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United States v. Lawson

United States Court of Appeals, Seventh Circuit

January 20, 2015

UNITED STATES OF AMERICA, Plaintiff-Appellee,
v.
JAMAL E. LAWSON, SR., Defendant-Appellant

Argued January 7, 2015.

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 12 CR 03 -- James B. Zagel, Judge.

For United States of America, Plaintiff - Appellee: Christopher R. McFadden, Attorney, Office of The United States Attorney, Chicago, IL.

For Jamal E. Lawson, Sr., Defendant - Appellant: Gerald J. Collins, Attorney, Chicago, IL.

Before WOOD, Chief Judge, and POSNER and EASTERBROOK, Circuit Judges.

OPINION

Page 520

Easterbrook, Circuit Judge.

Evangel Capital held itself out as a lender with $250 million in assets available to churches and other religious institutions. It issued firm-commitment financing letters for multi-million-dollar projects but never closed a single loan and, indeed, never had more than $10,000 in its bank accounts. What money it did have came from fees charged to potential borrowers. Jamal Lawson, Sr., its owner and principal manager, told clients that the fees would be used to pay for appraisals and required documents; instead the fees were swiftly withdrawn and used for personal expenses. Lawson collected some $270,000 in fees and, despite his promises, did not return a penny to clients when their loans went unfunded. A jury convicted Lawson of wire fraud, 18 U.S.C. § 1343, and he has been sentenced to 52 months' imprisonment.

Lawson does not contest the sufficiency of the evidence. He told clients that he had a track record of financing religious projects; actually he never financed a single one. Essentially everything he said to the clients was false, and in a statement to federal investigators Lawson admitted diverting fees to his own use. Unfortunately, the prosecutor tried to " strengthen" an airtight case by asking the district court's approval of a plan to show that Lawson had not reported the fees as income. (Lawson had not filed tax returns at all.) The judge told the prosecutor that he could show that Lawson failed to report his income, but not that he failed to file tax returns. The prosecutor followed these instructions at trial. The judge told the jury that the evidence was admitted for the purpose of showing whether Lawson acted with knowledge or fraudulent intent--but not how it illuminated those issues, creating a needless risk that the jury used it for the forbidden purpose of treating Lawson as having a propensity to commit crimes.

The only issue raised in Lawson's appellate brief is whether the district court should have excluded the tax evidence. The United States contends that the evidence was relevant and admissible, despite Fed.R.Evid. 404(b), because it was not used to show Lawson's propensity to commit crimes. It was used, rather, to negate his contention that he intended to extend loans and failed to do so only because the state of the economy made it impossible to get financial commitments. Tax evidence could in principle undermine such a contention: if Lawson did not report the advances as business income and take deductions for the expenses of running the business, that implies that there was no legitimate business (and no legitimate

Page 521

business expenses). The prosecutor also maintains that a jury could understand non-reporting of the income as Lawson's implicit acknowledgment that it was the fruit of a fraud rather than a legitimate venture. Yet the prosecutor did not ask the jury to draw these inferences (or any other) when the evidence was admitted, and all the instructions said about the subject was:

you must decide whether it is more likely than not that the defendant did the acts that are not charged in the indictment. If you decide that he did, then you may consider this evidence to help you decide whether the defendant acted knowingly and with fraudulent intent when he committed the acts alleged in the indictment. You may not consider it for any other purpose.

This does not tell the jury how it could make proper use of the evidence. Legalese such as " knowingly and with fraudulent intent" is useless to lay jurors without concrete advice about what ...


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