RULING ON DEFENDANTS' POST-TRIAL MOTIONS
Janet Bond Arterton, U.S.D.J.
On September 29, 2015, after a nine-day jury trial, Defendant David Jackson was convicted of one count of conspiracy, in violation of 18 U.S.C. § 1349, and nine counts of wire fraud, in violation of 18 U.S.C. § 1343, and Defendant Alex Hurt was convicted of one count of conspiracy, in violation of 18 U.S.C. § 1349, three counts of wire fraud, in violation of 18 U.S.C. § 1343, and one count of false statements, in violation of 18 U.S.C. 1001. (See Jury Verdict [Doc. # 154].) Defendant Hurt now moves [Doc. # 165], pursuant to Federal Rule of Criminal Procedure 33, for a new trial,  on the grounds that: (1) the false statement he was convicted of making was not, as a matter of law, material because the agents to whom he made the statement knew it to be false; and (2) the Court's refusal to sever his trial from Mr. Jackson's trial deprived Mr. Hurt of a fair trial. Mr. Jackson moves [Doc. # 163] for a judgment of acquittal on the basis that the Government failed to prove that he intended to harm his victims. In addition, Mr. Jackson, like Mr. Hurt, seeks [Doc. # 166] a new trial because his trial should have been severed from Mr. Hurt's trial. Mr. Jackson also argues that his prior conviction and his tax records should not have been admitted. For the following reasons, Mr. Hurt's and Mr. Jackson's motions are denied.
The parties' familiarity with the facts of this case is presumed. Briefly, Defendants David Jackson and Alex Hurt were convicted of conspiring to commit and committing wire fraud. Mr. Jackson, and to a lesser extent, Mr. Hurt, through the entities Jalin Realty Capital Advisors, American Capital Holdings, and Brightway Financial Group, induced victims to pay millions of dollars in fees in order to secure loans of substantial amounts of money. None of the promised loans ever materialized, and few of the victims were refunded any amount of fees, in spite of promises by Mr. Jackson and Mr. Hurt that fees would be fully refunded if the loans did not fund.
Mr. Hurt was additionally convicted of False Statements, arising out of his May 10, 2012 representation to FBI agents during a proffer session that he had never met with anyone in North Carolina who was looking for loan funding. In fact, Mr. Hurt had met with undercover FBI agent Steve West, who was posing as a potential borrower, in North Carolina less than a week earlier.
II. Legal Standard
"A Rule 29 motion [for a judgment of acquittal] should be granted only if the district court concludes there is no evidence upon which a reasonable mind might fairly conclude guilt beyond a reasonable doubt." United States v. Irving, 452 F.3d 110, 117 (2d Cir. 2006) (internal quotations omitted). "The Court must view the evidence presented at trial in the light most favorable to the Government, and draw all reasonable inferences in its favor." United States v. Cote, 544 F.3d 88, 98 (2d Cir. 2008). "[I]t is well settled that 'Rule 29(c) does not provide the trial court with an opportunity to substitute its own determination of... the weight of the evidence and the reasonable inferences to be drawn for that of the jury.'" Id. at 99 (quoting United States v. Guandagna, 183 F.3d 122, 129 (2d Cir. 1999)). "The Court must give full play to the right of the jury to determine credibility." Id. "A defendant challenging the sufficiency of the evidence that was the basis of his conviction at trial bears a heavy burden." United States v. Hawkins, 547 F.3d 66, 70 (2d Cir. 2008) (internal quotations and citations omitted).
Under Federal Rule of Criminal Procedure 33, the Court has the discretion to grant a new trial "if the interest of justice so requires, " particularly where there is "a real concern that an innocent person may have been convicted." United States v. Canova, 412 F.3d 331, 349 (2d Cir. 2005). "In the exercise of its discretion, the court may weigh the evidence and credibility of witnesses, " Cote, 544 F.3d at 101, but "[i]t is only where exceptional circumstances can be demonstrated that the trial judge may intrude upon the jury function of credibility assessment, " id. (quoting United States v. Sanchez, 969 F.2d 1409, 1414 (2d Cir. 1992)). While courts have broader discretion to grant a new trial under Rule 33 than to grant an acquittal under Rule 29, "courts must nonetheless exercise Rule 33 authority sparingly and in the most extraordinary of circumstances." Id.
A. Motion for Judgment of Acquittal
Defendant Jackson contends that he is entitled to a judgment of acquittal because "[t]he Government did not present sufficient evidence of [his] fraudulent intent, " which was "[t]he critical element in all ten Counts against [him]." (Jackson's Mot. for J. Acquittal [Doc. # 163] at 4.)
