Mailing Credit Card Bills Satisfies Mail Fraud Jurisdiction Requirement for Ongoing Scheme

United States v. Traxler, No. 13-30681 (5th Cir. Aug. 22, 2014) (Davis, Elrod, Costa)

The receipt and payment of credit card bills by mail over time in this case is sufficient for federal jurisdiction because the use of the mails was part of the ongoing scheme.  Traxler made unauthorized purchases (estimated to be over $60,000) on her employer’s credit cards over the course of approximately year.  Traxler moved to dismiss the indictment, which only listed one Visa card statement being sent to her employer that included a personal charge, for lack of jurisdiction.  Traxler argued that the alleged mailing was a routine statement from the credit card company and did not satisfy the 18 U.S.C. § 1341 mailing requirement.

For the panel, the critical question was not whether the mailing of the statement was routine or not.  “[T]he critical question is whether Traxler’s fraud was completed prior to the transmission of documents through the mails, or if the use of the mails was part of an ongoing scheme.”  Traxler argues that her fraud was completed at the time of the unauthorized purchases, but the panel disagrees.  Since Traxler’s unauthorized use of the credit card occurred over the course of more than a year and involved multiple purchases, the panel finds that her “continued fraud depended on her employer receiving and paying the credit card bills through the mails.”  Unlike defendants whose fraud was completed before the use of mails (and did not depend on credit card payment), it was material to Traxler that her employer continue making payments for her ongoing scheme to continue.  So, the mailing of the credit card bills in this instance was sufficient for federal jurisdiction.

Loss in Real Estate Fraud Scheme Not Offset by Value of Homes; Mass-Marketing Enhancement Applies if Advertisement Reaches Large Number of Persons

United States v. Morrison, No. 11-50614 (5th Cir. Apr. 4, 2013) (Stewart, Garza, Elrod)

Jason Heath Morrison, indicted for his part in a real estate scheme designed to defraud multiple parties, appealed his sentence, challenging the district court’s calculation of the loss amount and its application of the sentencing enhancement for “mass-marketing.” Morrison, who fled to Washington and attempted to change his identity, also challenged the sentencing enhancements for sophisticated means and obstruction of justice, as well as the PSR’s failure to reduce his sentencing level for acceptance of responsibility. The panel affirmed.

The PSR recorded an intended loss of $769,365 after totaling all the mortgages involved in the scheme and subtracting what was paid to the lenders. Morrison objected, citing Application Note 3(E) of U.S.S.G. § 2B1.1—which provides that in calculating the victims’ pecuniary losses for fraud offenses, that amount shall be reduced by the value of the collateral—and arguing that the loss should be reduced by the value of the underlying property to $111,912.96. In response to Morrison’s invocation of Application Note 3(E) of U.S.S.G. § 2B1.1, the district court mistakenly deemed the guideline inapplicable to the case, claiming that “the credits against loss only apply where the property is returned prior to detection by law enforcement.” The panel acknowledged that the district court’s interpretation of Application Note 3(E) of U.S.S.G. § 2B1.1 may have been error but held that any error was harmless. The evidence suggesting that the defendants did not intend to repay the mortgage loans was sufficient to support the district court’s decision to ignore collateral value when calculating the financial damages and its discretion to employ an intended loss calculation in lieu of an actual loss calculation.     

Morrison also contested the methods used by the district court to increase his offense level by two for the “mass-marketing” enhancement. Morrison argued that the intended number of victims was nine, one purchaser for each property, and nothing more. The panel disagreed with Morrison’s reasoning, citing United States v. Magnuson, 307 F.3d 333, 335 (5th Cir. 2002), which ruled that the mass-marketing enhancement “merely requires advertising that reaches a large number of persons.” The panel found no error in the district court’s application of the mass-marketing enhancement.

