United States v. Matthew Giovenco
2014 U.S. App. LEXIS 23104
| 7th Cir. | 2014Background
- Matthew Giovenco and Guy Potter operated ICS Cable, which they fraudulently certified as a Minority Business Enterprise (MBE) to obtain city-favored subcontracting work from RCN pursuant to Chicago’s MBE program.
- From 2003–2006 RCN was ICS’s sole client; RCN paid ICS $8,303,562 for subcontract work obtained through the fraudulent MBE status.
- Giovenco and Potter recruited a Black front-man to pose as ICS’s president while white principals controlled management; they shared the profits with co-schemers.
- Giovenco signed the 2006 subcontract that triggered RCN payments but was later fired; several charged mailings (checks mailed to Potter) occurred after his firing.
- Both defendants were convicted on six counts of mail fraud; Giovenco moved for acquittal arguing he had withdrawn before the charged mailings, and Potter contested a Guidelines loss enhancement at sentencing.
- The district court denied Giovenco’s acquittal motions, applied a loss-based Guidelines enhancement (measuring loss at $8.3M under Application Note 3(F)(v)), and sentenced Potter and Giovenco; the Seventh Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether withdrawal from a scheme after participation negates mail-fraud liability | Giovenco: He withdrew (was fired) before the charged mailings, so he cannot be held liable for those mailings | Government: Withdrawal is not a defense to mail fraud; prior participation and foreseeability of mailings suffice | Held: Affirmed conviction — withdrawal is not a defense to mail fraud; prior knowing participation and foreseeability of mailings support liability |
| Whether RCN suffered a "loss" for Guidelines loss-calculation purposes, justifying a 16-level enhancement | Potter: No actual loss because RCN received contracted services; therefore Guideline enhancement is improper | Government/District Court: Application Note 3(F)(v) covers fraudulently obtained regulatory approval — loss includes amounts paid without credit for value received; alternatively, defendant gain also supports enhancement | Held: Affirmed — Application Note 3(F)(v) applies so $8.3M counts as loss; alternatively, $2.2M gain would yield same offense-level result |
Key Cases Cited
- Seidling v. United States, 737 F.3d 1155 (7th Cir. 2013) (standard for reviewing denial of judgment of acquittal and mail fraud elements)
- Read v. United States, 658 F.2d 1225 (7th Cir. 1981) (withdrawal is not a defense to mail fraud because no agreement element exists)
- Adeniji v. United States, 221 F.3d 1020 (7th Cir. 2000) (mail fraud requires participation in scheme, not membership in an agreement)
- Daniel v. United States, 749 F.3d 608 (7th Cir. 2014) (personal mailing not required; use of mails must be reasonably foreseeable)
- Briscoe v. United States, 65 F.3d 576 (7th Cir. 1995) (similar principle: government need not show defendant personally mailed items)
- Lane v. United States, 323 F.3d 568 (7th Cir. 2003) (district court has discretion to adjust loss to reflect economic realities of the crime)