The opinion of the court was delivered by: William M. Skretny Chief Judge United States District Court
On February 23, 2011, after an eleven-day trial, the jury returned a guilty verdict against Defendant Ian Campbell Gent on counts 5 through 27 of a 27-count redacted indictment, which charged him with violating 18 U.S.C. §§ 2, 1341 (mail fraud and aiding and abetting mail fraud) and 18 U.S.C. § 1349 (conspiracy to commit mail fraud). The jury also returned a guilty verdict against Defendant James Lagona on all 27 counts of the redacted indictment, with counts 1-4 of that indictment also being for violations of 18 U.S.C. §§ 2, 1341.
Defendants now each move this Court to grant a judgment of acquittal pursuant to Rule 29 of the Federal Rules of Criminal Procedure or, alternatively, a new trial pursuant to Rule 33. For the reasons discussed below, Defendants' motions for judgments of acquittal and new trials are denied.
The charges of mail fraud and conspiracy to commit mail fraud relate to Defendants' involvement in the sale of debentures under the names Watermark Financial Services Group or Watermark M-One Holdings, Inc. (Tr. 60-61; Gov't Exs. 4.04, 5.21, 11.19, 12.11, 12.25, 12.39, 22.20, 22.22, 22.23, 28, 30, 64). Starting in January 2006, sales staff, originally hired by M-One Financial prior to the formation of Watermark Financial Services in 2005, would offer clients investment opportunities in one- or two-year debentures that promised 10% annual interest. (Tr. 53, 59-62; Deposition of Lorenzo Altadonna, Gov't Ex. 201, at 23). The prospective investments pitched to clients included real estate development in Maine and a health insurance network for religious institutions. (T. 60, 397-398, 403-404, 643; Altadonna Dep. at 91-93; Gov't Ex. 29). Sales staff had interested clients sign paperwork opening self-directed individual retirement accounts ("IRA"s) with PENSCO Trust Company, a custodian for such accounts,*fn1 into which client funds were either directly deposited or rolled-over from an existent IRA. (Tr. 173, 397-398, 636). This same paperwork also authorized transfer of funds from the newly created PENSCO account back to Watermark for the debentures. (See e.g. Gov't Ex. 5.13). Clients who invested did not understand that the "convertible debentures" they were purchasing were unsecured loans to Watermark which, prior to the due date for repayment, could be converted into shares of common stock in the company. (Tr. 398; Altadonna Dep at 132; see e.g. Gov't Ex. 30 at 1, 3). The clients that testified at trial explained that, based on representations made to them, they believed that they were making a safe, guaranteed investment with little to no risk. (Tr. 387-389, 402-403, 413, 555, 585, 592-595, 693, 704-705). Between January 2006 and May 2008, $6,758,027 was solicited from clients, however, only $241,000 was actually invested, and only $545,064 in principal and/or interest was returned to clients. Tr. 1018-1026; Gov't Ex. 100.25.
Defendants Ian Campbell Gent and James Lagona were originally indicted along with Guy W. Gane, Jr., for mail fraud and conspiracy. Docket No. 1. Gane subsequently pleaded guilty to one count of mail fraud in violation of 18 U.S.C. § 1341 and one count of money laundering in violation of 18 U.S.C. § 1957. (Docket No. 35). A jury trial commenced before this Court on the charges against the remaining Defendants, at which Gane testified as part of the Government's case in chief. After the close of the Government's proof, this Court dismissed Counts 25, 28, 29 and 31 of the original indictment upon the Government's motion. (Tr. 1030-1031). Defendants Gent and Lagona each moved for a judgment of acquittal pursuant to Rule 29. (Tr. 1041-1043, 1047). Defendant Gent's motion was granted insofar as Counts 1, 2, 3, and 4 were dismissed against him, but otherwise denied. (Tr. 1054-1055). Defendant Lagona's motion was denied in its entirety. (Id.).
Following this Court's ruling, each Defendant testified in his own behalf, and the Government presented one rebuttal witness. The jury returned a guilty verdict against Defendant Gent on counts 5 through 27 of the redacted indictment, and a guilty verdict against Defendant Lagona on all 27 counts of the redacted indictment. Following the verdict, Defendants each moved for a judgment of acquittal and, alternatively, for a new trial.
