United States v. Caldwell

• Court: Court of Appeals for the Fifth Circuit
• Decided: September 24, 2002
• Docket: 99-60908
• Status: Published

Opinion

REVISED SEPTEMBER 24, 2002

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_____________________

No. 99-60908 _____________________

UNITED STATES OF AMERICA

Plaintiff - Appellee

v.

STEVE D CALDWELL

Defendant - Appellant

_________________________________________________________________

Appeal from the United States District Court for the Southern District of Mississippi _________________________________________________________________ August 13, 2002

Before KING, Chief Judge, and PARKER and CLEMENT, Circuit Judges.

KING, Chief Judge:

After a jury trial, Defendant-Appellant Steve Caldwell was

convicted of three counts of mail fraud and one count of money

laundering. On appeal he challenges his convictions and sentence

on several grounds. Finding no reversible error, we AFFIRM

Caldwell’s conviction and sentence.

I. BACKGROUND

1 On November 4, 1998, a grand jury returned an indictment

charging Steve Caldwell with six counts of mail fraud in

violation of 18 U.S.C. §§ 1341, 1346, and 2 (2000), and two

counts of money laundering in violation of 18 U.S.C. §§ 1957 and

2 (2000). On the government’s motion, the district court

dismissed two of the mail fraud counts prior to trial.

At Caldwell’s trial, the government presented testimonial

and documentary evidence regarding his activities from

approximately March 1993 to December 1996 in connection with the

corporate entities that were created by the Venture Capital Act

of 1994, MISS. CODE ANN. §§ 57-77-1, et seq. (1996), amended by

MISS. CODE ANN. §§ 57-77-2, et seq. (Supp. 2001).1 Caldwell played

a large role in bringing the Venture Capital Act into existence.

In advocating this legislation, he represented himself to

governmental officials as being associated with Capital

Strategies Group (“CSG”), a company that he formed and wholly

owned. In March 1993, Caldwell and Lee Gilliand, who was the

president and the sole employee of CSG, assisted officials of the

Mississippi Department of Economic and Community Development (the

“DECD”) in developing and drafting legislation creating a

publicly-funded entity designed to attract venture capital from

1 In 1998, after the events underlying Caldwell’s convictions occurred, the Mississippi Legislature amended the Venture Capital Act. See MISS. CODE ANN. § 57-77-2 (Supp. 2001). All subsequent citations to the Venture Capital Act in this opinion are to the original version unless otherwise specified.

2 private investors. Once the DECD submitted the draft legislation

to the Mississippi legislature, Caldwell and Gilliand lobbied to

secure its passage, which occurred in January of 1994.

The Venture Capital Act provided for the formation of three

entities —— the Magnolia Capital Corporation (“Magnolia

Capital”), the Magnolia Venture Capital Corporation (“Magnolia

Venture”), and the Magnolia Venture Capital Fund Limited

Partnership (“Magnolia Fund”) —— “for the purposes of increasing

the rate of capital formation; stimulating new growth-oriented

business formations; creating new jobs for Mississippi;

developing new technology; enhancing tax revenue for the state;

and supplementing conventional business financing.” Id. § 57-77-

3. Magnolia Capital, a non-profit corporation, was the sole

shareholder of Magnolia Venture, a for-profit corporation that

was the general partner of Magnolia Fund. See id. §§ 57-77-9(1),

(3), 57-77-11(1), (3). The Venture Capital Act further provided

for the issuance of state bonds, see id. § 57-77-29, and

authorized the DECD to disburse money from the bond proceeds as a

loan to Magnolia Capital to be used to give Magnolia Venture

funding “for the purpose of providing venture capital to

Mississippi businesses,” id. § 57-77-17(a)-(b).

Caldwell was among the five members of Magnolia Venture’s

board of directors, all of whom the director of the DECD

appointed pursuant to the Venture Capital Act. See id. § 57-77-

11(2). At the first board meeting, held on June 6, 1994,

3 Caldwell was elected chairman of the board. In this capacity,

Caldwell called a special meeting of the board approximately one

month later for the purpose of presenting for the board’s

approval (1) an employment contract hiring Caldwell as CEO and

(2) a consulting contract with CSG. Caldwell’s employment

contract provided for a starting annual salary of $150,000 to be

increased by a minimum of 10% each year. The consulting contract

retained CSG to raise capital from the private sector (which was

mandated by the Venture Capital Act) and to advise Magnolia

Venture regarding investment decisions. For these and other

related services, CSG was to receive an initial payment of

$75,000, subsequent payments of $25,000 per month, and a 5%

commission on each $5,000,000 in private investment that CSG

raised. The board unanimously approved both contracts.2

In justifying the two contracts, Caldwell represented to the

board that he and Lee Gilliand were co-owners of CSG.3 As noted

above, Caldwell was in fact the sole owner of CSG. In a document

entitled “Brief on Specifics of Contract,” which Caldwell

distributed to the board members at the special meeting, he cited

Gilliand’s background as a reason for approving the CSG contract.

Specifically, Caldwell noted that Gilliand “was Chairman of the

2 Caldwell abstained from voting on both contracts. 3 A booklet containing information about Magnolia Venture, created under Caldwell’s direction to be distributed to potential private investors, stated that Caldwell owned 50% of CSG.

4 Governor’s Task Force” and “has worked for 18 months without

compensation to pass the Venture Capital Legislation.”

Caldwell’s focus on Gilliand in promoting CSG’s contract

presumably would have made sense to the board members, who, in

the words of one board member in her testimony at the trial,

“really thought Lee [Gilliand] . . . was the main person [at

CSG].”