Health Care Fraud Conspiracies that Overlap in Time, Place, Personnel, and Statutory Charge Don't Violate Double Jeopardy Since Government Sought to Punish Different Activity

United States v. Njoku, No. 12-20095 (5th Cir. Dec. 2, 2013) (Dennis, Clement, Southwick)

Four defendants were convicted on numerous counts related to committing health care fraud, receiving or paying healthcare kickbacks, and/or making false statements for use in determining rights Medicare benefits and payments.  The panel affirms the convictions and sentences but remands to the district court to amend Njoku’s written sentence of 63 months to conform with the oral sentence of 60 months.

The panel finds the Government presented sufficient evidence that Njoku knew of the unlawful purpose of both the health care fraud conspiracy and the kickback conspiracy and that she joined in those agreements willfully.  She also challenges the two conspiracy counts as multiplicitous.  (Since she did not object to the indictment as multiplicitous, the convictions stand but the sentences can be challenged under plain error review.)  Njoku argues that her health care fraud conspiracy conviction was based entirely on proof of the kickback conspiracy, so the kickback conspiracy is a lesser included of the health care fraud conspiracy.  The panel disagrees, noting that one conspiracy is under 18 U.S.C. § 1349 (proof of conspiracy to commit fraud and that fraud is the object of the conspiracy) and the other under 18 U.S.C. § 371 (proof of conspiracy against United States and the commission of an overt act).  Further, the indictment described the unlawful purpose of the health care conspiracy as the receipt of kickbacks in addition to the submission of fraudulent claims to Medicare.

Defendant Ellis challenges her trial on the of conspiracy to commit health care fraud as violating the Double Jeopardy Clause because she was acquitted of a conspiracy to commit health care fraud after a trial by jury prior to the instant indictment.  The first indictment focused on her activity as a recruiter and the other focused on her falsification of nursing notes and medical certifications.  Since she established a prima facie nonfrivolous double jeopardy claim, the Government bears the burden to prove by a preponderance of the evidence that she was charged in separate conspiracies.  The panel undertakes the five-prong test to determine whether there were two agreements and conspiracies.  It concludes that “the time, statutory offenses, and places involved suggest that there was one agreement.  Nevertheless, . . . two agreements and two conspiracies existed because of the separate functions that central co-conspirators provided in each scheme and the distinctive activity that the Government sought to punish in each case.” 

Ellis also argues that in her acquittal of the first charged conspiracy, the jury necessarily determined that she did not know her paid referrals were illegal, which she argues would bar any subsequent prosecution on whether she willfully received kickbacks.  The panel finds that the first jury could have based the acquittal either on Ellis not knowing that the paid referrals were illegal or on her not intending to further the unlawful purpose as charged in the indictment.  Since the jury did not have to necessarily find that she did not know the referrals were illegal, she was not twice put in jeopardy.

During trial, Ellis sought to introduce portions of testimony by a person, Clifford Ubani, who testified in the first trial that he never agreed with Ellis to do something unlawful but invoked his right against self-incrimination in the second trial.  The district court excluded this evidence finding its admission would require the admission of additional evidence in order to explain the statement in the proper context and would be more misleading or confusing than probative.  The panel also rejects Ellis’s argument that the district court’s ruling violated her Sixth Amendment right to present a complete defense.

With regard to sentencing, the panel affirms the loss amount calculated for Ellis, finding that the Government presented reliable evidence of actual loss and the district court properly considered Ellis’s contrary evidence.  The panel also affirms Ezinne Ubani’s enhancements as a manager/supervisor and abuse of trust, noting that “Medicare invests an important trust in RNs who complete OASIS questionnaires and certify plans of care for initial episodes of care and recertifications . . . .”

