The opinion of the court was delivered by: DAVID COAR, District Judge
MEMORANDUM OPINION AND ORDER
On August 10, 2004, a Second Superceding Indictment charged
Defendant Roger Wolf ("Wolf" or "Defendant") with eight counts of
wire fraud, in violation of 18 U.S.C. § 1343 and 2. On April 15,
2005, after a jury trial, Wolf was found guilty as charged in the
Second Superceding Indictment. Presently before this Court is
Wolf's motion for judgment of acquittal, pursuant to
Fed.R.Crim.P. 29 ("Rule 29"). For the reasons set forth below, Wolf's
motion is DENIED.
I. Factual and Procedural Background
Illinois Vehicle Premium Finance Company ("IVPF") and Illinois
Vehicle Insurance Agency ("IVIA") were companies formed by Wolf,
that worked, in tandem, to sell automobile insurance policies to
high risk drivers who could not obtain insurance from "standard"
insurers (i.e., Allstate and State Farm). See Mot. for
Acquittal, p. 2.*fn1 Wolf was president of IVPF. Id. In 1988, Wolf hired Jerome Januszewski ("Januszewski") to serve as
IVPF's and IVIA's Chief Financial Officer. Id. Wolf owned
similar operations in Texas and Florida. Id.
In a typical IVPF sale, a new customer purchased a six or
twelve month insurance policy, but did not have to pay the entire
policy premium cost upon purchase. See Mot. for Acquittal, p.
2. Rather, IVPF would collect a down payment from the new
customer with his or her application, and allow the customer to
finance the remaining premium in monthly installments over the
term of the policy. Id. IVPF would purchase the policy from an
insurance carrier, and then collect the monthly installment
payments from the customer. Id. These monthly installment
payments included interest and other fees due IVPF in exchange
for financing the premium cost. Id.
In 1995, IVPF entered into a Collateralization Agreement with
Texas Commerce Bank National Association, currently known as JP
Morgan Chase Bank (hereinafter referred to as "Chase"). Mot. for
Acquittal, p. 2. Pursuant to the Collateralization Agreement,
Chase made $32.5 million in funding available to IVPF. Id. at
pp. 2-3 Each month, Chase would buy premium finance contracts
from IVPF, and forward IVPF the funds it needed to complete the
purchases relating to those new customers. Id. at p. 3 In
return, IVPF assigned the future payments it was due on these
financed policies (the "receivables") to Chase. Chase and IVPF
renewed and reissued their agreements in 1997, until IVPF had
over $55 million available from Chase to finance new policies.
The new policies and receivables that were assigned to Chase
were listed on a funding report that IVPF sent to Chase
approximately once a month. Mot. for Acquittal, p. 3. As noted by
several witnesses at trial, including Richard Melton ("Melton"),
a consultant for Chase, and Januszewski, Chase did not purchase all of the policies that IVPF
issued. Id. Chase only purchased those policies that were
defined in the Agreements as "eligible", and only those that were
included in the Funding Reports that IVPF sent Chase. Id.
The Collateralization Agreement also required IVPF to set up a
"Deposit Account" in which it would deposit monthly payments
received from customers whose policies were bought by Chase. Mot.
for Acquittal, p. 3. In addition, pursuant to the
Collateralization Agreement, the only payments that were to be
deposited into this Deposit Account were the monthly payments or
receivables owned by Chase; commingling was prohibited. Id.
Further, IVPF was required to submit to Chase daily reports of
monies deposited into the Deposit Account, to insure that all of
the funds in the Deposit Account were being wired to Chase in
accordance with the parties' agreement. Id. at pp. 3-4.
Additionally, IVPF was required to submit a monthly servicer's
report to Chase that included all of IVPF's new loan sales for
the month and tracked the total receivables that Chase owned.
Id. at p. 4.
In late 1999, Chase noticed a discrepancy between the amount of
receivables IVPF reported in its October 1999 Servicer's Report
and the amount of receivables reported in IVPF's most recent
financial statements. Mot. for Acquittal, p. 5. On November 2,
1999, Chase sent a letter to IVPF noting that it had discovered a
$9 million shortfall in the Collateral Pool Balance. Id. Until
this shortfall was reconciled, Chase ceased funding any new
policies to IVPF. Id. According to Chase's investment advisors,
Kris Harihara and Joseph Lorusso of Structured Finance
Associates, they were unable to conduct an audit or review of
IVPF's records until October 2000. According to the evidence presented by the Government, after
Chase ceased funding, Januszewski wire transferred $300,000 out
of the Deposit Account to IVPF's main operating account. Mot. for
Acquittal, p. 5. Melton testified that such a transfer was
prohibited by the Agreements, as were all other transfers that
occurred from December 1999 through September 2000. In total,
Januszewski made over 50 similar wire transfers out of the
Deposit Account totaling $6,255,000.000 Id. at p. 6. During
Wolf's trial, Januszewski claimed he instituted these wire
transfers after discussing IVPF's need for additional funds with
Wolf, and it was under Wolf's direction that Januszewski made
these wire transfers. Id. Januszewski testified that he
concealed these transfers, per Wolf's instructions, by
underreporting IVPF's policy sales on the monthly Servicer's
Reports sent to Chase during the Indictment Period. Id.
In October 2002, Melton and Harihara visited IVPF's offices and
compared IVPF's bank records to the deposits IVPF reported in its
September 2000 Servicer's Report. Mot. for Acquittal, p. 6.
According to Melton, he immediately discovered the wire transfers
out of the Deposit Account to IVPF's other operating accounts.
In May 2003, Januszewski was indicted on eight counts of wire
fraud, pursuant to 18 U.S.C. § 1343. In August 2003, Januszewski
entered a plea of guilty. On August 21, 2003, a superceding
indictment, that named both Januszewski and Wolf as defendants,
was returned. According to the Indictment, Wolf concealed the
diversion of funds by directing Januszewski to fax inaccurate
monthly Servicer's Reports to Chase during the indictment period.
As noted above, on April 15, 2005, after a jury trial, Wolf was
found guilty as charged in the August 10, 2004 Second Superceding
Indictment. II. Legal Standard for Rule 29 Motion
Wolf moves for judgment of acquittal pursuant to Rule 29. "A
motion for judgment of acquittal should only be granted if there
is insufficient evidence to sustain the conviction." United
States v. O'Hara, 301 F.3d 563, 569 (7th Cir. 2002) (citing
United States v. Jones, 222 F.3d 349, 351-52 (7th Cir. 2000);
Fed.R.Crim.P. 29(a)). When evaluating a motion for judgment of
acquittal pursuant to Rule 29, the court must view the evidence,
"in the light most favorable to the government," and determine
whether that evidence "could support any rational trier of fact's
finding of all the essential elements of the crime beyond a
reasonable doubt." United States v. Brown, 328 F.3d 352, 355
(7th Cir. 2003) (citing United States v. Williams,
298 F.3d 688, 691-92 (7th Cir. 2002)).
The Defendant argues that judgment of acquittal pursuant to
Rule 29 is warranted for two reasons. First, Wolf argues that
there was no evidence at trial that the funds diverted from the
Deposit Account actually belonged to Chase, and without such a
diversion, there is no evidence of a "scheme to defraud." Second,
Wolf contends that the Government claimed that it did not have to
prove any actual diversion, as long as there was evidence of
Wolf's attempt to divert funds that he thought belonged to Chase.
Wolf asserts that because "attempt to commit fraud" is not the
crime for which he was indicted, there is a material variance
between the ...