In the “Brief on Specifics of Contract,” Caldwell also

stated that the DECD “approved” of his relationship with CSG and

that CSG was the only securities dealer in Mississippi licensed

to perform the services needed by Magnolia Venture. At trial,

however, the DECD official who was primarily responsible for

drafting the legislation with Caldwell and Gilliand disavowed any

“approval” by the DECD of Caldwell’s relationship with CSG. In

addition, Mississippi’s assistant secretary of state for

securities testified that, at the time that the board approved

the consulting contract with CSG, 900 firms were registered in

Mississippi to perform the services in question. The assistant

secretary further testified that CSG was not among these 900

registered firms.

Caldwell was apparently quite certain that his appointment

as chairman and the board’s approval of the contracts would come

to pass even before the Venture Capital Act went into effect in

1994. On December 6, 1993, Caldwell wrote a letter to an

investment broker at Merrill Lynch suggesting that it would be

5 beneficial to Merrill Lynch to finance an existing business loan

of Caldwell’s because of the income that he expected to obtain as

a result of the formation of Magnolia Venture. Specifically,

Caldwell wrote:

Lee and I have worked extensively on the State of Mississippi’s new Venture Capital program. . . . [T]he highlights are that the State will put up $20 million. . . . It is planned that I will be Chairman of the Board of the Venture Capital Corporation (a healthy salary included). We will then sign a management contract in the $350,000 range to Capital Strategies to do background and management work for prospective companies. . . . All of this will become public knowledge in January when the legislation is introduced to the . . . Mississippi Legislature.

Caldwell indicated that he would open an account with Merrill

Lynch in CSG’s name if Merrill Lynch financed his loan.

Shortly after the formation of the Magnolia entities, the

DECD loaned Magnolia Capital $20,000,000, the amount generated

from the state bonds issued pursuant to the Venture Capital Act.

Magnolia Capital then transferred $13,000,000 of the loan amount

to Magnolia Venture.4 As a result of Magnolia Venture’s

contracts with CSG and with Caldwell, Caldwell obtained

significant amounts of Magnolia Venture’s funds. Initially,

pursuant to its contract with CSG, Magnolia Venture paid CSG

$75,000 up front and $25,000 per month thereafter. Additionally,

the contract obligated Magnolia Venture to pay for any CSG

4 Magnolia Capital placed the remaining $7,000,000 in zero coupon bonds that would yield the principal amount of the loan in fifteen years.

6 expenses that were approved by Magnolia Venture’s CEO (i.e.,

Caldwell). The evidence presented by the government at trial

indicated that Caldwell —— in his capacity as the owner of CSG ——

billed Magnolia Venture a total of $14,000 over the course of

four months for a non-existent “secretary” and —— in his capacity

as CEO of Magnolia Venture —— authorized the payment of this

$14,000 to CSG.

Further, after successfully persuading a private investor,

Billy Clements, to invest $5,000,000 in Magnolia Venture,

Caldwell claimed CSG’s entitlement to a $250,000 commission (5%

of the $5,000,000 investment) under its contract with Magnolia

Venture. Originally, Clements agreed to invest only $4,500,000,

the amount that the Venture Capital Act required Magnolia Venture

to raise before it could invest venture capital in Mississippi

businesses. See MISS. CODE ANN. § 57-77-11(6) (1996). When

Clements expressed his reluctance to increase the amount to

$5,000,000 because he needed the difference to pay his taxes,

Caldwell promised Clements that he would be permitted to withdraw

from the Magnolia Fund the portion of his investment necessary to

satisfy his tax obligations. Clements subsequently withdrew

$650,000 from the Magnolia Fund.

In his capacity as CEO of Magnolia Venture, Caldwell

approved the issuance of a $250,000 check to CSG for securing the

$5,000,000 investment from Clements. In Magnolia Venture’s check

register, the payee for this check was recorded as

7 “confidential.” Subsequently, Caldwell’s wife (Sandra Caldwell)

signed a CSG check in the amount of $225,000 payable to Caldwell,

which he deposited in his personal account. Caldwell later sent

a letter to Liza Looser, who was on the board’s compensation

committee, suggesting that he deserved “a nice bonus” of $75,000

for obtaining the $5,000,000 investment from Clements. The

committee gave him this requested bonus.

Unbeknownst to the other board members, in addition to the

$25,000 monthly fee that Magnolia Venture paid CSG for providing,

inter alia, advice on investment decisions, CSG secured the

agreement of Pat Gilliand, a local securities broker,5 to give

CSG 50% of the commissions that he received from Magnolia Venture

for purchasing securities on its behalf. Gilliand paid CSG a

total of $38,730.56 in these “split commissions,” which Caldwell

subsequently deposited in his personal bank account.

Also without the board’s knowledge, Caldwell instructed

David Crawford, whom Caldwell had hired as Magnolia Venture’s

“vice president of investments,” to distribute 10% of the general

partner’s share of profits from Magnolia Venture’s investments to

Caldwell in his monthly paychecks. Consequently, over the course

of several months in 1996, Caldwell was paid a total of

$44,302.50 from Magnolia Venture’s profits. Caldwell’s

employment contract with Magnolia Venture provided for a

5 Pat Gilliand is the father of Lee Gilliand, the president of CSG.

8 distribution of 10% of the general partner’s share of profits

“upon liquidation of the Fund, or in advance at the discretion of

the Board.” Two board members testified that the board never

approved of such a distribution, and Crawford testified that the

Fund was never in liquidation.

