United States v. Carpenter
2011 U.S. Dist. LEXIS 98548
D. Mass.2011Background
- Daniel E. Carpenter was tried on a superseding indictment charging nineteen counts of mail and wire fraud arising from Benistar Property Exchange's handling of exchangors' funds.
- Benistar, led by Carpenter, used a qualified intermediary model for § 1031 exchanges, holding exchangor funds in accounts at Merrill Lynch or PaineWebber and investing them.
- Exchangors were provided documents and marketing materials containing representations about fund safety and investment handling allegedly false when funds were invested in stock options.
- The government argued Carpenter had specific intent to defraud by misrepresenting how funds would be held and invested; the defense asserted good faith and discretionary investment authority under the agreements.
- Evidence showed various exchange documents, escrow agreements, and account forms naming Benistar as intermediary with control over funds and investment options.
- The jury found Carpenter guilty on all counts, but the judge later vacated the conviction and granted a new trial due to prejudicial government conduct and improper framing of the representations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Sufficiency of evidence for each count | Prosecution argued documents and conduct showed knowing, willful fraudulent intent. | Evidence failed to prove specific intent to defraud beyond reasonable doubt. | Sufficient evidence supported conviction on all counts |
| Good faith as a defense to mail/wire fraud | Government contends good faith does not defeat intent to defraud where representations were false. | If honest belief in the truth of representations exists, good faith negates specific intent to defraud. | Good faith did not defeat conviction; substantial evidence supported intent to defraud |
| Impermissible government conduct requiring new trial | Prosecution's references to profits and greed were permissible framing of the case. | Closing and argument improperly urged improper theories and mischaracterized documents, tainting verdict. | New trial granted due to likely influence of improper government conduct |
| Impact of alleged representations of safety and security | Documents and materials conveyed safety and security of funds. | Any representations were not explicit; truth depends on contract terms and proper interpretation. | Court found mischaracterization of representations and error that supported new trial |
Key Cases Cited
- United States v. Woodward, 149 F.3d 46 (1st Cir. 1998) (defining elements of mail and wire fraud; burden to prove participation in scheme)
- United States v. Sawyer, 85 F.3d 713 (1st Cir. 1996) (reiterates standard for fraud schemes and use of mails or wires)
- United States v. Rothrock, 806 F.2d 318 (1st Cir. 1986) (circumscribed review of jury verdicts under Rule 29)
- United States v. Duclos, 214 F.3d 27 (1st Cir. 2000) (statement of standard for sufficiency of the evidence)
- United States v. Scharon, 187 F.3d 17 (1st Cir. 1999) (standard for judging sufficiency when evidence invites reasonable doubt)
- United States v. Andujar, 49 F.3d 16 (1st Cir. 1995) (guidance on reasonable doubt and circumstantial evidence)
- United States v. Mueffelman, 470 F.3d 33 (1st Cir. 2006) (good faith is a defense to fraud that must be disproved beyond reasonable doubt)
- United States v. Dockray, 943 F.2d 152 (1st Cir. 1991) (role of good faith in fraud prosecutions)
- United States v. Carpenter, 494 F.3d 13 (1st Cir. 2007) (discusses standards for improperly focusing trials on improper themes)
- United States v. Azubike, 504 F.3d 30 (1st Cir. 2007) (new trial warranted when government conduct taints verdict)