Judge’s Use of Red Pen to Note Humorous Points During Health Care Fraud Trial Not Plain Error; Restitution Orders Vacated for Erroneous Calculation

United States v. St. Junius, No. 11-20805 (5th Cir. Dec. 18, 2013) (Stewart, King, Prado)

Three defendants were convicted by a jury of various crimes related to their involvement in a health care fraud conspiracy.  The panel affirms their convictions.  At one point during trial, the district judge commented to the jury that he will make notes about things he finds humorous with a red pen so that he can visit with the jury after the case in the jury room about those things; all other notes he will take in black ink.  None of the defendants objected contemporaneously to these remarks.  The panel rejects the argument that the jury could look to see what color of pen the judge was using to help them determine how to interpret the evidence.  No plain error.

Ramos objected to the introduction of her personnel file on the first day of trial on the grounds that her counsel had not seen the records before and did not have sufficient time to review them.  She challenges the admission of the documents as a violation of the court’s order requiring parties to exchange exhibits seven days prior to the start of trial.  Ramos did not request discovery pursuant to Rule 16, and could not therefore challenge the admission under Rule 16.  The panel finds that the admission of the personnel file did not prejudice Ramos’s substantial rights because the Government would have sustained its burden of proof without it, noting that Ramos had equal access to it prior to trial.

The panel finds that the district court properly allowed rebuttal testimony that was relevant, was not hearsay (because not offered for the truth of the matter but rather to impeach the defendant’s credibility), and was not offered as character evidence.  The panel also defers to the district court’s decision to limit the deliberate ignorance instruction to one of the defendants whose defense at trial focused on her alleged lack of guilty knowledge. 

The panel rejects Ramos’s argument that she could not have willfully violated the Anti-Kickback Statute because she did not know that engaging in a commission-based pay arrangement with a Medicare provider violated the law.  The panel finds that the Government need only “prove that the defendant willfully committed an act that violated the Anti-Kickback Statute,” not that the defendant knew of the statute or acted with a specific intent to violate it.

The panel affirms St. Junius’s sentence, finding that it is plausible that she held a managerial role in the offense since she led others to believe she owned the business and “signed Medicare documents, signed and issued paychecks, and sent correspondence as the owner” of the business.  St. Junius also held a position of trust since she had a license to provide medical equipment for Medicare, and she abused that trust by signing documents and engaging in other activities that helped facilitate the health care fraud conspiracy.  The panel finds that Ramos and Spicer also abused positions of trust even though they did not have a fiduciary relationship with Medicare; they both transferred patients’ “means of identification” to facilitate the crime.  

The panel vacates Spicer’s and Ramos’s restitution orders, however, because they were improperly based on conduct outside of the offense for which they were convicted.  The restitution amount was based on the total amount Medicare/Medicaid paid the business based on Spicer’s and Ramos’s referrals ($794,434.08); “a figure that grossly exceeded the amount Medicare/Medicaid paid with respect to the crimes for which” they were convicted. 

Absence During Jury Impanelment Did Not Affect Defendant’s Substantial Rights

United States of America v. Thomas, No. 12-60707 (Aug. 1, 2013) (Owen, Haynes, Lemelle)

            Dr. Cassandra Thomas, a licensed physician in the state of Mississippi, challenged her convictions of healthcare and Medicare fraud. The panel affirmed.

Thomas argued that the district court erred by denying her constitutional right to be present at all critical stages of her trial.  The panel rejected that argument, finding that Thomas failed to establish that her absence from jury impanelment affected the outcome of the district court proceedings.

In regards to Thomas’ argument that the court failed to apply the rule of lenity to dismiss the indictment against her at the pretrial phase, the panel held that other underlying facts in Thomas’ conviction undermine her arguments of ambiguity in the Medicare guidelines and affirmed the district court’s denial of Thomas’ motion to dismiss the indictment.

Thomas also claimed that evidence used in the trial, namely the Mississippi state licensure requirements for physical therapists, and the exclusion of an article concerning Medicare regulations, prevented her from providing an adequate argument of ambiguity in the physical therapy guidelines she followed. The panel drew attention to the fact that the excluded article was never offered into evidence during trial and that the change in Medicare regulations occurred after the fraud occurred. Thus, the panel affirmed the court’s decision to deny the motion in limine, exclude the article, and deem the regulation changes as irrelevant to the case.