The board became concerned about Caldwell’s performance as

CEO after receiving an audit report and management letter

produced by an outside accounting firm. The management letter

flagged a number of Caldwell’s activities as improper or

potentially problematic, including: (1) CSG’s failure to provide

“detailed billing indicating what work was performed for

[Magnolia Venture] each month and the applicable dates of

performance,” particularly in light of the fact that Caldwell was

both CEO of Magnolia Venture and the sole owner of CSG, (2)

certain payments made by Magnolia Venture to CSG, including the

$14,000 for a “secretary” and $767 in rent each month for office

space, (3) CSG’s cut of the commissions that Magnolia Venture

paid to brokers, (4) Magnolia Venture’s payments to American

Telesys, a company of which Caldwell owned 72.9%, “for various

services,” (5) the fact that “no further investors [had been]

sought” after Billy Clements invested $5,000,000, even though

“other investors had submitted subscription agreements and

written investment checks to the [Magnolia] Fund[, which were]

returned prior to the closing [of the Magnolia Fund],” and (6)

Billy Clements’s withdrawal from the Magnolia Fund of $650,000

9 pursuant to his agreement with Caldwell, thereby reducing the

amount of money attributable to private investment “below the

$4,500,000 . . . threshold required by the [Venture Capital]

Act.” According to the management letter, these and other

“matters and practices . . . raise concerns about [Magnolia

Venture’s] long-term financial stability and [about] whether the

original spirit of the Venture Capital Act of 1994 . . . is being

adhered to in [Magnolia Venture’s] operations.”

In response to the audit report and management letter, the

board appointed Johnny Clements (who became a board member in

April 1996 and is the brother of Billy Clements) and another

board member to an internal audit committee to investigate

Caldwell’s activities. Johnny Clements wrote two memoranda

reporting on the committee’s findings and its conclusion that

many of Caldwell’s actions constituted breaches of his fiduciary

duty to Magnolia Venture. For example, the audit committee

determined that Caldwell had acted in the best interest of CSG,

rather than of Magnolia Venture, in attributing Billy Clements’s

investment to Caldwell as owner of CSG, rather than as CEO of

Magnolia Venture (in which case Magnolia Venture would not have

been obligated to pay the $250,000 commission).

The board members held two meetings at which they discussed

the findings in the memoranda with Caldwell. At trial, Johnny

Clements testified that at one of these meetings, Caldwell

insisted that the $250,000 commission to CSG was proper because

10 Lee Gilliand had been primarily responsible for securing Billy

Clements’s investment. Shortly after these two meetings, the

board terminated Caldwell. Magnolia Venture subsequently

declared bankruptcy.6

The jury entered specific findings supporting its guilty

verdict on three of the four mail fraud counts and on both of the

money laundering counts. The district court set aside the jury’s

verdict on one of the money laundering counts on the ground that

the amount of money necessary for conviction could not be

6 As noted above, the Mississippi Legislature amended the Venture Capital Act in 1998. Section 57-77-2 of the new version explains that because “[t]he Legislature finds that the Venture Capital Act of 1994 . . . has not been implemented in accordance with legislative intent,” the Act “needs to be amended for the purpose of clarifying the legislative intent and for the further purpose of ensuring public trust in the venture capital loan program by providing safeguards in the operation of the program and over the proper administration of the use of public funds.” MISS. CODE ANN. § 57-77-2 (Supp. 2001). The new clarifications and safeguards include, inter alia: (1) that the three Magnolia entities “shall be instrumentalities of the State of Mississippi and their operations and activities shall be subject to review by the State Auditor of Public Accounts, the Attorney General of Mississippi, the Mississippi Ethics Commission, the Joint Legislative Committee on Performance Evaluation and Expenditure Review, and any other state officer or agency as provided by law,” id. § 57-77-3, (2) that money in or obtained from the Magnolia Fund “and any earnings on such amounts . . . shall remain, and shall be considered to be, public funds,” id., and (3) that no money in or obtained from the Magnolia Fund “may be used to provide financing for, or to contract for goods or services with, any business in which a director, employee, or limited partner of [any of the Magnolia entities], or the spouse of any such [person] has a direct or indirect interest,” id. § 57-77-29(1).

11 aggregated. The district court sentenced Caldwell to sixty

months’ imprisonment on each of the mail fraud counts and to

seventy-five months’ imprisonment on the money laundering count,

all to run concurrently, followed by three years of supervised

release. The court ordered Caldwell to pay the state of

Mississippi restitution in the amount of $1,377,830.52 and

imposed a special assessment of $250. Caldwell timely appeals

his convictions on all counts and his sentence.

III. CHALLENGES TO THE CONVICTIONS

Caldwell attacks his convictions primarily on grounds of

alleged indictment defects and insufficiency of the evidence. He

also raises a number of challenges to the district court’s

evidentiary rulings and jury instructions, most of which are more

properly framed as challenges to the sufficiency of the evidence.

We accordingly address them as such.

As noted above, Caldwell was convicted of three counts of

mail fraud in violation of 18 U.S.C. § 1341. The offense of mail

fraud has two basic elements: “(1) having devised or intending to

devise a scheme to defraud (or to perform specified fraudulent

acts), and (2) use of the mail for the purpose of executing, or

attempting to execute, the scheme (or specified fraudulent

acts).” Carter v. United States, 530 U.S. 255, 261 (2000)

(quoting Schmuck v. United States, 489 U.S. 705, 721 (1989)).

