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United States v. Foster

United States Court of Appeals, Eleventh Circuit

January 4, 2018

UNITED STATES OF AMERICA, Plaintiff - Appellee,
v.
LAWRENCE FOSTER, a.k.a. Lorenzo Foster, Defendant-Appellant.

         Appeal from the United States District Court for the Southern District of Florida D.C. Docket No. 1:13-cr-20063-DLG-1

          Before JORDAN, HULL, and GILMAN, [*] Circuit Judges.

          GILMAN, Circuit Judge

          I. OVERVIEW

         This is a real estate fraud case. A jury convicted Lawrence Foster of defrauding investors with regard to real estate located on the island of Rum Cay in the Bahamas. Foster appeals the district court's (1) denial of his three motions for a judgment of acquittal; (2) determination of the loss amount, restitution award, and his sentence; and (3) denial of his motion to vacate the verdict due to alleged juror misconduct. For the reasons set forth below, we AFFIRM the judgment of the district court.

         II. BACKGROUND

         A. Factual background

         Foster served as president of Paradise Is Mine, Inc. (PIM), a Florida corporation that offered investments in Rum Cay land. (R. 452, USCA 2752; R. 528, USCA 4931) The company's website proclaimed that PIM "own[ed] in excess of 16, 000 acres of prime, investment grade real estate." (R. 455, USCA 3317) PIM solicited investors online and by telephone, offering them two investment opportunities: they could either (1) purchase Rum Cay land or (2) lend money to PIM in return for a security interest in the land. PIM targeted people who had recently lost money in the stock or precious-metals markets, giving them an above-market-value credit for any stock or precious-metals investments transferred to PIM as consideration. (R. 452, USCA 2689-90, 2698-2700, 2969, 2974-75)

         Foster used several marketing strategies, including celebrity endorsements, to promote PIM. One endorsement involved Joe Montana, a professional-football icon, who agreed to endorse PIM in return for a parcel of Rum Cay land. (R. 456, USCA 3417-58) Foster then represented to prospective investors that Montana had purchased Rum Cay land from PIM. (R. 452, USCA 2696-98, 2705-06, 2733; R. 453, USCA 2816-17, 2860-61, 2897, 2910-12; R. 454, 2994-95, 3038- 40, 3060; R. 455, USCA 3317-19, 3325-29) Several investors testified at trial that they had invested with PIM partly because they believed that celebrities like Montana had done so. Id.

         Foster also represented to prospective investors that hundreds of news organizations, including USA Today and The Wall Street Journal, had "featured" articles about PIM within the past two years. (R. 454, 3007-14; R. 455, USCA 3318-22). Images of articles appeared on PIM's website, and Foster himself emailed articles to prospective investors who expressed hesitation about investing. Id. Several investors later testified that they had invested with PIM partly because they had believed that the articles gave PIM credibility. (R. 453, USCA 2898, 2911-16; R. 454, USCA 2994-96, 3007-14)

         PIM, in fact, was a scam. The land that it purported to own was actually held in the name of Sunward Holdings, a Bahamian company owned by a convicted felon and embroiled in litigation over title to the land. (R. 457, USCA 3662-71; R. 458, USCA 3897-3906, 3917, 3947-54; 3662; R. 459, USCA 3994- 4001, 4072) PIM did not inform investors that Sunward held the disputed title to the land until after they had transferred cash, stock, retirement accounts, or other value to PIM. (R. 453, USCA 2756, 2809-10, 2826-30, 2852-56, 2861, 2870-72, 2899-2909; R. 454, USCA 2958-59, 3038-48) Moreover, no reporter for either USA Today or The Wall Street Journal had ever written anything about PIM or the land. (R. 455, USCA 3251-54, 3270-74) Foster created some of the articles himself. (R. 455, USCA 3320-22; R. 458, USCA 3854) Others were created by a public-relations firm that he had hired. (R. 235, USCA 1133, 1150-53)

         None of the investors ever received title to the Rum Cay land. Those who agreed to purchase land from PIM instead received an option contract under which they could, at least in theory, purchase land from Sunward and apply for a title from the Bahamian government, which in turn would impose a stamp tax of 10% of the purchase price. But PIM failed to provide the investors with the documentation they needed to exercise their options. (R. 456, USCA 3430-48)

         Those who made loans to PIM received security agreements, but the Rum Cay land securing the loans belonged to Sunward, putting the collateral out of reach. Several such investors testified that they did not even know the collateral's location. (R. 453, USCA 2829-30; R. 571, USCA 5447-48, 5456-57).

         On the other hand, PIM's salespeople received exorbitant commissions of up to 50% of the price of the investments they sold. (R. 459, USCA 4037) And Foster withdrew over a million dollars in cash from PIM's accounts and transferred another million dollars or more to jewelry and rare-coin companies with no apparent benefit to PIM's investors. (R. 456, USCA 3486-3500; R. 519, USCA 4710-15) He also made no significant improvements to the Rum Cay land and, from 2008 to 2012, filed no corporate or personal income-tax returns. (R. 455, USCA 3295)

         B. Procedural background

         Foster was charged in a superseding indictment with one count of conspiring to commit wire fraud, in violation of 18 U.S.C. § 1349, and with six counts of wire fraud, in violation of 18 U.S.C. § 1343. (R. 72, USCA 822-33) A jury convicted him on all counts. (R. 196, USCA 834) Because of an error in the exhibits given to the jury, however, the district court ordered a new trial. (R. 272, USCA 1823) At the second trial, Foster twice moved for a judgment of acquittal, first at the close of the government's proof and again at the close of his own. (R. 457, USCA 3651; R. 461, USCA 4123) The court denied both motions. (R. 457, USCA 3655;R. 461, USCA 4126) A jury again convicted Foster on all counts. (R. 375, USCA 2186-87)

         Several days after the trial's conclusion, the district court received a letter from a juror alleging that some of the other jurors had bullied her into reaching a guilty verdict, which she now regretted. (R. 383, USCA 2201-04) This prompted Foster to file a motion to vacate the verdict. The court declined to do so. (R. 390, USCA 2239-47; R. 421, USCA 2419) Foster then moved a third time for a judgment of acquittal, arguing that insufficient evidence supported his convictions. (R. 403, USCA 2302-20) The court denied that motion as well. (R. 471, USCA 4355)

         After a sentencing hearing that spanned three days, the district court determined the loss amount to be the full value of the victims' investments. (R. 560, USCA 5244, 5263-65) It ordered Foster to pay restitution in the amount of $8, 190, 110 (the full amount of the loss, less about $280, 000 previously returned to a few of the investors in the form of loan repayments) and sentenced him to 152 months in prison. (R. 560, USCA 5254-55, 5265) This timely appeal followed. (R. 543, USCA 5063)

         III. ANALYSIS

         A. ...


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