894 F.3d 173
5th Cir.2018Background
- From 2004–2010 David L. Spalding raised about $3.75 million from ~97 lenders through Wind Plus and Baseload Energy by promising quick repayment and stock options while representing funds would be used for the businesses.
- In truth Spalding diverted large portions of investor funds to personal expenses (housing, luxury items, vacations, wedding, etc.), and used multiple corporate bank accounts and a shell account to conceal transfers.
- Wind Plus had no coherent business plan, poor financial controls, unpaid debts, and bankruptcy filings that converted from Chapter 11 to Chapter 7; trustees and a forensic accountant documented missing financial records and unusual expenditures.
- A grand jury indicted Spalding on wire fraud, mail fraud, two counts of false testimony under oath in bankruptcy, and two counts of bankruptcy fraud; the jury convicted on six counts and the district court sentenced him to 180 months, restitution, and forfeiture.
- On appeal Spalding challenged sufficiency of evidence for fraud and perjury, denial of suppression under the Fifth Amendment, admission of summary charts (Rule 1006), several jury-instruction issues, and multiple sentencing rulings (Guidelines manual choice, enhancements, and loss calculation).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Sufficiency of evidence for mail/wire fraud | Gov: scheme, interstate wires/mails, and specific intent proven by misrepresentations, concealment, and admissions | Spalding: business setbacks and inexperience, not fraudulent intent; some legitimate business activity | Affirmed: evidence supports scheme and intent; concealment and false updates supported conviction |
| Perjury/false testimony in bankruptcy (18 U.S.C. §152(2)) | Gov: Spalding knowingly made materially false statements about noteholders’ number, repayments, and dates | Spalding: answers were literally true, evasive, or opinions (invoking Bronston) | Affirmed: statements were responsive and false; Bronston inapplicable to responsive falsehoods |
| Denial of motion to suppress deposition testimony (Fifth Amendment) | Spalding: state-court deposition was compelled and thus should be suppressed | Government: Spalding never timely invoked the Fifth in deposition; no record of what he would have said at trial | Affirmed: claim unreviewable (no proffer of what he would have testified) and not compelled—he failed to invoke privilege timely |
| Admission of summary charts/analyst opinions (Rule 1006) | Spalding: charts improperly injected expert inferences (personal-expense labels) beyond underlying records | Government: charts based on voluminous bank records; analyst explained methodology and was cross-examined; jury instructed | Any error harmless: charts supported by underlying evidence, analyst cross-examined, limiting/admonitory instructions given |
| Jury instructions (wire fraud element, constructive amendment, perjury "literally true") | Spalding: omission of word ‘false’ harmed Count One; instruction altered Count Three; court refused Bronston-based instruction | Government: omission cured by general instruction; parties stipulated interstate nexus; pattern instructions otherwise correct | Affirmed: no reversible error; objections forfeited or below plain-error threshold; instructions adequately covered law |
| Sentencing: Guidelines manual, enhancements, loss amount | Spalding: should be sentenced under 2015 manual; contest sophisticated-means and broker-enhancements and loss calculation | Government: Spalding waived applying 2015 manual; factual findings on sophistication and loss supported; services rendered did not offset loss | Affirmed: waiver of 2015 manual binding; sophisticated-means enhancement proper; loss calculation reasonable—no offset for alleged business expenses |
Key Cases Cited
- United States v. Gibson, 875 F.3d 179 (5th Cir. 2017) (standard for sufficiency review)
- Vargas-Ocampo, 747 F.3d 299 (5th Cir. 2014) (discussing sufficiency and equipoise rule abrogation)
- Bronston v. United States, 409 U.S. 352 (1973) (literally true but unresponsive answers and limits of perjury prosecutions)
- United States v. Bishop, 264 F.3d 535 (5th Cir. 2001) (Rule 1006 summaries—requirements and instruction guidance)
- United States v. Smyth, 556 F.2d 1179 (5th Cir. 1977) (warning against argumentative matter in summary exhibits)
- Mezzanatto v. United States, 513 U.S. 196 (1995) (waiver of rights by voluntary agreement)
- United States v. Byors, 586 F.3d 222 (2d Cir. 2009) (no offset to loss for "legitimate business expenditures" that confer no value to victims)