The first element may be satisfied (1) by proof that the

12 defendant devised a scheme or artifice to defraud, which

“includes a scheme or artifice to deprive another of the

intangible right of honest services,” 18 U.S.C. § 1346, or (2) by

proof that the defendant devised a scheme or artifice to engage

in one of the two fraudulent acts specified in § 1341, which are

“[to] obtain[] money or property by means of false or fraudulent

pretenses, representations, or promises,” and “to sell, dispose

of, loan, exchange, alter, give away, distribute, supply, or

furnish or procure for unlawful use any counterfeit or spurious

. . . article,” 18 U.S.C. § 1341.7 In the instant case, Caldwell

7 Section 1341 provides in full: Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, or to sell, dispose of, loan, exchange, alter, give away, distribute, supply, or furnish or procure for unlawful use any counterfeit or spurious coin, obligation, security, or other article, or anything represented to be or intimated or held out to be such counterfeit or spurious article, for the purpose of executing such scheme or artifice or attempting so to do, places in any post office or authorized depository for mail matter, any matter or thing whatever to be sent or delivered by the Postal Service, or deposits or causes to be deposited any matter or thing whatever to be sent or delivered by any private or commercial interstate carrier, or takes or receives therefrom, any such matter or thing, or knowingly causes to be delivered by mail or such carrier according to the direction thereon, or at the place at which it is directed to be delivered by the person to whom it is addressed, any such matter or thing, shall be fined under this title or imprisoned not more than five years, or both. If the violation affects a financial institution, such person shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both. 18 U.S.C. § 1341 (2000).

13 was charged with, and the jury found him guilty of, devising a

“scheme or artifice” both to obtain money and property by means

of false and fraudulent representations and to deprive another of

the right to honest services.

Caldwell was also convicted of one count of money laundering

in violation of 18 U.S.C. § 1957, which prohibits “knowingly

engag[ing] in a monetary transaction in criminally derived

property of a value greater than $10,000 [that] is derived from

specified unlawful activity.” Id. § 1957(a). The monetary

transaction underlying the charge for which Caldwell was

convicted is the deposit in his personal account of the CSG check

paying Caldwell $225,000 of the $250,000 commission that Magnolia

Venture paid CSG for Billy Clements’s $5,000,000 investment. The

indictment alleges that the $225,000 was derived from mail fraud

in violation of § 1341, which is among the “specified unlawful

activities” that can form the basis of a money laundering

conviction. See 18 U.S.C. §§ 1957(f)(3), 1956(c)(7)(A),

1961(1)(B) (2000).

A. Challenges to the Indictment

1. The mail fraud charges

Caldwell challenges the mail fraud counts in his indictment

on two grounds: (1) the counts are duplicitous, and (2) the

indictment insufficiently alleges the elements of the offense.

Duplicity of a count and the sufficiency of an indictment are

14 both issues of law that this court reviews de novo. United

States v. Sharpe, 193 F.3d 852, 865-66 (5th Cir. 1999)

(duplicity); United States v. Alford, 999 F.2d 818, 823 (5th Cir.

1993) (sufficiency of the indictment).

A duplicitous indictment is one that alleges “two or more

distinct and separate offenses” in a single count. United States

v. Morrow, 177 F.3d 272, 296 (5th Cir. 1999). Accordingly, in

determining whether an indictment is duplicitous, the inquiry is

“whether [the indictment] can be read to charge only one

violation in each count.” Sharpe, 193 F.3d at 866.

Caldwell’s indictment alleges that he “intentionally devised

and carried out a scheme”:

(1) to defraud the taxpayers and officials of the State of Mississippi, the Board of Directors for [Magnolia Venture], and others to obtain money and property by means of false and fraudulent representations, pretenses and promises, and (2) [to] depriv[e] [Magnolia Venture] of its intangible right of honest services by breaching his fiduciary duty owned to [Magnolia Venture] as [its] Chairman of the Board of Directors and Chief Executive Officers.

After detailing Caldwell’s alleged conduct in devising this

scheme, the indictment alleges that Caldwell knowingly mailed

certain letters via the U.S. Postal Service for the purpose of

executing the scheme to obtain money and to deprive of honest

services, “each [letter] constituting a separate count.”

Relying on United States v. Curry, 681 F.2d 406 (5th Cir.

1982), Caldwell argues that the mail fraud counts are duplicitous

because each count alleges more than one scheme, i.e., each count

15 alleges both (1) a scheme to defraud Mississippi officials and

taxpayers and the board of Magnolia Venture to obtain money by

false and fraudulent representations and (2) a scheme to deprive

Magnolia Venture of the right to honest services. We agree with

the government that Caldwell’s indictment alleges only one scheme

with two objects. However, even if each mail fraud count did

allege multiple schemes, it does not follow, as Caldwell argues,

that the counts would be duplicitous. While Caldwell is correct

that this court described the indictment at issue in Curry as

alleging “two separate and distinct fraudulent schemes,” 681 F.2d

at 411, we did not hold that each separate scheme constitutes a

separate mail fraud offense. Instead, we explicitly recognized

that “[u]nder the mail fraud statute, each mailing is a separate

violation.” Id. at 409 n.5 (emphasis added); see also United

States v. St. Gelais, 952 F.2d 90, 97 (5th Cir. 1992) (“It is not

the scheme to defraud but the use of the mails or wires that

constitutes mail or wire fraud.”).

In United States v. Harvard, 103 F.3d 412 (5th Cir. 1997),

we rejected essentially the same duplicity argument as Caldwell’s

in reviewing a bank fraud count alleging that the defendant had

devised a scheme “to defraud” and “to obtain monies by false

representation.” Id. at 420. We reasoned that these two

allegations were “alternative ways in which [the] offense c[ould]

be committed,” not allegations of multiple violations of § 1344.