Thomas’ final argument involving her denied motion for new trial based on ineffective assistance of trial counsel was dismissed because Thomas failed to prove that her counsel’s previous criminal charges and in-court actions posed any objectively unreasonable or prejudicial threat to her defense.  

Thanks to FPD Intern Matthew Gonzalez for this blog post.

Court Erroneously Excluded Character Evidence & Calculated Restitution to Include Loss Outside Alleged Time Period

United States v. De Leon, No. 12-40244 (Aug. 29, 2013) (Stewart, Davis, Wiener)

De Leon was convicted at trial of five counts of health-care fraud.  His attorney called his mother as a character witness.  After some background questions, the attorney asked whether De Leon was a law-abiding citizen.  The Government objected citing Federal Rule of Evidence 608(a).  The Court sustained the objection and instructed De Leon that his second character witness would be limited to testifying as to De Leon’s reputation for truthfulness.  The defense attorney did not call the second witness and then rested. 

The district court erred in excluding evidence of De Leon’s law-abiding character.  “‘[E]vidence of the defendant’s pertinent trait’ is admissible.  [Fed. R. Evid. 404(a)(2)(A).] And evidence of the defendant’s ‘character as a law-abiding citizen . . . is always relevant.’” Rule 608(a) applies only to a witness’s credibility, and De Leon was not a witness.  This erroneous ruling, however, did not affect De Leon’s substantial rights since there was “overwhelming evidence of De Leon’s knowing submission of fraudulent claims.”  The panel affirms the conviction.

The district court also plainly erred in calculating the restitution award.  The PSR calculated the loss as the $2.9 million paid by Medicare and Medicaid to De Leon, on any and all claims, from 2005 through 2011.  The temporal scope of the conduct charged in the indictment was June or July 2008 through April 2010.  “Restitution is limited to the loss actually caused by the offense of conviction . . . [and] cannot be awarded for ‘losses’ attributable to conduct outside the temporal scope of the scheme charged . . . [or] for conduct not charged as part of the scheme.”  Thus, payments to De Leon in 2005, 2006, 2007, and 2011 cannot be counted among the actual losses incurred.

The district court conducted several hearings to try to discern which of the payments were fraudulent.  Ultimately, the court concluded that “it was ‘difficult, if not impossible, to ascertain with precision the actual loss,” so the court estimated that the total loss totaled $750,000 split evenly between Medicare and Medicaid.  The panel vacates the restitution reward and remands for recalculation even though the district court did not award the full $2.9 million since the record does not suggest that the district court excluded the sums outside of the temporal scope of the Indictment.  “By calculating restitution on the basis of the PSR’s exaggerated ‘ceiling,’ the district court indisputably awarded restitution for claims outside the scope of the charged conspiracy.

The panel notes, though, that on remand the district court can assign De Leon the burden of demonstrating the amount of credit he is due if the court concludes that justice requires this burden shift:

“Even though the MVRA puts the burden on the government to demonstrate the amount of a victim’s loss, a sentencing court may shift ‘the burden of demonstrating such other matters as the court deems appropriate . . . [to] the party designated by the court as justice requires.’ . . . ‘[W]e have approved the transfer of at least a portion of the burden to a defendant to establish his entitlement to a restitution credit.’ 

United States v. Sharma, 703 F.3d 318, 325 (5th Cir. 2012).

Enhancement for Violating Administrative Order/Process Applied to Future Fraud Unaddressed by Prior Agency Intervention

United States v. Nash, No. 12-30890 (Aug. 30, 2013) (Smith, Garza, Southwick)

According to the majority, an agency letter finding fraud in certain instances and requiring payment of a fine for those violations constitutes an administrative order, injunction, decree, or process that is violated by future instances of fraud since the agency warned the individual of the violations, allowed him to participate in the process in a meaningful way, and assessed a fine for the violations.  The individual’s subsequent violations despite the previous agency interaction resulted in a two-level enhancement pursuant to U.S. Sentencing Guideline § 2B1.1(b)(9)(C).

