In U.S. v. Edwards, No. 06-11643 (May 5, 2008), the Court affirmed fraud and money laundering convictions arising out of a Ponzi scheme involving investments in coin-operated payphones.
Edwards failed to renew his motion for judgment of acquittal at the close of all the evidence, as required by Fed. R. Crim. P. 29. Accordingly, the Court reviewed his challenge to the sufficiency of the evidence only for "a manifest miscarriage of justice." The Court held that the evidence was sufficient, noting that Edwards was aggressively courting investors with claims that his company was sound and profitable, when it was, in reality, "hemorrhaging money." Turning to the conspiracy conviction, the court noted that since conspiracies are "inevitably secret," they are "rarely established by direct evidence." The Court concluded that Edwards’ wife was not aware that what she was doing was illegal, and she therefore was not a conspirator. However, another senior manager at Edwards’ companies participated in the transfers of money, and inferences from his conduct sufficed to establish that he had conspired with Edwards to launder the fraud proceeds.
The Court rejected Edwards’ argument that victims of his fraud who were going to be called as government witnesses should have excluded from the courtroom during the trial under Fed. R. Evid. 615. The Court noted that the Crime Victims Act provides an exception to Rule 615 for victims, and the Court found no constitutional basis for invalidating this exception, and no abuse of discretion in the district court’s application of it.
The Court also found no "collusion" between the SEC and the United States Attorney’s Office in acquiring and sharing information about Edwards’ corporations. The Court further rejected an argument that the fraud jury instruction constructively amended the indictment because it expanded the mens rea for the offense.
The Court did not address Edwards’ challenges to his sentence because it vacated the sentence and remanded for resentencing: the district court failed to specify, as required, a sentence for each count of conviction.