Id.; cf. Sanabria v. United States, 437 U.S. 54, 66 n.20 (1978)

16 (“A single offense should normally be charged in one count rather

than several, even if different means of committing the offense

are alleged.”) (citing FED. R. CRIM. P. 7(c)(1)).

Accordingly, where a mail fraud count alleges only one

instance of use of the mail in furtherance of multiple schemes

(or a single scheme with multiple objects), the jury can find the

defendant guilty of only one mail fraud offense on that count ——

regardless whether the jury finds that the defendant devised one

or all of the alleged schemes associated with that particular use

of the mail. Each mail fraud count in Caldwell’s indictment

contains only one allegation of use of the mail. Thus, none of

the counts is duplicitous.

Caldwell also mounts several challenges to the sufficiency

of the mail fraud charges in his indictment. First, he contends

that the indictment insufficiently alleges mail fraud because

Magnolia Venture is a private corporation, and private

corporations cannot be deprived of the right to “honest services”

for purposes of mail fraud. In support of this position,

Caldwell relies on McNally v. United States, 483 U.S. 350 (1987),

a pre-§ 1346 case in which the Supreme Court held that § 1341 was

“limited in scope to the protection of property rights,” and thus

reversed the defendants’ mail fraud convictions based on a scheme

to deprive the citizens and government of Kentucky of honest

services. Id. at 352, 360-61. The McNally Court reasoned that

“[i]f Congress desires to go further, it must speak more clearly

17 than it has.” Id. at 360. As this court recognized in United

States v. Brumley, 116 F.3d 728 (5th Cir. 1997) (en banc),

“Congress accepted the Court’s invitation [in McNally]” by

enacting § 1346, id. at 732, which makes explicit that “the term

‘scheme or artifice to defraud’ [in § 1341] includes a scheme or

artifice to deprive another of the intangible right of honest

services,” 18 U.S.C. § 1346.

According to Caldwell, because § 1346 does not explicitly

indicate that it applies to “private corruption,” the McNally

Court’s requirement that Congress make its intentions unequivocal

indicates that § 1346 should not be construed as reaching private

corruption. This court has concluded otherwise. In United

States v. Gray, 96 F.3d 769 (5th Cir. 1996), a post-§ 1346

decision, we affirmed a conviction of “honest services” mail

fraud based on conduct undertaken in the private sphere. Id. at

774-75. Accordingly, Caldwell’s contention that § 1346 does not

extend to “private corruption” lacks merit.

Caldwell further contends that, even assuming § 1346 applies

to cases involving private-employer victims, the indictment is

nevertheless deficient because it fails to allege all the

essential elements of the “honest services” form of mail fraud.

Specifically, Caldwell maintains that under this court’s decision

in Brumley, a violation of state law is an essential element of

“honest services” mail fraud that must be alleged in the

indictment. Thus, Caldwell argues, the allegation in his

18 indictment that he deprived Magnolia Venture of the right to

honest services by breaching “fiduciary duties” that he owed to

Magnolia Venture as chairman of its board and CEO is not

sufficient because the indictment does not allege a state-law

source of these fiduciary duties.

The essential elements of mail fraud that must be alleged in

the indictment are “(1) having devised or intending to devise a

scheme to defraud (or to perform specified fraudulent acts), and

(2) use of the mail for the purpose of executing, or attempting

to execute, the scheme (or specified fraudulent acts).” Carter,

530 U.S. at 261 (internal quotations and citation omitted); see

also, e.g., United States v. Reyes, 239 F.3d 722, 735 (5th Cir.

2001).8 Caldwell’s indictment clearly alleges that he deprived

Magnolia Venture of its right to his honest services, one of the

types of scheme that satisfies the first element of mail fraud.

The government correctly points out that the Brumley court did

not hold that the state-law source of the right to honest

services must be alleged in the indictment. Rather, this court

held that, properly interpreted, “honest services” are services

owed to an employer under state law and, thus, that the

government must prove that the defendant deprived the employer of

such services. See Brumley, 116 F.3d at 734.

8 Although “[a] specific intent to commit fraud” is also an essential element of mail fraud, this court has held that an indictment “need not specifically charge” this mens rea element. United States v. Gordon, 780 F.2d 1165, 1170 (5th Cir. 1986).

19 Caldwell also claims that the charges based on deprivation

of “honest services” are insufficient because the indictment

fails to allege that the “breach of the fiduciary duty was

‘material’.” This court has held that “a violation of the

[fiduciary] duty to disclose [can] only result in criminal mail

fraud where the information withheld from the employer [i]s

material,” Gray, 96 F.3d at 774 (quoting United States v.

Ballard, 680 F.2d 352, 353 (5th Cir. 1982 Unit B)), and that

materiality must be alleged in an indictment charging mail fraud,

see United States v. Richards, 204 F.3d 177, 192-93 (5th Cir.

2000). However, “[i]f the facts alleged in the indictment

warrant an inference [of] material[ity], the indictment is not

fatally insufficient for its failure to allege materiality in

haec verba.” Id. at 192 (quoting United States v. McGough, 510

F.2d 598, 602 (5th Cir. 1975)) (first alteration in original).

