Evidence of fraud sufficient to convict; Ex Post Facto violation applies to sentencing guidelines; U.S. v. Wetherald

The federal mail fraud statute, 18 U.S.C. §1341, makes it a federal crime to use the mail in any way to advance a fraud. The federal wire fraud statute, 18 U.S.C. §1343, makes it a federal crime to use any interstate wire communication to advance a fraud. The defendants here were charged and convicted of violating the wire fraud and mail fraud statutes because of their involvement in defrauding investors who invested in telecommunications companies known as competitive local exchange carriers (CLEC’s). A CLEC is an entity that acquires discounted local retail telecommunication services from Baby Bells for resale to the public without any infrastructure costs of their own. The Unites States Attorney presented the following evidence showing the defendants intended to defraud the investors:
• they solicited 8 million dollars from investors for several CLECs,
• the CLECs they started made no money and eventually fell into bankruptcy,
• the defendants gave investors misinformation and omitted key information,
• investors said if they knew the correct information, they never would have invested in these companies.

On the sentencing issue, the district court sentenced the defendants under the 2008 federal sentencing guidelines rather than the 2002 guidelines, the year the defendants committed the offense. The 2002 guidelines were significantly lower at 151-188 months. In U.S. v. Booker, the Supreme Court held that the federal sentencing guidelines were no longer mandatory but were advisory instead. Prior to Booker, if a more lenient guidelines sentence was in effect at the time of the offense, the guidelines at the time of the offense must apply to avoid a violation of the Ex Post Facto Clause of the Constitution. In this case, the Eleventh Circuit was faced with the decision of whether the Ex Post Facto Clause still prohibited the higher 2008 guidelines post Booker, where the guidelines are advisory and not binding. The court found that an Ex Post Facto Clause violation occurs when a district judge’s selects the guidelines applicable at the time of sentencing rather than at the time of the offense and the sentence results in a substantial risk of a harsher punishment. In this case, the defendants failed to show a substantial risk of a harsher sentence. Here all defendants received departures that were below the 2002 range.