Pursuant to Rule 29, a court must, upon a defendant's motion,*fn2 "enter a judgment of acquittal of any offense for which the evidence is insufficient to sustain a conviction." A defendant challenging the sufficiency of the evidence bears a heavy burden. United States v. Finley, 245 F.3d 199, 202 (2d Cir. 2001), cert denied 534 U.S. 1144 (2002). "In evaluating whether the evidence was sufficient to convict a defendant, [a reviewing court] consider[s] all of the evidence, both direct and circumstantial, 'in the light most favorable to the government, crediting every inference that the jury might have drawn in favor of the government.'" United States v. Velasquez, 271 F.3d 364, 370 (2d Cir. 2001), cert denied 535 U.S. 965 (2002), quoting United States v. Walker, 191 F.3d 326, 333 (2d Cir. 1999), cert denied 529 U.S. 1080 (2000). When considering the trial evidence, "the court must be careful to avoid usurping the role of the jury." United States v. Jackson, 335 F.3d 170, 180 (2d Cir. 2003). The court may not "substitute its own determination of . . . the weight of the evidence and the reasonable inferences to be drawn for that of the jury." United States v. Guadagna, 183 F.3d 122, 130 (2d Cir. 1999)(internal quotation marks and citations omitted). The credibility of the witnesses falls strictly within the province of the jury. Guadagna, 183 F.3d at 129 (noting that the court must defer to the jury even if the evidence would also support, in the court's opinion, a different result). A judgment of acquittal is warranted only if the court concludes that the evidence that the defendant committed the crime is non-existent or so meager no rational trier of fact could have found the defendant guilty beyond a reasonable doubt. Velasquez, 271 F.3d at 270; Guadagna, 183 F.3d at 130.
In determining whether a defendant is entitled to an acquittal, the evidence is considered "in its totality, not in isolation, and the government need not negate every possible theory of innocence." United States v. Cote, 544 F.3d 88, 98 (2d Cir. 2008); see Guadagna, 183 F.3d at 130 ("each fact may gain color from the others"). "[W]hen a motion for judgment of acquittal made at the close of the government's case-in-chief is denied and a defendant presents a case, then the evidence put in by the defense will also be considered in deciding a Fed.R.Crim.P. 29(c) motion made after the trial ends." United States v. Truman, 762 F.Supp.2d 437, 445 (N.D.N.Y. 2011); Velasquez, 271 F.3d at 371. Here, each Defendant moved for acquittal at the close of the Government's case-in-chief, Tr. 1041-1047, and each decided to testify on his own behalf following this Court's denial, in whole or in part, of his motion. Tr. 1054-1055, 1062, 1278. Defendants have therefore waived any claim as to the sufficiency of the Government's cases considered alone. Velasquez, 271 F.3d at 371. "A defendant's testimony may thus add weight to the government's case. To put it another way, a jury may 'use its disbelief [of a defendant's testimony] to supplement the other evidence against him.' " Velasquez, 271 F.3d at 371, quoting United States v. Stanley, 928 F.2d 575, 577 (2d Cir.1991).
Defendants were convicted of violating 18 U.S.C. §§ 2, 1341, and 1349 for acts of mail fraud, aiding and abetting mail fraud, and conspiracy to commit mail fraud. The substantive counts of mail fraud have "three elements: (1) use of the mails to further (2) a scheme to defraud with (3) money or property as the object of the scheme." United States v. Kinney, 211 F.3d 13, 17 (2d Cir. 2000), cert denied 531 U.S. 1079 (2001)(quotation marks omitted); see United States v. Somerstein, 971 F.Supp. 736, 741 (E.D.N.Y. 1997)(a conviction requires a specific intent to defraud). To establish the 'use of the mails' element, the Government must show either that the use of the mails would follow in the ordinary course of business, or that such use could reasonably be foreseen, even if not actually intended. United States v. Alkins, 925 F.2d 541, 549 (2d Cir. 1991); see United States v. Naiman, 211 F.3d 40, 49 (2d Cir. 2000). Because good faith is a complete defense to mail fraud, the government is also required to prove a lack of good faith beyond a reasonable doubt. Alkins, 925 F.2d at 549-550.