Caldwell’s indictment alleged sufficient facts to warrant an

inference that the information that he failed to disclose was

material. The indictment alleges several instances of Caldwell’s

failure to disclose information to the board of Magnolia Venture,

including the failure to disclose (1) his promise to Billy

Clements that he could withdraw part of his $5,000,000 investment

in the Magnolia Fund “to satisfy [his] tax liability in 1996,”

(2) his payment to himself of $225,000 drawn from the Magnolia

Fund, (3) his solicitation and receipt of $38,730.96 from Pat

Gilliand “for a substantial investment in a number of securities

20 [purchased] through [Gilliand] for and on behalf of [Magnolia

Venture],” and (4) his direction to Crawford to pay Caldwell a

certain percentage of Magnolia Venture’s profits each month. The

indictment also alleges that, in urging the board to approve the

contract with CSG, Caldwell falsely represented that he shared

ownership of CSG with Lee Gilliand, that the DECD “approved” of

the relationship between Caldwell and CSG, and that CSG was the

only firm licensed to perform the services necessary for Magnolia

Venture to carry out its mission. Finally, the indictment

alleges that Caldwell falsely represented in CSG’s bills to

Magnolia Venture that CSG had incurred $14,000 in expenses that

it did not in fact incur. This information that the indictment

alleges Caldwell failed to disclose or misrepresented ——

involving significant sums of money and important business

decisions —— clearly warrants an inference of materiality.9

9 In connection with his argument that the indictment failed to allege materiality, Caldwell contends that the mail fraud charges are insufficient because they fail to specify whether the government considered Magnolia Venture to be a private or public entity. He does not cite any authority for this proposition, but rather asserts that it was necessary for him to know whether the government considered Magnolia Venture to be a private or public entity because in the case of private entities, the government must prove (and he must also defend against) the allegation that the breach of fiduciary duty is material. However, this court has not limited the materiality requirement to cases of “honest services” mail fraud involving private employers. See Gray, 96 F.3d at 774-75. Consequently, the indictment’s failure to specify whether Magnolia Venture is a private or a public entity did not deprive Caldwell of notice of the materiality requirement.

21 Finally, Caldwell argues that his indictment is insufficient

because it did not provide the factual specificity necessary to

give him adequate notice of the mail fraud charges against him.

Specifically, Caldwell objects to the indictment’s failure to

“specify which action[s],” including the alleged mailings,

“furthered which scheme.” Federal Rule of Criminal Procedure

7(c) requires that “[t]he indictment or the information shall be

a plain, concise and definite written statement of the essential

facts constituting the offense charged.” FED. R. CRIM. P. 7(c).

In applying this rule, this court has noted that “[p]ractical,

not technical, considerations govern the validity of an

indictment, and the test of the validity of an indictment is ‘not

whether the indictment could have been framed in a more

satisfactory manner, but whether it conforms to minimal

constitutional standards.’” United States v. Chaney, 964 F.2d

437, 446 (5th Cir. 1992) (quoting United States v. Webb, 747 F.2d

278, 284 (5th Cir. 1984)). In addition to containing all the

elements of the charged offense, a constitutionally sufficient

indictment “fairly informs” the defendant of the charge that he

or she faces and is precise enough to preclude the risk that the

defendant may be prosecuted for the same offense in the future.

Alford, 999 F.2d at 823.

As noted above, the first paragraph of the mail fraud counts

alleges that Caldwell devised a scheme (1) to defraud Mississippi

taxpayers and officials and Magnolia Venture’s board by means of

22 false or fraudulent representations to obtain money, and (2) to

deprive Magnolia Venture of its right to honest services. This

initial paragraph largely tracks the language of §§ 1341 and

1346. The subsequent paragraphs describe specific acts alleged

to be “part of the scheme and artifice to defraud.” More

specifically, these paragraphs set out (1) the misrepresentations

(both affirmative and by omission) allegedly made by Caldwell,

(2) the monetary transactions (including specific amounts) and

agreements that he allegedly effected through the use of his

authority as CEO of Magnolia Venture and as sole owner of CSG,

and (3) the dates on which these acts allegedly took place.

We are unpersuaded by Caldwell’s conclusory assertion that

the indictment was rendered constitutionally insufficient by its

failure to “match” each alleged act with either the scheme to

defraud the Mississippi taxpayers and officials and Magnolia

Venture’s board by false or fraudulent representations to obtain

money or the scheme to deprive Magnolia Venture of its right to

honest services. The considerable level of detail used in the

indictment to describe the various acts constituting the scheme

on which the government based the mail fraud counts provided

Caldwell with adequate notice of the facts and circumstances on

which the mail fraud charges were based and precluded the risk of

prosecution for the same offenses in the future.10

10 Caldwell also contends that the indictment’s allegation of several “unmatched” acts in the mail fraud counts made it

23 Similarly, because the indictment contains detailed

allegations of the acts underlying the charges, Caldwell was

adequately apprised of how the government understood the mailings

to further the scheme. Two of the mail fraud counts on which

Caldwell was convicted are based on letters to two members of

Magnolia Venture’s board notifying them of the special board

meeting that Caldwell called to present his employment contract

and the CSG contract to the board for approval. The allegations

regarding Caldwell’s misrepresentations at this special board

meeting are sufficient to provide Caldwell with notice of how

these mailings furthered the alleged scheme. The third count of

mail fraud is based on Caldwell’s letter to Liza Looser urging

her to grant him a bonus of $75,000 for his performance as CEO.

The indictment specifically referenced this letter, noting that

therein Caldwell touted his success in securing a $5,000,000

investment. In addition, the indictment detailed Caldwell’s

dealings with Billy Clements that resulted in this investment.

Thus, Caldwell was also fairly informed of the connection between

this third mailing and the alleged scheme.

