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United States v. Jedynak

United States District Court, N.D. Illinois, Eastern Division

May 6, 2014

UNITED STATES OF AMERICA,
v.
JAMES JEDYNAK, Defendant

Page 813

For Gail Howard, also known as Betty Gail Howard, Defendant: Mary Higgins Judge, LEAD ATTORNEY, Federal Defender Program, Chicago, IL.

For James Jedynak, Defendant: Theodore Thomas Poulos, LEAD ATTORNEY, Cotsirilos, Tighe, Streicker, Poulos, & Campbell, Ltd., Chicago, IL; Marty Basu, Cotsirilos Tighe Streicker Poulos & Campbell Ltd, Chicago, IL.

For USA, Plaintiff: Derek Owens, LEAD ATTORNEY, United States Attorney's Office, Chicago, IL; Rachel Marie Cannon, Ryan S. Hedges, LEAD ATTORNEYS, William R. Hogan, Jr., United States Attorney's Office (NDIL), Chicago, IL; Pretrial Services, Probation Department.

Page 814

MEMORANDUM OPINION AND ORDER

Robert M. Dow, Jr., United States District Judge.

Before the Court is Defendant James Jedynak's post-trial motion for judgment

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of acquittal or, alternatively, for a new trial [132]. For the reasons set forth below, the Court grants Defendant's motion for acquittal as to Count 3 and denies Defendant's motion [132] in all other respects.

I. Background

The Government charged Defendant James Jedynak and co-defendant Gail Howard with defrauding approximately 70 investors in a California-based voice-over-internet-protocol (" VOIP" ) company called Unified Worldwide Transport (" UWT" ) between 2003 and 2007. Howard was UWT's President, and Jedynak was responsible for recruiting individuals and entities to invest money in UWT.[1] On October 3, 2013, following a three-week trial, a jury convicted Defendant James Jedynak on the five counts of wire fraud charged against him in the indictment. Defendant challenges his convictions on Counts 3, 4, and 5, moving for a judgment of acquittal pursuant to Federal Rule of Criminal Procedure 29 or, alternatively, a new trial under Rule 33. He does not challenge his convictions on Counts 1 and 2.

At trial, the Government presented evidence that Jedynak and Howard raised more than $35 million from investors and lenders by falsely representing that UWT would use their funds to acquire telecommunications routes, build network infrastructure, provide working capital, repay debt, and purchase licenses and equipment. Government witnesses testified, among other things, that Jedynak represented that he would not receive any compensation from UWT until investors received all of their principal back. Jedynak and Howard directed investors and lenders to send their money to KKJ Holdings, a company of Jedynak's. Jedynak then deposited investor and lender funds into a KKJ Holdings Harris Bank account that he controlled and then split the funds with Howard. Evidence was presented from which the jury could have found (and evidently did find) that Howard and Jedynak misappropriated (and concealed their misappropriation of) millions of dollars' worth of investor and lender funds.

The Government also presented evidence that Defendants falsely represented to investors that UWT had entered into a contract with Caterpillar Inc., a Fortune 500 Company headquartered in Peoria, Illinois, to carry Caterpillar's international VOIP traffic. Defendants represented that Caterpillar owed UWT a significant amount of money as a result of this contract and had caused UWT to experience a substantial decrease in anticipated revenues by failing to pay it. Howard and Jedynak made these representations to explain UWT's failure to pay investors their promised principal and interest payments and to induce them to make additional investments. Defendants also distributed to certain investors information and financial statements that contained false information about the purported Caterpillar accounts receivable balance. Defendants gave one investor a fraudulent agreement purporting to evidence a contractual relationship between Caterpillar and UWT. However, evidence was presented at trial that there never was a contract between UWT and Caterpillar and that Caterpillar did not owe money to UWT.

The trial evidence came from a variety of sources, including investor testimony about the representations made by Jedynak and Howard and the documents and materials that Howard and Jedynak provided to investors. The Government also introduced copies of the Caterpillar contract and accounts receivable that Jedynak and Howard provided to certain investors.

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as well as testimony from Caterpillar executives confirming that no such contract or relationship between Caterpillar and UWT existed. In addition, the Government presented voluminous financial records showing that millions of dollars investors provided to Jedynak and Howard never reached UWT, but instead were deposited into the bank account that Jedynak controlled and eventually split between Howard and Jedynak.

Jedynak's principal defense was good faith. He asserted that Howard was the mastermind of the fraud and that he, like the investors who testified at trial, was a victim of Howard's criminal scheme.

II. Legal Standards

A. Motion for Judgment of Acquittal

Defendant moves for a judgment of acquittal pursuant to Rule 29 with respect to Counts 3, 4, and 5 of the indictment. Counts 3, 4, and 5 charged Defendant with wire fraud in violation of 18 U.S.C. § 1343. Rule 29(a) provides that, " [a]fter the government closes its evidence or after the close of all the evidence, the court on the defendant's motion must enter a judgment of acquittal of any offense for which the evidence is insufficient to sustain a conviction." Fed. R. Crim. P. 29(a).

" In challenging the sufficiency of the evidence, [a defendant] bears a heavy, indeed, nearly insurmountable, burden." U.S. v. Warren, 593 F.3d 540, 546 (7th Cir. 2010); see also U.S. v. Jones, 713 F.3d 336, 339-40 (7th Cir. 2013); U.S. v. Berg, 640 F.3d 239, 246 (7th Cir. 2011); U.S. v. Dinga, 609 F.3d 904, 907 (7th Cir. 2010); U.S. v. Morris, 576 F.3d 661, 665-66 (7th Cir. 2009). The reviewing court will view the " evidence in the light most favorable to the prosecution," and the defendant " 'must convince' the court that, even in that light, 'no rational trier of fact could have found him guilty beyond a reasonable doubt.'" Warren, 593 F.3d at 546 (quoting U.S. v. Moore, 572 F.3d 334, 337 (7th Cir. 2009)); see also U.S. v. Eller, 670 F.3d 762, 765 (7th Cir. 2012); U.S. v. Doody, 600 F.3d 752, 754 (7th Cir. 2010) (stating that the inquiry is " whether evidence exists from which any rational trier of fact could have found the essential elements of a crime beyond a reasonable doubt" ). In other words, a court will " set aside a jury's guilty verdict only if 'the record contains no evidence, regardless of how it is weighed,' from which a jury could have returned a conviction." U.S. v. Presbitero, 569 F.3d 691, 704 (7th Cir. 2009) (quoting U.S. v. Moses, 513 F.3d 727, 733 (7th Cir. 2008)); see also Warren, 593 F.3d at 546.

It follows that under Rule 29, courts " do not reassess the weight of the evidence or second-guess the trier of fact's credibility determinations." U.S. v. Arthur, 582 F.3d 713, 717 (7th Cir. 2009); see also U.S. v. Severson, 569 F.3d 683, 688 (7th Cir. 2009). Rather, " [s]orting the facts and inferences is a task for the jury." Warren, 593 F.3d at 547. The Seventh Circuit teaches that:

[t]he critical inquiry on review of the sufficiency of the evidence to support a criminal conviction must be not simply to determine whether the jury was properly instructed, but to determine whether the record evidence could reasonably support a finding of guilt beyond a reasonable doubt. But this inquiry does not require a court to ask itself whether it believes that the evidence at the trial established guilt beyond a reasonable doubt. Instead, the relevant question is whether, after viewing the evidence in the light most ...

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