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United States of America v. Clarence Allen Rice

November 14, 2012

UNITED STATES OF AMERICA PLAINTIFF - APPELLEE
v.
CLARENCE ALLEN RICE DEFENDANT - APPELLANT



Appeal from United States District Court for the Southern District of Iowa - Des Moines

The opinion of the court was delivered by: Murphy, Circuit Judge:

Submitted: September 20, 2012

Before LOKEN, BEAM, and MURPHY, Circuit Judges.

Clarence Allen Rice was convicted of four counts of wire fraud based on fraudulent money transfers he made in connection with his leasing business. The district court sentenced him to 70 months and ordered restitution of $3.3 million. He*fn1 appeals, challenging the jury instructions, the verdict form, and his sentence. We affirm.

I.

Rice owned several related companies in Des Moines which he operated as one company called C&J. C&J leased golf carts, tanning beds, and other equipment to small businesses for a monthly fee. To finance its operations, C&J regularly sold leases to Frontier Leasing Corporation, which would then receive the stream of monthly payments from the small businesses. C&J remained the named party on the lease, collected the lease payments, and forwarded them to Frontier. C&J would also forward lump sums from lessees who wished to pay off the balance ahead of schedule, and would repurchase leases that went into default.

In June 2000 Rice began using funds from C&J to engage in online day trading, and C&J experienced cash flow problems as a result. To cover C&J's liabilities Rice began to withhold lump sums it received when a lessee paid off its lease early. Instead of forwarding the lump sum to Frontier, Rice would forward an amount equal to the normal monthly payment so that Frontier would not realize the lease had been paid off. Surplus cash would be used to replenish Rice's investment account. In similar fashion Rice made monthly payments on defaulted leases in order to avoid C&J's obligation to repurchase them, and he sold Frontier a number of completely invalid leases that had been canceled, rewritten, or already paid off. He gave inaccurate accountings to Frontier throughout.

In 2006 an internal investigation by Frontier revealed that a large number of monthly payments were actually coming from C&J rather than from lessees, and Frontier began to suspect fraud. When Frontier demanded to have direct contact with the lessees, Rice was forced to admit that hundreds of the leases were in default, paid off, rewritten, or canceled, and that C&J lacked the funds necessary to repurchase them. Nearly 700 of the 2700 leases C&J had sold to Frontier were involved with a total value of approximately $7 million.

Rice was indicted on four counts of wire fraud under 18 U.S.C. § 1343. The indictment alleged that Rice had intentionally devised a scheme to defraud Frontier through several means and that in furtherance of his scheme he had made interstate wire transfers. Each count of the indictment referenced a specific money transfer by wire in which Rice had deposited a lessee's early payoff in C&J's account in Iowa. Count 1 for example identified a transfer of approximately $3,000 by a lessee in North Carolina. Counts 2, 3 and 4 identified similar transfers of lessee payments from Oregon, Virginia, and Florida. The indictment alleged that in each case Rice had converted the payoff money to his own use instead of forwarding it to Frontier. In addition to the conversion of early payoffs, the indictment described several other means in which Rice had carried out his scheme, including concealing defaulted leases, selling invalid leases, and giving inaccurate accountings.

The jury instructions given at trial mirrored the indictment in setting forth the charges and factual allegations against Rice. Instruction 8 identified the wire transfer related to each count, listing the date, location, and amount that was converted by Rice. Instruction 9 described Rice's scheme to defraud Frontier, listing twelve means he had used to carry it out. These included "converting [early payoffs] to his own use," "[c]oncealing the status of defaulted leases," "[s]elling leases to Frontier that were no longer valid," and several others described in the indictment. Instruction 9 explained that the government only needed to prove one of the twelve means in order to establish that Rice had devised a scheme to defraud Frontier and that all the jurors did not need to agree on the same particular means.

The jury found Rice guilty on all four counts. The district court held a two day sentencing hearing where it heard testimony from numerous witnesses and received hundreds of exhibits. The court calculated the total loss from Rice's fraud to be $5.4 million and his guideline sentencing range to be 70 to 87 months. The court subsequently sentenced Rice to 70 months and ordered $3.3 million in restitution.

Rice appeals his conviction and sentence, challenging the jury instructions, verdict form, loss calculation, restitution award, and sentence of imprisonment.

II.

Rice first appeals the jury instructions given by the district court, arguing that the jury should have been required to agree unanimously on which means he had used to carry out the scheme to defraud Frontier. We review the jury instructions for abuse of discretion. United States v. Florez, 368 F.3d 1042, 1044 (8th Cir. 2004). We will affirm if, "taken as a whole, [they] adequately advise[d] the jury of the essential elements of the offenses ...


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