"Conspiracy constitutes a crime, separate and distinct from the substantive offense." Somerstein, 971 F.Supp at 746; see 18 U.S.C. § 1349; United States v. Pinckney, 85 F.3d 4, 8 (2d Cir. 1996). "Conspiracy requires proof of: (1) an agreement among the conspirators to commit an offense; (2) specific intent to achieve the objective of the conspiracy; and (3) usually, an overt act to effect the object of the conspiracy." Pinckney, 85 F.3d at 8. "[I]n order to prove a defendant guilty of conspiracy, the government need not show that he knew all of the details of the conspiracy, so long as he knew its general nature and extent." United States v. Rosa, 17 F.3d 1531, 1543 (2d Cir. 1994), cert denied 513 U.S. 879 (1994). Circumstantial evidence may be sufficient to establish that a defendant knowingly joined and participated in the charged conspiracy. Rosa, 17 F.3d at 1543-1544. "The deference accorded to the jury's verdict 'is especially important when reviewing a conviction of conspiracy ... because a conspiracy by its very nature is a secretive operation, and it is a rare case where all aspects of a conspiracy can be laid bare in court with the precision of a surgeon's scalpel.' " United States v. Guerrero, __ F. Supp.2d __, 2011 WL 6013957, *19 (S.D.N.Y. 2011), quoting United States v. Pitre, 960 F.2d 1112, 1121 (2d Cir.1992).
Finally, as charged here, each Defendant could be found criminally liable for each mail fraud count based upon a finding that he willfully caused or aided and abetted the commission of the crime. 18 U.S.C. § 2; Pereira v. United States, 347 U.S. 1, 9, 74 S.Ct. 358, 98 L.Ed. 435 (1954). The jury was also charged that Defendants could be found guilty of the substantive mail fraud charges under a theory of coconspirator liability. Tr. 1533-1536. Under this theory, "[o]nce a conspiracy has been established, the criminal liability of its members extends to all acts of wrongdoing occurring during the course of and in furtherance of the conspiracy." United States v. Gallerani, 68 F.3d 611, 620 (2d Cir. 1995) (internal quotation marks omitted); see generally Pinkerton v. United States, 328 U.S. 640, 66 S.Ct. 1180, 90 L.Ed. 1489 (1946). Thus, it was permissible for the jury to find each Defendant "guilty on a substantive count without specific evidence that he committed the act charged if it is clear that the offense had been committed, that it had been committed in the furtherance of an unlawful conspiracy, and that the defendant was a member of that conspiracy." Gallerani, 68 F.3d at 620 (internal quotation marks omitted).
This Court finds that there was sufficient evidence presented at trial from which the jury could conclude that the solicitation of investment funds was in fact a fraudulent scheme, that Gent and Lagona were each aware of the fraudulent nature and extent of that scheme, and that they collectively participated in furtherance of this scheme. Pinckney, 85 F.3d at 8; Rosa, 17 F.3d at 1543. There is also sufficient evidence to support the conclusion that the use of the mails, including a private commercial carrier, was reasonably foreseeable. Alkins, 925 F.2d at 549.
1. Fraudulent scheme Evidence supported a conclusion that the sales representations made to potential investors were false. Individuals who invested funds offered testimony that a salesperson assured them that the investment was "guaranteed" and there was "no risk." Tr. 387-389, 402-403, 413, 555, 585, 592-595, 693, 704-705; Gov't Ex. 5.04; see Tr. 422-423, 428, 632 (corroborating testimony of salespersons). A business plan for Watermark Financial prepared for prospective investors indicated that any idle funds would be invested in treasury bills. Tr. 80-81, Gov't Ex. 29. Other witnesses testified that, based on the representations of salespersons, they believed that they were setting up a secure retirement account, and these witnesses did not understand that they were in fact making an unsecured loan. Tr. 392, 515-516, 520, 523, 546-547, 549, 554, 585, 691. One witness testified that he was led to believe that he was placing his money in something like a certificate of deposit "where you're guaranteed 10 percent of your initial investment after one year of maturity." Tr. 555.