2. The money laundering charge

“impossible for the jury to apply the acts to the schemes” and thus presented the risk of a non-unanimous jury verdict. The unanimity issue is not presented in this case because the verdict form required the jury to make separate findings on the two purposes of the alleged scheme and on the individual acts that supported each purpose, and the district court made clear in its instructions to the jury that unanimity was required for any positive finding.

24 Caldwell contends that the money laundering charge is

insufficient because it (1) fails to name the financial

institution through which he allegedly laundered the $225,000,

and (2) fails to provide adequate factual specificity regarding

the mail fraud from which the money was allegedly derived. Both

of these arguments allege inadequate factual detail regarding

elements of the offense —— namely, the “monetary transaction”

element and the “specified unlawful activity” element. In

assessing whether an indictment contains adequate factual

information regarding the elements of a charged offense, this

court has explained that although an indictment “must allege that

the defendant committed each of the essential elements of the

crime charged so as to enable the accused to prepare his defense

and to invoke the double jeopardy clause in any subsequent

prosecution for the same offense,” “[i]t is not necessary for an

indictment to go further and to allege in detail the factual

proof that will be relied upon to support the charges.” United

States v. Crippen, 579 F.2d 340, 342 (5th Cir. 1978); see also

United States v. Williams, 679 F.2d 504, 508 (5th Cir. 1982)

(stating that Federal Rule of Criminal Procedure 7(c) “does not

mean that the indictment must set forth facts and evidentiary

details necessary to establish each of the elements of the

charged offense”).

In evaluating whether the “monetary transaction” element of

a money laundering offense has been alleged with sufficient

25 factual specificity, it is important to bear in mind that “[t]he

core of money laundering, which distinguishes one such offense

from another, is the laundering transaction itself.” United

States v. Smith, 44 F.3d 1259, 1265 (4th Cir. 1995). Caldwell

maintains that United States v. Pettigrew, 77 F.3d 1500 (5th Cir.

1996), requires that the financial institution through which

money is allegedly laundered be named in the indictment.

However, as the government points out, the Pettigrew court did

not hold that an indictment must include the name of the

financial institution in charging a § 1957 offense, but rather

noted in dicta that the district court constructively amended the

indictment by naming in the jury instructions a bank other than

the two banks named in the indictment. See 77 F.3d at 1513 n.11.

The money laundering count in Caldwell’s indictment, which

closely tracks § 1957, includes the date of the offense and the

amount of money. In these circumstances, the absence of the name

of the financial institution does not render the charge

constitutionally insufficient. The specification of both the

date of the offense and the amount of money is sufficiently

precise to (1) provide Caldwell with adequate notice of the

“monetary transaction” on which the government based the money

laundering charge and (2) preclude the possibility of Caldwell’s

being charged in the future with money laundering for the same

transaction.

26 Caldwell also argues that the indictment’s allegation that

the “unlawful activity” was “mail fraud in violation of Section

1341, Title 18, United States Code” was not sufficient to give

him adequate notice of the factual basis for this element of a

money laundering offense. In support of this argument, he relies

on United States v. Knowles, 29 F.3d 947 (5th Cir. 1994). In

Knowles, this court reaffirmed the rule that “an allegation made

in one count of an indictment may be incorporated by reference in

another count of the indictment” only if “expressly done.” Id.

at 952. According to Caldwell, because the money laundering

count does not expressly incorporate any of the mail fraud

counts, the factual allegations in those counts may not be

considered in assessing the sufficiency of the money laundering

count. Without these factual allegations, he argues, the mere

reference to the offense of mail fraud in the money laundering

count insufficiently alleges the “unlawful activity” element.

Although this court has not yet addressed the precise

incorporation issue that Caldwell raises, the Fourth Circuit has

assessed the sufficiency of an indictment’s allegation of

“unlawful activity” in a context quite similar to the instant

case. In United States v. Smith, 44 F.3d 1259 (4th Cir. 1995),

the defendant challenged the sufficiency of the charge that he

“caus[ed] $374,578.00 to be transferred and deposited to the

Grimm-Gray Trust account at the Sun Bank, Ft. Lauderdale,

Florida, which funds were the proceeds of a wire fraud, in

27 violation of 18 U.S.C. § 1343.” Id. at 1264 (emphasis added).

Reasoning that “the requirement that the funds be illegally

derived is not the distinguishing aspect and therefore does not

lie at the core of the offense,” the Fourth Circuit concluded

that “details about the nature of the unlawful activity

underlying the character of the proceeds need not be alleged.”

Id. at 1265. The Fourth Circuit further explained that “the term

‘specified unlawful activity’ is a defined term referring to a

list of offenses which qualify as unlawful activity for purposes

of stating a money laundering offense.” Id. Thus, because wire

fraud in violation of § 1343 “is included as a ‘specified

unlawful activity’ for purposes of money laundering,” the Fourth

Circuit held that “[n]othing more need be alleged” than that the

laundered money was the proceeds of wire fraud in violation of

§ 1343. Id.

We agree with the Fourth Circuit’s analysis of the

“specified unlawful activity” element in Smith. Accordingly, we

conclude that the statement in Caldwell’s indictment indicating

that the $225,000 was derived from mail fraud in violation of

§ 1341 sufficiently alleges the “unlawful activity” element of

money laundering.

B. Challenges to the Sufficiency of the Evidence

Caldwell contends that there was insufficient evidence to

support (1) the “scheme” element for all three mail fraud counts

28 of which he was convicted and (2) the “mailing” element for two

of those counts. In reviewing a challenge to the sufficiency of

the evidence, we ask whether “a rational trier of fact could have

found the essential elements of the crime beyond a reasonable

doubt.” United States v. Powers, 168 F.3d 741, 746 (5th Cir.

