In United States v. Watkins, No. 19-12951 (July 15, 2022) (Newsom, Tjoflat, Ed Carnes), the Court affirmed the defendants’ fraud convictions.
The defendants solicited millions of dollars in investments from wealthy and famous people, including Sir Charles Barkley, by misleading them about their ownership interest in the investment company, that the funds would be used for business (rather than personal) purposes, and that other high-profile people were involved in the company. The defendants also directed a friend to request a loan from a bank where the defendants were already maxed out, and to conceal that the loan was for the defendants.
On appeal, the Eleventh Circuit held that the evidence was sufficient to support the defendants’ convictions. As for wire fraud, the evidence was sufficient to show an intent to defraud because the misrepresentations affected the nature of the bargain and sought to obtain money to which the defendants were not entitled. As for bank fraud, the evidence was sufficient because concealing the true recipient of the loan affected the nature of the bargain with the bank.
The Eleventh Circuit held that the district court did not abuse its discretion by denying the defendants’ proposed jury instruction on the “intent to harm” element of wire/bank fraud. Using the pattern instruction, the court properly instructed the jury that it could not have convicted without finding that the misrepresentations were made with an intent to cause loss or injury to the people from whom he solicited money, and thus to obtain money to which he was not entitled. The court also properly instructed the jury on the theory of defense.
Finally, the Eleventh Circuit held that the district court did not abuse its discretion by excluding defense evidence about the value of the investment companies. That evidence would not have affected the government’s theory of the case. For example, showing that the companies were successful would have done nothing to relieve the defendant from liability for deceiving investors about how their money would be used.