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U.S. v. WOLF

August 31, 2005.

UNITED STATES OF AMERICA, Plaintiff,
v.
ROGER WOLF Defendant.



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. Id.

  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. Id.

  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)).

  III. Analysis

  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 ...


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