Nash became an authorized retailer for the food stamp program known as the Supplemental Nutrition Assistance Program (SNAP) through his convenience stores.  In 2008, the U.S. Department of Agriculture (USDA) sent Nash a letter notifying him of suspected food stamp violations and offering Nash an opportunity to respond.  Nash did so, but the USDA concluded that the violations had occurred and fined him nearly $15,000.  The USDA’s letter warned that failure to pay the fine would result in a six-month disqualification from SNAP and that the USDA’s decision did not preclude prosecution under applicable laws. 

Nash paid the fine but continued to commit food stamp fraud.  He later pled guilty to committing a conspiracy to defraud SNAP.  At sentencing, the district court applied the § 2B1.1(b)(9)(C) enhancement for “a violation of any prior specific . . . administrative order, injunction, decree, or process not addressed elsewhere in the guidelines.”  Nash argues that the USDA letters that resulted in him paying a fine for previous fraud do not constitute a definite agency directive with which he failed to comply.  The panel disagreed, finding that Nash had sufficient interaction with USDA and was able to participate in that administrative process in some meaningful way.  Further, the panel accepted the interpretation of the Guideline application note, which applies the enhancement if the defendant commits fraud “in contravention of a prior, official judicial or administrative warning,” and concluded that the USDA process here—administrative warning and fine—triggered the § 2B1.1(b)(9)(C) enhancement.

Judge Garza dissented, finding that the USDA’s letter did not constitute a warning or order against future food stamp fraud since the letter only threatened consequences if Nash did not pay the fine linked to those prior violations, and Nash paid that fine.

Sentencing Commission Promulgates Guidelines Amendments for November 2011

Last week the Sentencing Commission issued this press release announcing a new crop of Guidelines amendments. Absent Congressional action, the amendments will take effect on November 1, 2011.  There's some good and some bad for defendants, with changes affecting illegal reentry, firearms, supervised release, mitigating role, health care fraud, and more. The Sentencing Resource Counsel Project has prepared a helpful summary of the amendments, which have not yet been posted on the Commission's website.  For bootleg redlines of the amendments, make your way over here.

Panel Splits Over Whether Credit-Card Holder Who Is Reimbursed for Fraudulent Charges Is a "Victim" Under U.S.S.G. §2B1.1(b)(2)

United States v. Conner, No. 06-50218 (5th Cir. July 28, 2008) (Reavley, Jolly; Garza, dissenting in part)

Conner was sentenced to 100 months for his participation in a conspiracy to commit access-device fraud and mail fraud. The scheme used commercial credit card accounts, sans authorization, to purchase merchandise and gift cards from Home Depot, Lowe's, and Sam's Club. Conner purchased gift cards in bulk from another co-conspirator, and resold them on eBay. He and the others also used the gift cards to purchase power tools from the stores, which they also resold on eBay.

Conner raised several unsuccesful challenges to his conviction (evidentiary sufficiency, evidentiary rulings, jury instructions), but prevailed on one of his sentencing arguments. When calculating Conner's offense level under the fraud guideline, the district court found that the offense involved between 50 and 250 victims, triggering a four-level enhancement under §2B1.1(b)(2). The district court arrived at that number by treating each of the commercial credit card account holders as a separate victim. "Conner argued below that the account holders should not be counted as victims because the credit company for each account (five in total) fully reimbursed the accounts for all temporary charges."

The panel majority agreed with Conner. It held that because the account holders weren't out any money, they had not suffered the "actual loss" required for victim status under §2B1.2's commentary. Instead, "there were only five victims under § 2B1.1(b)(2): Home Depot, Lowe’s, Sam’s Club, Citicorp Credit Services, (Home Depot’s issuing credit company), and G.E. Consumer Credit (the issuing credit company for Lowe’s and Sam’s Club)."