The 'guaranteed return of 10%' and the assurances of a stable, safe place to invest are belied by the record. Gane testified that the incoming client funds were not invested in either real estate or in treasury bills, but were used for salaries and expenses, including personal expenses such as alimony. Tr. 79-81, 96-97, 165. Many potential investors were pitched on the development of Maine property even after that potential deal had fallen through, and no real estate investment was made during the two-plus years at issue. Tr. 63, 82, 257, 397-398, 401-403, 410-412, 643. The investment documents prepared by salespeople and presented to clients for their signature revealed that clients were in fact opening or transferring funds into a self-directed IRA and then making an unsecured loan to Watermark. See e.g. Gov't Exs. 5.07, 5.14-5.16, 5.21, 11.05-11.15, 12.07, 12.25. Witnesses who invested testified that these numerous forms were presented to them already completed, and the sales person would indicate where signatures were required. Tr. 513-514, 548, 588-589, 687-688. Further testimony indicated that investors signed the forms without reading because they had discussed the investment with a salesperson they trusted. Tr. 392, 522-523, 555, 590, 691, 729-730. The jury was also presented with evidence that over six million dollars was received from investors between January 1, 2006 and May 2008. Tr. 1018-1020, Gov't Ex. 100.25. From those funds, however, only $545,064 was repaid to investors and only $241,000 was invested in startup companies. Tr. 1022-1026; Gov't Exs. 100, 100.25. Witnesses also testified that they would not have invested if the true state of affairs had been clear, Tr. 527-528, 560, 694-695, and thus the "misrepresentations went to an essential element of the bargain." United States v. Schwartz, 924 F.2d 410, 420-421 (2d Cir. 1991); see United States v. Walker, 191 F.3d 326, 335-336 (2d Cir. 1999), cert denied 529 U.S. 1080 (2000); United States v. Kuna, 760 F.2d 813, 819-820 (7th Cir. 1985)(evidence that defendant concealed risk by sending false financial reports, promoting false sense of security, sufficient to support mail fraud conviction).
Despite the absence of all but nominal investments, clients were continuously assured that their accounts were doing well and had in fact already earned money. Tr. 390, 530, 535-536, 564-565, 596-597, 600-601, 705-706, 708-718 731-732; Altadonna Dep at 53; see United States v. Sampson, 371 U.S. 75, 80-81, 83 S.Ct. 173, 9 L.Ed.2d 136 (1962)(the use of false assurances that promised services would be performed was part of fraudulent scheme); United States v. Angelilli, 660 F.2d 23, 36-37 (2d Cir. 1981), cert denied 455 U.S. 910 (1982)(same). Such assurances included those in the April 7, 2008 letters signed by Lagona stating that, according to Watermark records, investments had retained their full value plus interest. Gov't Exs. 5.02, 11.02, 17.02. These letters were sent in response to letters from PENSCO to account holders devaluing the investments in Watermark due to a Securities and Exchange Commission ("SEC") investigation. Tr. 182-186, 476-480, 651-652; see e.g. Gov't Ex. 5.03. Based on testimony that Gane, Gent, and Lagona were aware that there were no assets and no investments at the time the Watermark response letters were sent, Tr. 183, 898-900, as well as evidence that investments continued to be solicited thereafter, Altadonna Dep at 91-93; Gov't Exs. 236, 237, the jury could have rationally concluded that these letters, like the interest payments to the initial investors, "were lulling devices which comprised part of the basic scheme and its desired continued perpetration; and that the scheme applied to persons already victimized to make them a prey for additional investment and to open the way for the successful pursuit of the scheme as to others." Bliss v. United States, 354 F.2d 456, 458 (8th Cir. 1966), cert denied 384 U.S. 963 (1966); see Sampson, 371 U.S. at 80-81; Kuna, 760 F.2d at 819-820. Thus, contrary to Defendants' contentions, these letters, which serve as the basis for Counts 23 through 26 of the redacted indictment, were properly found to be part of the fraudulent scheme.
There was therefore sufficient evidence from which the jury could find not just a fraudulent investment scheme, but also a specific intent to harm on the part of all participants therein. See Schwartz, 924 F2d at 421.
