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United States v. Schultz

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

May 15, 2017

UNITED STATES OF AMERICA
v.
DEBRA A. SCHULTZ

          MEMORANDUM OPINION AND ORDER

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

         Before the Court are Defendant Debra Schultz's motion for acquittal and new trial [154] and her motion for leave to file a brief in excess of fifteen pages [153]. For the reasons set forth below, the Court grants Defendant's request to file a longer brief [153], but denies Defendant's motion for acquittal and new trial [154].

         I. Background

         Defendant Debra Schultz was charged with three counts of wire fraud, 18 U.S.C. § 1343, in connection with a scheme to defraud a non-profit organization that coordinated organ and tissue donations in Illinois and Indiana (“Organization A”). Two other defendants were charged alongside Defendant, one of whom was her cousin, co-Defendant Shari Hansen. Hansen was the non-profit's auditing coordinator and created false organ donation invoices to siphon money from her employer. Some of the invoices and checks were made out to Defendant's minor son and identified him as the doctor performing the non-existent procedure. Dozens of checks were deposited into bank accounts controlled by Defendant. Hansen maintains that Defendant kept some of this money for herself, and Defendant maintains that she did not. Ultimately, Hansen pled guilty, cooperated with the Government, and testified against Defendant at trial.

         Trial commenced on January 9, 2017. After a six-day trial, the jury returned a guilty verdict on all three counts. Defendant has now moved for acquittal and a new trial [154].

         II. Legal Standard

         Under Federal Rule of Criminal Procedure 29(a), a defendant may move for entry of a judgment of acquittal on “any offense for which the evidence is insufficient to sustain a conviction.” Fed. R. Crim. P. 29(a). A “Rule 29 judgment of acquittal is a substantive determination that the prosecution has failed to carry its burden.” Smith v. Massachusetts, 543 U.S. 462, 468 (2005). The Court must “construe the evidence in the light most favorable to the government, asking whether a rational trier of fact could have found the elements of the crime beyond a reasonable doubt.” United States v. Weimert, 819 F.3d 351, 354 (7th Cir. 2016). To prevail on a sufficiency of evidence challenge, Defendant “must show that no rational trier of fact could have found that the government proved the essential elements of the crime beyond a reasonable doubt.” United States v. Griffin, 684 F.3d 691, 694 (7th Cir. 2012).

         Under Federal Rule of Criminal Procedure 33, a “court may vacate any judgment and grant a new trial if the interest of justice so requires.” Fed. R. Crim. P. 33(a). “A jury verdict in a criminal case is not to be overturned lightly, and therefore a Rule 33 motion is not to be granted lightly.” United States v. Santos, 20 F.3d 280, 285 (7th Cir. 1994) (internal quotation marks omitted). The rule is “reserved for only the most extreme cases.” United States v. Hagler, 700 F.3d 1091, 1101 (7th Cir. 2012) (quoting United States v. Linwood, 142 F.3d 418, 422 (7th Cir. 1998)). “[C]ourts have interpreted the rule to require a new trial ‘in the interests of justice' in a variety of situations in which the substantial rights of the defendant have been jeopardized by errors or omissions during trial.” United States v. Kuzniar, 881 F.2d 466, 470 (7th Cir. 1989).

         III. Analysis

         Defendant seeks a judgment of acquittal or new trial for three reasons: (1) Defendant's Fifth Amendment rights were violated when the Court instructed the jury-consistent with the Seventh Circuit's pattern jury instructions-that the wire fraud statute can be violated without gain to Defendant; (2) there was insufficient evidence to convict Defendant of wire fraud based on Hansen's testimony; and (3) the Court erred in excluding certain text messages. The Court takes each argument in turn.

         A. “No Gain” Jury Instruction

         Before the final jury instruction conference, Defendant indicated that she would be objecting to the Government's proposed jury instructions on the basis of Stirone v. United States, 361 U.S. 212 (1960). The Court asked Defendant to brief her objection, and she submitted a short, half-page argument that largely summarized Stirone and United States v. Miller, 471 U.S. 130 (1985). [See 129, at 2.] When it came to applying those two cases, Defendant framed her argument this way:

By allowing a finding of guilty without any gain established, the indictment is amended beyond its scope. The grand jury was introduced evidence that there was $114, 000 provided to the defendant as a result of the scheme and the indictment was handed down on the basis of gain. To allow a conviction based on an instruction with no gain required, the indictment's scope is expanded.

Id.

         The Court overruled that objection, providing at least eight reasons for doing so: (1) the indictment merely included the open-ended statement that Defendant and her two co-Defendants “fraudulently converted to their own benefit the funds obtained from” Organization A, which was consistent with the proof at trial; (2) Defendant failed to submit any evidence of what the grand jury was told; (3) regardless, the terms of the indictment, not grand jury testimony, are what can be constructively amended; (4) gain is not an element of wire fraud, and allegations that are unnecessary to the elements of the offense can be dropped from the indictment without causing a constructive amendment under Miller; (5) withdrawing proof of personal gain narrows rather than broadens the indictment, which is permissible under Miller; (6) Defendant had notice of the charge from the indictment; (7) reference to “benefit” in the indictment was, at best, surplusage and could not increase the elements that the government was required to prove at trial; and (8) Defendant's proposed remedy (striking Government's proposed “aiding and abetting” instruction) did not match any alleged Stirone violation. [132, at 3-6.] The jury was ultimately given the Seventh Circuit's pattern instruction that success is not required to prove wire fraud. See Pattern Criminal Jury Instructions of the Seventh Circuit for 18 U.S.C. §§ 1341 & 1343 at 442 (2012); [134, at 26 (“The wire fraud statute can be violated whether or not there is any loss or damage to the victim of the crime or gain to the defendant.”)].

         Defendant argues that this was error, and attempts to respond to some of the Court's reasons over the first twenty pages of her post-trial brief.[1] Overall, she makes three main arguments. First, the Government “broadened” the indictment because the “theory” it submitted to the grand jury was that Defendant converted funds for personal gain, while the “theory” it presented at trial was one of “no gain.” [154, at 4-5.] This was an “alternative theory of the case, ” and the grand jury was required to charge both theories-gain and no gain-if the Government was to present a theory of “no gain” at trial. Id. at 5. Because the “no gain” theory was not presented to the grand jury, the Government violated Stirone and a new trial is needed. Second, grand jury testimony is “very relevant” to establishing a constructive amendment. Id. at 15-17. Third, “it does ...


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