United States v. Andrew Melton
2017 U.S. App. LEXIS 16753
| 8th Cir. | 2017Background
- Andrew Melton was CFO of ThermoEnergy; from 2006–2009 he directed company funds to pay ~monthly checks to Mertins Law Firm that in fact satisfied a personal garnishment against him rather than being withheld from his wages.
- An external auditor discovered large unpaid payroll-tax liabilities in 2008–2009; Melton provided doctored/delayed Forms 940/941 and a memorandum falsely asserting he was negotiating with the IRS.
- ThermoEnergy’s board ordered a forensic audit and restricted Melton’s authority; subsequent forensic work revealed unauthorized personal charges, reimbursements, and mischaracterized disbursements.
- A federal grand jury charged Melton with 12 counts of mail fraud (based on mailed checks to Mertins Law Firm) and 5 counts of failure to pay withholding taxes; a jury convicted on all counts and the district court sentenced him to 84 months (concurrent with 60 months).
- On appeal Melton challenged evidentiary rulings (board minutes, emails, audit reports), portions of the prosecutor’s closing, sufficiency of the mail-fraud evidence, cumulative error, and three Guidelines enhancements (sophisticated means, endangerment of a publicly traded company, obstruction of justice).
Issues
| Issue | Plaintiff's Argument (Government) | Defendant's Argument (Melton) | Held |
|---|---|---|---|
| Admission of board minutes, emails, audit reports | Business records and witnesses’ testimony made them admissible and probative | Minutes and some reports contain prejudicial legal conclusions/hearsay or were prepared in anticipation of litigation | Admission upheld as non-abusive: minutes admissible with limiting instruction; some emails/errors harmless; one forensic report improperly admitted but cumulative and harmless |
| Prosecutor’s closing argument | Counsel may vigorously attack defendant’s credibility and draw reasonable inferences from evidence | Closing remarks were improper and prejudicial, warranting a new trial | Remarks questionable but not plain error; evidence of guilt overwhelming, no miscarriage of justice |
| Sufficiency of mail-fraud convictions | Evidence shows scheme to defraud: diversion of company funds, concealment, doctored tax forms, intent inferred from pattern and control of finances | Payments were minor, could be explained as reimbursements or corporate cash-flow practices; no proof of intent to defraud | Convictions affirmed: viewing evidence favorably to government, reasonable jury could infer fraudulent intent and scheme |
| Guidelines enhancements (sophisticated means; endangering financial security; obstruction) | Facts support enhancements: coordinated concealment, doctored documents, repetitive scheme; conduct harmed company solvency and misled investigators | Company financial problems predated Melton; false statements not proven material/significantly obstructive | District court findings upheld: no clear error on sophisticated means, endangerment, or obstruction enhancements |
Key Cases Cited
- United States v. Two Elk, 536 F.3d 890 (8th Cir.) (trial-court deference on evidentiary rulings)
- United States v. Worman, 622 F.3d 969 (8th Cir.) (harmless-error standard for evidentiary rulings)
- United States v. Loveless, 139 F.3d 587 (8th Cir.) (Rule 403 deference on prejudicial evidence)
- United States v. White, 241 F.3d 1015 (8th Cir.) (plain-error review of prosecutorial remarks in closing)
- United States v. Jenkins, 578 F.3d 745 (8th Cir.) (sophisticated-means enhancement guidance)
- United States v. Wheeler, 412 F.3d 979 (8th Cir.) (endangerment-of-corporate-financial-security enhancement)
- United States v. Montanari, 863 F.3d 775 (8th Cir.) (obstruction enhancement based on false statements)