2. Knowing and Voluntary Participation in the Fraudulent Scheme Evidence also supports the conclusion that both Gent and Lagona knowingly participated together in the furtherance of this fraudulent scheme. See Kinney, 211 F.3d at 17; Pickney, 85 F.3d at 8. Lagona was hired in 2005 to work for Watermark, prior to the sale of the first debenture in January 2006, and Gane informed him that the incoming funds would be used for salaries and expenses. Tr. 67-68, 96. Lagona prepared all debentures, Tr. 92-93, those initial debentures became due in January 2007, and Gane testified that Lagona was aware that no investments had been made, the investment funds had otherwise been spent, and new investment funds were being used to pay off the amounts owed. Tr. 84-90, 92-94 96-97; see Gov't Exs. 4.02, 4.03. Lagona nonetheless continued to prepare debentures. Tr. 92-93, 96-97. Gane further testified that shortly after Gent started his employment in the "middle of March, I believe, of 2007," Gane discussed with Gent and Lagona the use of new investor money to pay old investors. Tr. 102, 108. According to Gane, when he suggested that they contact the authorities, referencing the SEC and the National Association of Security Dealers ("NASD," subsequently named Financial Industry Regulatory Authority or "FINRA"), regarding the inability to repay investors, both Gent and Lagona told him that he was crazy. Tr. 108-109, 824, 835. Gent responded that there were different ways to fix this problem than to go to the authorities. Tr. 109. Both Lagona and Gent were also present when Gane asked bookkeeper Jane Furlani to take home financial records in late December 2007 or early January 2008 because FINRA or the SEC would want to review them. Tr. 773, 775-776. Furlani also testified that Gane, Gent, and Lagona were present at meetings "at least weekly" where accounting concerns were discussed. Tr. 774. Diane Bonvissuto, the compliance officer, testified that she spoke with Gane, Gent, and Lagona regarding the possible improprieties with debenture sales, particularly with respect to whether the debentures constituted securities requiring registration. Tr. 835.
Gent and Lagona each directly interacted with clients, either by participating in sales meetings, Tr. 142-143, assuring clients that investments were doing well, Tr. 530, 729-732, or promising that funds were forthcoming. Tr. 530, 602-604, 711-721. Both were participants in discussions with Gane on, for example, convincing the Church of St. Albert the Great to continue its debenture on a month to month basis at a time when no funds were available to pay the amount due, Tr. 142-143, 880-881, and on the company's lack of assets as of January 2008. Tr. 898-900. Further, Bonvissuto testified that Gent told her that she "really shouldn't be exposed to [debentures] in case [she] did have to testify. They didn't want [her] to know anything." Tr. 822. Gent told Bonvissuto that Gane needed "to continue to sell the debentures, and [Gent] talked to some other people, and they said basically whether you sell one or 100 debentures it's still going to be the same penalty. And they were trying to make it so that if they raised enough money, nobody would get hurt in this ordeal." Tr. 831-834. Gent subsequently informed her that the FINRA representative gave the company permission to continue selling debentures "as long as nobody is going to lose any money and get hurt." Tr. 841. Notably, that FINRA representative, Robert McCarthy, flatly denied during his testimony making any such representation to Gent, as using money obtained from later investors to pay off earlier ones "would have been indicative of a Ponzi scheme." Tr. 962.
The jury heard evidence that, in addition to preparing the debentures, Tr. 92-94, Altadonna Dep. at 29-30, Lagona tracked or tallied the money coming in from the sale thereof, Tr. 94, 843-845, and, according to one salesperson, explained the debentures to the salespeople. Altadonna Dep. at 132. Further, contrary to his contention, there was sufficient evidence that Lagona signed and sent the response letters to clients following PENSCO's devaluing of investments with Watermark. Tr. 180-188, 651-655, 674-675, 1430-1432. These letters from Lagona on behalf of 'WaterMark M-One' state that investments had retained value and continued to accrue 10% per year. Tr. 186; Gov't Exs. 5.02, 11.02, 17.01, 22.02. There was evidence that Lagona specifically discussed with Gane the fact that these letters should indicate "[t]hat the customer's full value of their account was on the books at Watermark M-One." Tr. 651-652. Gent also participated in discussions regarding the need for these letters with Lagona before they were sent. Tr. 182-183, 651-652. As noted, Gane, Gent, and Lagona were aware at that time of the lack of either assets or investments to support these assertions, therefore Watermark's records could not have shown that the investments had retained full value plus interest. Tr. 183, 187-188, 898-900. Additional investor funds were solicited even after these letters were sent on or about April 7, 2008. See Gov't Exs. 100.25, 236, 237. Notably, one of those later clients agreed to rollover $76,000 of distributed IRA funds for the investment. Altadonna Dep at 91-93; Gov't Ex. 237. Lorenzo Altadonna, who made this sale, testified that this investment was required to go through PENSCO, but although the client filled out the forms to do so, at Gane's instructions the check was made out directly to Watermark M-One Holdings. Altadonna Dep. at 92-93; Gov't Ex. 236. Altadonna gave the completed PENSO paperwork and the check to Gent, Altadonna Dep. at 94, following which the funds were not sent to PENSCO, but were deposited in a Watermark account the next day.
