United States v. Nicholas Krug, 2016 U.S. App. LEXIS 8133

From March 2007 to August 2012, Nicholas Krug and Charles Elliot ran a Ponzi scheme through Sovereign International LLC; investors (including Ruthann Currence) wired funds to Sovereign’s accounts based on promises of high monthly dividends and protection by purported government bonds.
On March 29, 2007, Currence wired $500,000 to Sovereign; funds were quickly used to pay other investors and transferred into accounts controlled by Krug and Elliot.
Krug and Elliot signed the joint-venture investment document sent to Currence and were co-signatories on the relevant bank accounts and checks that paid dividends.
After initial partial payments, Currence received sporadic small checks; Krug communicated with her by phone and email, making false statements about the investment’s status and origin of payments (including claims the funds were in Switzerland). Some conversations were recorded and provided to the Arkansas Securities Department, which referred the matter to the FBI.
Krug was indicted for conspiracy to commit wire fraud, sought to proceed pro se at two hearings but refused to answer the court’s colloquy questions and mailed documents rejecting the court’s jurisdiction. The district court denied self-representation and Krug was tried with counsel, convicted, and sentenced to 42 months’ imprisonment and 3 years’ supervised release.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Sufficiency of evidence to prove Krug intentionally joined conspiracy to commit wire fraud	Evidence (joint-venture agreement, co-signatory status on accounts/checks, transfers of investor funds, recorded conversations and emails) shows Krug knew of and intentionally joined the scheme	Krug lacked direct contact during initial misrepresentations and therefore lacked specific knowledge and intent to join the conspiracy	Affirmed — viewing evidence in the light most favorable to the verdict, a reasonable jury could find Krug knowingly and intentionally joined the conspiracy and had intent to defraud
Denial of motion to proceed pro se (Faretta right)	Court permissibly denied self-representation because Krug’s evasive, obstructionist answers prevented a knowing, voluntary waiver and his subsequent filings rejected court authority and were unintelligible or irrelevant	Krug asserted the right to represent himself and filed pro se pleadings; he argued the court erred in denying that request	Affirmed — court properly found Krug’s refusal to answer, obstructionist conduct, and filings justified denial of self-representation

United States v. Cole, 721 F.3d 1016 (8th Cir. 2013) (standard for reviewing sufficiency of the evidence in conspiracy cases)
United States v. Louper-Morris, 672 F.3d 539 (8th Cir. 2012) (elements of conspiracy and evidentiary standards)
United States v. Lopez, 443 F.3d 1026 (8th Cir. 2006) (direct and circumstantial evidence may prove conspiracy)
United States v. Flynn, 196 F.3d 927 (8th Cir. 1999) (fraudulent intent may be inferred from surrounding facts)
United States v. Mosley, 607 F.3d 555 (8th Cir. 2010) (self-representation can be denied for obstructionist misconduct)
United States v. Edelmann, 458 F.3d 791 (8th Cir. 2006) (Faretta right not absolute; may be limited by defendant’s conduct)
Faretta v. California, 422 U.S. 806 (1975) (criminal defendant has a constitutional right to self-representation)