In order to prove a defendant guilty of wire fraud, the government must "establish that the defendant had fraudulent intent or a conscious knowing intent to defraud and that some harm or injury to the property rights of the victim was contemplated." United States v. McGinn, 787 F.3d 116, 122 (2d Cir. 2015) (internal quotation marks omitted). "Misrepresentations amounting only to a deceit are insufficient. . . because the deceit must be coupled with a contemplated harm to the victim." United States v. Binday, 804 F.3d 558, 578 (2d Cir. 2015) (internal quotation marks omitted). However, "[w]hen the necessary result of the defendant's scheme is to injure others, fraudulent intent may be inferred from the scheme itself." United States v. Romano, 794 F.3d 317, 335 (2d Cir. 2015) (internal quotation marks and alterations omitted). Thus, "it is not necessary that a defendant intend that his misrepresentation actually inflict a financial loss-it suffices that a defendant intend that his misrepresentations induce a counterparty to enter a transaction without the relevant facts necessary to make an informed economic decision." Binday, 804 F.3d at 579.
In this case, Mr. Jackson concedes that "the Government established that [he] made some misrepresentations that may have amounted to deceit, " but he insists that the Government offered "no direct evidence" of intent. (Jackson's Mot. for J. Acquittal at 4.)
As a preliminary matter, as this Court instructed the jury, and as the Second Circuit "ha[s] repeatedly emphasized, . . . 'intent to defraud' can be established by circumstantial evidence." United States v. Couto, 383 F.App'x 30, 33 (2d Cir. 2010) (citing United States v. Guadagna, 183 F.3d 122, 129 (2d Cir. 1999)); see Romano, 794 F.3d at 335 ("A defendant's fraudulent intent may be proven entirely through circumstantial evidence."). Moreover, the Government here presented ample evidence from which a reasonable jury could have found intent to defraud.
The jury heard testimony from ten individuals who had paid Mr. Jackson sums of money ranging from $35, 000 to $100, 000, in addition to up to $1 million in escrow, to secure funding for various ventures. Mr. Jackson represented to every one of these individuals that if they did not receive their funding, they would be entitled to a full refund, and that no money would leave the escrow account without their explicit consent. (See, e.g., Jackson Testimony, Ex. 1 to Gov't's Opp'n [Doc. # 174] at 66-67, 73-74.) Notwithstanding those representations, only one of the victims received so much as a partial refund, though none of the victims received their funding. (See Id. at 71.) Further, individuals who never agreed to the release of their escrow funds testified that the funds were nonetheless released to others. The Government presented evidence to show that at least some of the released escrow funds were placed directly into an American Capital Holdings' account and used for Mr. Jackson's personal expenses.
The Government also submitted evidence that Mr. Jackson had made other misrepresentations to the victims to induce them to do business with him, and many victims stated that they would not have done business with Mr. Jackson had they known the truth about these misrepresentations. Several victims testified that Mr. Jackson had told them that he had successfully made "many" loans in the past. Michael Healy, for example, testified that Mr. Jackson had stated to him that he "did a loan every month in the amount of $100 million." Dale McClean testified that Mr. Jackson represented to him that he had "closed tens of deals for millions of dollars." Valerie Hill-Rawls likewise testified that Mr. Jackson had told her that he had successfully closed loans in the past, and Mitchell Koep stated that Mr. Jackson had represented to him that he had closed millions of dollars of loans. In fact, as Mr. Jackson admitted at trial, he had never successfully funded a loan.
The Government additionally offered evidence that Mr. Jackson had provided prospective clients with a reference from co-conspirator Mariame Robinson-Cowan. The evidence showed, and Ms. Robinson-Cowan testified, that Mr. Jackson paid her to tell prospective clients that she had obtained large loans from Mr. Jackson although this was not true. Indeed, Mr. Jackson himself testified that Ms. Robinson-Cowan's statements to prospective clients "might have been an exaggeration" and that in fact, he had never closed "one of these loans." (Id. at 73, 74.)
Finally, Mr. Jackson admitted that he used several aliases in his business dealings, alternatively calling himself C. David Mann, Andrew Smithson, and Charles Jackson. Mr. Jackson testified that he used these names for "profiling" his company, i.e., making it seem bigger than it was. The jury, however, could reasonably have drawn a different conclusion from Mr. Jackson's use of aliases-namely, that he did not want prospective clients to know about his criminal record. Indeed, Kelly Thoma testified that after googling "Smithson" and "American Capital Holdings, " she had learned that "Charles Jackson" had been to jail. She asked "Mr. Smithson" if "Charles Jackson" was still involved in the business, and he emphatically assured her that "Charles Jackson" was no longer affiliated with the business and was in jail "where he belonged."
Mr. Jackson contends, however, that the evidence submitted at trial is "just as reasonably construed as evidence of [his] good faith." (Mot. for J. Acquittal at 8.) In so arguing, Mr. Jackson misconstrues the standard for granting a judgment of acquittal. In considering a motion under Rule 29(c), the "Court must view the evidence presented at trial in the light most favorable to the Government, and draw all reasonable inferences in its favor." Cote, 544 F.3d at 98. Doing so here, the Court finds ample evidence from which a reasonable jury could have found that Mr. Jackson acted with fraudulent intent.
Accordingly, Defendant Jackson has not met his heavy burden under Rule 29 of establishing that there was insufficient evidence upon which the jury could have relied to find him guilty, and thus a ...