Gov't Exs. 100.18, 100.25.
The jury could have reasonably concluded from the evidence above that Defendants were not acting in good faith. According to Gane, Gent initially proposed to 'repaper' the company, Tr. 101, 877. Gent testified that "what Watermark was trying to do" was engage in a process of admitting that notes or stock in a company were "unintentionally sold," and obtaining an exemption from the New York State Attorney General by offering those investors either a right of rescission or conversion of the note into an investment in the new company "[a]nd then everything is legal." Tr. 1096-1097; see 112. The jury could have concluded from this testimony that Gent recognized that the sale of debentures was improper, nonetheless debentures continued to be sold during Gent's tenure even as the interest on prior debentures came due. Gent also admitted that this right of rescission was never completed. Tr. 1098; see Tr. 112. Further, contrary to Lagona's arguments, there was no evidence that significant progress toward actual investments occurred. Although approximately $241,000 was invested in startup companies, it was rational for the jury to find this amount insignificant when compared with the over $6 million in investor funds received, and further conclude that the primary purpose of the operation was to fraudulently deprive clients of money.
There is also no merit in the argument that the evidence established Defendants' reasonable belief that a purported additional investor, Konstantinos "Kostas" Samouilidis, would commit $5 million dollars to purchase stock in Watermark. Tr. 120-122, 766-767, 1077-1087, 1232-1250. The jury was presented evidence that Defendants were involved with Samouilidis for over a year, during which time Samouilidis not only failed to invest any money, but in fact received over $600,000 in purported loans from Watermark. Tr. 123- 129, 130-131, 890-891, 901, 972-973, 991-993, 1101, 1104-1105, 1120, 1249-1250, 1267, 1315-1316; Altadonna Dep. at 111-117; Gov't Exs. 238-240. No written agreement was ever executed with Samouilidis regarding these loans. Tr. 767-768, 994, 1147-1148, 1261-1262; Altadonna Dep. at 119. The jury could have rationally concluded from the evidence presented regarding Samouilidis that, as one witness testified, the process of constantly sending money to someone who ostensibly had millions of dollars to invest "sounded like a con," Tr. 768, and that any reliance on Samouilidis' promised investment was unreasonable.
Gent further argues that Count 5,*fn3 which alleges the use of the mails to defraud a client of $6,500 on March 22, 2007, must be dismissed as against him. Gent argues that this charge predates any proof of his employment, as evidenced by an April 3, 2007 email from Gane indicating that Gent had been asked to become a paid consultant. Aff of Robert A. Liebers, Docket No. 88-1, ¶¶ 5-6, Ex. A; Gov't Ex. 3504.09. Gent correctly asserts that with regard to liability for substantive offenses, as opposed to liability for the conspiracy itself, "a defendant cannot be retroactively liable for offenses committed prior to his joining the conspiracy." United States v. Blackmon, 839 F.2d 900, 908-909 (2d Cir. 1988). Here, however, the trial record contains sufficient evidence to support a jury finding that Gent entered into the conspiracy to defraud prior to March 2007. Gane testified that he first began to speak with Gent regarding his business, then M-One Financial, in the fall of 2004 or beginning of 2005. Tr. 98-99. Discussions regarding Gent joining Watermark as a consultant or employee were held in the fall of 2006 and into January and February 2007. Tr. 99. Gane testified that he spoke with Gent about selling debentures in the "[v]ery beginning of 2007," specifically "January, February," prior to Gent becoming officially associated with Gane's company in the "middle of March, I believe, of 2007." Tr. 100-101. Gent himself testified that Gane contacted him in the third week of March 2007. Tr. 1062-1063. Further, Gane's testimony that Gent became an employee in mid-March is not contradicted by Gane's April email, which recognizes that Gane had already asked Gent to become a paid consultant. Gov't Ex. 3504.09. Indeed, as the Government notes, HSBC records for Watermark Financial Services Group show payments to Gent as early as February 9, 2007. Gov't Ex. 100.15. There was therefore sufficient evidence that Gent was involved with the debenture scheme prior to March 22, 2007.
