June 22, 2015 Practice Points

Conviction Stands Despite Defendant Not Having Sent Fraudulent Emails

The Eleventh Circuit affirmed that convictions under the wire-fraud statute can stand even if the defendant did not send fraudulent emails, if the third party's emails were reasonably foreseeable.

By Michael T. Dawkins – June 22, 2015

Linda Deavers raised more than $5 million from individual investors in Florida using the pitch that she had connections to European trading programs that would generate large returns. Kyle Wilson, a victim of Deavers’s scheme, was also a broker whose clients were persuaded to invest millions of dollars in the scheme.

At Deavers’s trial, the government presented evidence that she spent more than $3 million of investors’ funds on personal purchases. She perpetuated her fraud by using Skype and emails to assure investors that her delays in investing the clients’ funds would soon be overcome.

Wilson relayed some of Deavers’s reassuring emails regarding the status of investments made by Wilson’s clients. In 2014, a jury convicted Deavers of 10 counts of wire fraud and five counts of money laundering.

Half of the wire-fraud counts were founded on emails to investors, not by Deavers, but by Wilson. Deavers appealed the denial of her motion for judgment of acquittal on the Wilson email wire-fraud counts, arguing that she did not transmit the Wilson emails, did not ask Wilson to send the emails, and did not even know that Wilson would send the emails. Moreover, Deavers claimed, because of a confidentiality agreement, she would not have approved the emails.

The Eleventh Circuit Court of Appeals affirmed the convictions, pointing to its precedent that “a defendant may be held liable for a communication transmitted by a victim of her fraud, if the communication furthered the defendant’s fraudulent scheme” and “communications designed to conceal a fraud by lulling a victim into inaction may constitute communications made in furtherance of the scheme.”

The court observed that the government’s evidence at trial showed that Deavers was aware that Wilson was under pressure from his clients to show returns on their investments and that Deavers knew that Wilson was in regular contact with his clients. The court reasoned that this was sufficient to sustain the wire-fraud conviction: “From this evidence, the jury reasonably could have found that, even if Deavers did not instruct Wilson to relay the misinformation she provided about the investments to his clients, she reasonably could have foreseen that he would do so.” Moreover, testimony at trial showed that Wilson’s emails did not breach the confidentiality agreement.

Michael T. Dawkins, Baker Donelson, Jackson, MS

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