United States v. Rodney Phelps, 20-5889

Background

From 2012–2014 Rodney Phelps and Jason Castenir ran Maverick Asset Management and solicited investments by falsely claiming Phelps was a Morton Salt heir and trustee of a large family trust.
They marketed various investments (Belize oil concessions, debenture offerings, a Tunica casino) promising low-risk, high-return returns allegedly backed by the family trust; documents and account statements were fabricated.
Instead of investing funds, Phelps and Castenir funneled money to pay earlier investors, cover Maverick expenses, and enrich themselves in a Ponzi-like scheme. Investors lost millions.
Castenir pleaded guilty to related offenses and cooperated; a grand jury indicted Phelps on 12 counts of wire fraud and one count of conspiracy to commit wire fraud.
At trial Phelps testified in his own defense; the jury convicted on all counts. The district court sentenced him to 108 months’ imprisonment and ordered restitution of $2,437,875.30.

Issues

Issue	Plaintiff's Argument (Government)	Defendant's Argument (Phelps)	Held
Sufficiency of the evidence to support wire-fraud and conspiracy convictions	Evidence (victim testimony, emails, marketing materials, bank records, Castenir’s corroboration) shows Phelps knowingly participated in a scheme to obtain money by false pretenses and used interstate wires	Phelps argued he was passive or unaware, that Castenir was the mastermind, and that he intended to generate real profits	Conviction affirmed; viewing evidence in the light most favorable to the verdict, a rational jury could find guilt beyond a reasonable doubt (Jackson standard)
Motion for new trial based on late-discovered FBI investigation of Castenir	New impeachment evidence about Castenir was disclosed after trial but was cumulative and would not likely produce acquittal	Phelps argued the undisclosed investigation would have impeached Castenir and warranted a new trial	Denied; district court did not abuse discretion because the evidence was cumulative and other evidence supported convictions
Admission of prior bad-acts evidence under Rule 404(b)	Evidence of false persona, commingling, falsified statements, and other acts showed motive, intent, identity, and Phelps’s distinctive method of fraud	Phelps argued the evidence was unfairly prejudicial and improperly used to show propensity	Admission upheld; evidence was admissible for non-propensity purposes and any risk of prejudice did not warrant reversal (or was harmless)
Lay witness handwriting/writing-style identifications	Lay witnesses (agents, associates) could identify emails/documents by familiarity with Phelps’s signatures, greetings, and writing style	Phelps contended many witnesses gained familiarity during the investigation (impermissible if only for litigation) and he failed to object at trial	No plain error; investigatory familiarity by agents is permissible and lay identification is allowed under Rules 701/901 as applied by circuit precedent
Requests to substitute counsel shortly before and during trial	Government opposed delay; trial should proceed given preparation and prior continuances	Phelps sought new counsel five days before trial and again on last day, claiming breakdown in communications	Denied; district court did not abuse discretion given untimeliness, court’s inquiry, and interest in efficient administration of justice
Competency to stand trial	Government implicitly argued Phelps was competent	Phelps claimed physical ailments and medications suggested incompetence	No competency hearing required; record showed Phelps was coherent, able to consult counsel, and to understand proceedings
Prosecutorial misconduct in closing and elsewhere	Government argued closing remarks were proper commentary on credibility and the evidence; isolated exchanges did not prejudice trial fairness	Phelps alleged improper remarks, overstating evidence, and snippy exchanges with defense	No reversible misconduct; statements did not misstate evidence or imply unpresented corroboration and did not fatally infect trial
Nonunanimity jury instruction for conspiracy count	Multiple fraudulent schemes were alternative means of the same conspiracy; nonunanimity instruction permitted because means are not separate elements	Phelps argued jury should have been required to unanimously agree on the specific scheme he joined	Instruction upheld as within discretion; alternative fraudulent means were closely related and did not require specific-unanimity instruction
Sentencing: obstruction-of-justice enhancement for perjury	Government argued Phelps lied materially at trial about key facts (Morton Salt heir, trust backing) warranting a §3C1.1 enhancement	Phelps maintained his testimony was truthful and concerns about chilling testimony should preclude enhancement	Enhancement affirmed; district court reasonably found material false testimony and applied enhancement after balancing concerns
Sentencing: sophisticated-means and abuse-of-trust enhancements; substantive reasonableness	Government sought enhancements for complex concealment methods and for Phelps exploiting investor trust; within-guidelines sentence appropriate	Phelps argued the enhancements were inapplicable and the 108-month sentence was substantively unreasonable given age, health, and lack of criminal history	District court acted within discretion: sophisticated-means and abuse-of-trust enhancements supported by multi-step fabrications and false persona; 108-month within-guidelines sentence is presumptively reasonable and affirmed

Key Cases Cited

Jackson v. Virginia, 443 U.S. 307 (establishes the standard for reviewing sufficiency of evidence)
United States v. Rogers, 769 F.3d 372 (describes wire-fraud and conspiracy elements in Sixth Circuit)
Richardson v. United States, 526 U.S. 813 (permits nonunanimity instruction when alternative factual means compose an element)
Darden v. Wainwright, 477 U.S. 168 (limits on prejudicial prosecutorial argument)
United States v. Young, 470 U.S. 1 (prosecutor may not suggest unpresented corroborating evidence)
Puckett v. United States, 556 U.S. 129 (plain-error standard for unpreserved claims)
United States v. Vonner, 516 F.3d 382 (presumption of reasonableness for within-guidelines sentences)
United States v. Roberts, 919 F.3d 980 (application of §3C1.1 for material perjured testimony)
United States v. Igboba, 964 F.3d 501 (sophisticated-means enhancement in fraud cases)
United States v. Harris, 786 F.3d 443 (permitting lay handwriting testimony based on investigatory familiarity)
United States v. LaVictor, 848 F.3d 428 (harmlessness standard for evidentiary error)