On the way to that holding, the majority also pointed out something that applies to all Guidelines calculations, not just victim determinations under §2B1.1(b)(2): Guidelines factual findings must be supported by evidence, not speculation and conjecture.

In finding that the account holders were victims, the district court reasoned that some account holders must have paid bills with fraudulent account charges before ultimately being reimbursed, and this logically involved a loss of business time. Although it did not specifically say so, perhaps this was the district court finding that the account holders ultimately incurred pecuniary harm. The court admitted that it did not have “any evidence” for this conclusion, but that it was just “garden-variety logic.” It is possible that with a proper evidentiary foundation these types of unreimbursed business losses could be considered “actual losses” for the purposes of counting “victims[,]" [keeping in mind that the Application Notes exclude certain types of damages from "loss"]. But the district court’s speculation as to the existence of these facts was an insufficient basis to enhance Conner’s sentence. “[A] finding under the Guidelines must be based on reliable information and a preponderance of the evidence, see U.S.S.G. § 6A1.3, commentary.” And it is the “[t]he Government [that]bears the burden of proving . . . that the facts support a sentencing enhancement.” This standard was not met here. . . . Here, the district court did not point to any evidence of the pecuniary costs incurred by the account holders. Therefore, we cannot accept enhancing Conner’s sentence on this basis.

(some cites omitted). Because of this Guidelines calculation error, the court vacated Connor's sentence and remanded for resentencing.

Judge Garza dissented from the majority's number-of-victims holding. In his view, "[t]he fact that the account holders were later reimbursed for the fraudulent charges they incurred does not mean that the account holders failed to suffer an actual loss." As an example of "how the majority has turned the enhancement on its head," Judge Garza offered a comparison between "a defendant who defrauds 1,000 individuals that, after the fact, have their losses reimbursed by a single insurer and a defendant who defrauds 10 uninsured individuals. Assuming an equal amount of loss, there can be no doubt that the first defendant’s crime is more serious and therefore deserving of a more severe sentence. The majority’s interpretation of the victim enhancement leads to the incongruous result of the second defendant receiving the higher Guidelines range." (Although not adressing the dissent directly, the majority constructively responds by noting that "[t]he district court could properly consider the large number of individual account holders affected by Conner’s crime as part of its consideration of § 3553(a) factors if the court decided to issue a non-guidelines sentence.")

Fives Affirm Questionable 404(b) and Loss-Amount Determinations in Union Voter Fraud Case

United States v. Crawley, No. 07-20461 (5th Cir. June 27, 2008) (Jones, Barksdale, Stewart)

Crawley was elected president of a Teamsters local in Louisiana in 1997, 1999, and 2002. Irregularities in the 2002 election prompted an investigation which revealed that Crawley falsified voter ballots, and that he received a $20,000 kickback in connection with a contract for telephone services at the union hall. Crawley was eventually convicted of mail fraud, and several Title 29 embezzlement and false record offenses. In addition to sentencing him to 78 months' imprisonment, the district court ordered him to pay the union local a little over $120,000 in restitution. Crawley appealed his conviction and sentence.

Crawley's challenge to his conviction concerned 404(b) evidence that he argued was improperly admitted. At trial, a union member testified that

[i]n September 2002, Crawley invited Kyle to his home after work hours. There, the two men engaged in an “assembly-line” process: using several different pens, Crawley marked and folded each ballot; he then handed it to Kyle, who placed and sealed the ballot in the return envelope. Crawley used the Union’s membership roster to decide which members were unlikely to vote in the election, such as part-time UPS employees. Kyle testified that peel-and-stick labels generated by the Union’s computer were used on the envelopes to avoid their being challenged. Thereafter, the completed ballots were separated by the zip codes for the “voters” and mailed from various post offices.