Gent further argues that Counts 6 through 14, which allege substantive mail fraud charges occurring from April 3, 2007 to August 29, 2007, must be dismissed because there was no evidence that he had any knowledge of these individual transactions. Lieber Aff. ¶ 7. Having concluded, however, that there was evidence from which the jury could have concluded that Gent entered the conspiracy earlier than March 22, 2007, and was a knowing participant therein, Gent's criminal liability "extends to all acts of wrongdoing occurring during the course of and in furtherance of the conspiracy" after that date, even in the absence of specific evidence that he participated in each occurrence of mail fraud. Gallerani, 68 F.3d at 620 (internal quotation marks omitted).
3. Use or Cause of Use of the Mails in Furtherance of the Scheme The Government also presented sufficient evidence that the 'use of the mails' would follow in the ordinary course of business. "Where one does an act with knowledge that the use of the mails will follow in the ordinary course of business, or where such use can reasonably be foreseen, even though not actually intended, then he 'causes' the mails to be used." Alkins, 925 F.2d at 549 (internal quotation marks omitted); see Naiman, 211 F.3d at 49. As part of the sale of debentures, salespersons would have individual clients sign an application to open an account with PENSCO Trust Company. Tr.170-173, 457-458, 512-522, 547-549, 586, 636, 687-688; See e.g. Gov't Exs. 5.07, 11.06, 12.05, 22.07, 235. PENSCO Trust Company was a New Hampshire based bank and trust with the primary business of acting as custodian for self-directed retirement accounts, and it had offices located in both New Hampshire and California. Tr. 170-171. 447-450. Witnesses testified that the PENSCO forms they signed were completed by Watermark personnel. Tr. 512-522, 549-555, 585-590, 636-637, 687-688, 691-692. A PENSCO IRA Non-Public Investment Authorization directed that funds placed in the newly opened PENSCO account be sent to Watermark. Tr. 517-518, 551, 586-587, 689; Gov't Exs. 5.13, 11.13, 12.09, 22.14. The related PENSCO Payment and Funding form requires that the funds be sent via check overnight to the Watermark offices in Amherst, New York. Tr. 171-172, 461-463, 518-519, 552-587, 689-690; Gov't Exs. 5.14, 11.14, 12.10, 22.15. The completed, signed applications would then be submitted to PENSCO, and as a direct result, funds would be sent by check overnight via FedEx from PENSCO's California location to Watermark in New York. Tr. 173-175, 461-463. Thus, there was sufficient evidence to conclude that the use of the mails would follow in the ordinary course of this scheme. Alkins, 925 F.2d at 549. Further, salesperson Deborah Galas testified that she mailed the letters responding to the PENSCO devaluation after Lagona signed them. Tr. 656, 674-675.
Finally, Gent argues that the Government failed to establish that FedEx is a private, commercial shipping company, as required by 18 U.S.C. § 1341.*fn4 Gent Supp. Mem of Law, Docket No. 124-1, at 2-3. Even if this Court were to assume that this fact is outside the ken of the average juror, there was still sufficient evidence presented from which the jury could have so concluded. Notably, "the [G]overnment was required to show that FedEx is private or commercial, it does not have to show both." United States v. Mallory, __ F.Supp.2d __, 2010 WL 8375023, *2 (E.D.Va. 2010), affd __ Fed. Appx. __, 2012 WL 149797 (4th Cir. 2012). The FedEx shipping labels in evidence*fn5 state "BILL SENDER," suggesting "that FedEx is an entity that derives revenue from the provision of transportation services and thus it is 'commercial' in nature." Mallory, 2010 WL 8375023, *2. The labels similarly support the conclusion that FedEx is a carrier, inasmuch as the references to billing and shipping charges indicates "that FedEx is an entity that contracts to transport goods for a fee." Id. at *3. Finally, the labels indicate that the checks were shipped interstate between San Francisco, California and Amherst, New York. See Id. at *3.
This Court therefore finds that there was sufficient evidence supporting the jury verdict on all counts, and Defendants' motions for ...