Not content to rely on this testimony, the Government called another witness who testified, over Crawley's objection, that Crawley "committed similar acts of voter fraud [in the 1999 election, as well]; and devised the strategy of duplicating ballots for those members least likely to vote." Following that testimony, the district court instructed the jury that "the evidence of the 1999 voter fraud could be considered only for determining Crawley’s 'motive, intent, identity, knowledge, opportunity, plan, preparation, and the absence of mistake or accident in engaging in' the 2002 voter fraud."

Applying the Fifth Circuit's two-prong Beechum test, the court of appeals found no error in admission of the testimony concerning the 1999 election. Under the first prong, the court held that the evidence was relevant to Crawley's intent, insofar as it showed that Crawley "acted with the same specific intent in 2002 as he had in 1999." The court rejected Crawley's argument that the evidence was not in fact relevant to intent because his defense was that someone else submitted the fake ballots:

Regardless of the defenses asserted by Crawley, the Government was required to prove specific intent as an essential element of the charged offenses. Therefore, the extrinsic evidence was offered to demonstrate Crawley acted with the requisite intent to commit those offenses. Based on the testimony regarding the 1999 fraud, the jury could rationally conclude that, “because the defendant had unlawful intent in the extrinsic offense [1999 fraud], it is less likely that he had lawful intent in the present offense [2002 fraud]”. Gordon, 780 F.2d at 1173. The testimony, therefore, was offered for a legitimate purpose under Rule 404(b). (Because the evidence was properly offered to show intent, we need not decide whether, in addition, it was admissible to demonstrate motive, as was also held by the district court.)

The court then concluded, as to the second Beechum prong, that the prejudicial impact of the evidence did not substantially outweigh its probative value, because the district court instructed the jury "that the 1999 voter-fraud evidence could only be considered for the limited purpose of determining motive, intent, identity, knowledge, opportunity, plan, preparation, and the absence of mistake or accident in engaging in the 2002 voter fraud. Even assuming, therefore, that admission of the extrinsic evidence posed a risk of undue prejudice, that risk was greatly minimized by the court’s limiting instruction."

(Both of these conclusions are questionable. If anything, given Crawley's defense the evidence was relevant to identity, not intent. But even if, as the court says, the 1999 voter-fraud evidence was relevant to intent, it had little to no probative value in relation to the unfairly prejudicial he-did-it-before-so-he-must-have-done-it-again inference that 404(b) exists to prevent. After all, if the jury were to conclude that Crawley was behind the 2002 ballot falsification, it's all but inconceivable that they would have trouble finding that he did so with the specific intent to defraud the union. It's also hard to see how the district court's instruction to the jury minimized any prejudice, given that it was simply a boilerplate recitation of permissible 404(b) factors, some of which the Government doesn't even appear to have argued for.)

Crawley also challenged the district court's loss findings for purposes of the Guidelines calculations and the restitution award. The district court used Crawley's salary and benefits for both calculations, as well as the $20,000 kickback. To oversimplify things a bit, Crawley argued that the loss amount for both purposes should be limited to the $20,000 kickback, because the union got what it paid for in the form of his services as local president. The court of appeals disagreed, concluding that "[b]y procuring a union office by fraud," Crawley "render[ed] any service valueless ab initio." Additionally, it wasn't possible to sever Crawley's legitimate services to the union from his non-legitimate services. Thus, the district court did not clearly err in the Guidelines calculation, nor did it abuse its discretion in determining the restitution amount.

(This, too, is questionable. Is it really true that Crawley's services as union president were "valueless ab initio"? Unless everything he did as president was corrupt, the union got at least some value out of his service. Doesn't the union as victim receive a windfall by getting all of Crawley's salary and benefits back when they would have otherwise had to pay someone else to do the job? To be fair, the court addresses these points, just not convincingly in my opinion.)