1999). We consider the evidence in the light most favorable to

the jury’s verdict. Richards, 204 F.3d at 206. As “[t]he jury

is free to choose among reasonable constructions of the

evidence,” id., this court does not assess the weight of the

evidence or the credibility of the witnesses, Powers, 168 F.3d at

746.

1. The evidence of a scheme

In Caldwell’s case, the government advanced two theories of

a “scheme.” First, the government alleged that Caldwell created

a scheme to defraud Mississippi taxpayers and officials and the

board of Magnolia Venture of money by “enrich[ing] himself

through financial transactions made possible by unlawful

misrepresentations and deceits rather than for the statutory

purposes of providing venture capital financing.” Second, the

government alleged that Caldwell created a scheme to deprive the

board of Magnolia Venture “of its intangible right of honest

services [by] breaching the fiduciary duty owed to [Magnolia

Venture] as the corporation’s Chairman of the Board and Chief

Executive Officer.” On the verdict form provided by the district

29 court, the jury indicated its finding that the government had

proven both of these theories beyond a reasonable doubt. As to

each theory, the jury further specified the manners in which it

found that Caldwell knowingly created the scheme.

The jury found that Caldwell created a scheme against

Mississippi taxpayers and officials and Magnolia Venture’s board

to obtain money by false or fraudulent representations in the

following ways:

(1) “by unlawful representations concealing from the [board] an agreement in a limited partnership with an investor, Billy Clements, where [CSG], owned by [Caldwell], received a commission of $250,000.00,” (2) “by lying to the President of [CSG] that a $225,000.00 check made payable to [Caldwell] had been spent for the expenses of [CSG],” (3) “by soliciting and receiving without knowledge of the [board] a total of $38,730.56 from a local securities broker,” (4) “by paying to himself a total of $44,302.50 representing 10% of the profits of the General Partner’s distribution from [Magnolia Venture],” and (5) “by authorizing payment out of [Magnolia Venture] funds a total of $14,000.00 to be paid to [CSG] for a secretary never hired.”

Caldwell contends that neither the conduct specifically

found by the jury nor any of the other conduct supported by the

evidence establishes a scheme to obtain money by means of false

or fraudulent representations. At most, Caldwell contends, this

conduct is evidence of ethical improprieties or “other offenses.”

30 As this court has recognized, for purposes of the federal

fraud statutes, “[t]he term ‘scheme to defraud’ is not readily

defined, but it includes any false or fraudulent pretenses or

representations intended to deceive others in order to obtain

something of value, such as money.” United States v. Saks, 964

F.2d 1514, 1518 (5th Cir. 1992) (internal citation omitted).

Additionally, the false or fraudulent representations must be

material. Neder v. United States, 527 U.S. 1, 25 (1999). In the

instant case, the government presented sufficient evidence for a

reasonable juror to have found beyond a reasonable doubt that

Caldwell knowingly created such a “scheme to defraud.”

Based on evidence such as board members’ testimony and the

“Brief on Specifics of Contracts” (distributed by Caldwell at the

special board meeting), the jury was entitled to infer that

Caldwell (through CSG) obtained the $250,000 commission on

Clements’s investment, the $38,730.56 in split commissions from

Pat Gilliand, and the $14,000 for the non-existent secretary, by

means of the false, material representations that he made to the

board in urging it to approve CSG’s contract. Specifically,

Caldwell falsely represented that he owned only 50% of CSG, that

the DECD “approved” of his relationship with CSG, and that CSG

31 was the only firm in Mississippi licensed to perform the

necessary investment work for Magnolia Venture.11

Further, Caldwell’s receipt of the $14,000 directly resulted

from his unquestionably false and material representation that

CSG had expended that amount to employ a secretary. Caldwell

argues that he was unaware that the “secretary” for which he

billed Magnolia Venture did not exist. However, there is ample

evidence supporting the jury’s contrary finding. In particular,

a rational juror could have concluded that Caldwell knew that CSG

never employed a secretary based on the evidence that Caldwell

worked in CSG’s office on a regular basis during the four-month

period over which he billed Magnolia Venture for secretarial

services and that CSG had only one employee (thus the absence of

a secretary was likely apparent).

11 Conceding that the representation that he owned 50% of CSG was false, Caldwell maintains that this representation nevertheless may not be deemed part of a mail fraud “scheme” because the representation is not material. According to Caldwell, it is the fact of his ownership interest in CSG that is material —— not the extent of that interest. We disagree. A rational juror could have concluded otherwise, particularly in light of the evidence indicating that Caldwell also falsely represented that Lee Gilliand, who was not a member of Magnolia Venture’s board, was the co-owner of CSG (in which case Caldwell’s purported 50% interest would not have been a majority interest) and was the principal decisionmaker for the company. Moreover, Caldwell made other false and material representations to the board that by themselves support the jury’s finding that he devised a scheme to obtain money by false or fraudulent representations.

32 Similarly, although Caldwell points out that CSG’s contract

with Magnolia Venture entitled CSG to a 5% commission on every

$5,000,000 investment, a reasonable juror could have assigned

this provision little weight in considering CSG’s receipt of the

$250,000 commission on the Billy Clements investment in light of

the evidence presented at trial indicating: (1) that Caldwell did

not inform the board that he agreed to permit Clements to

withdraw part of his investment after CSG received the

commission, thereby causing the investment to drop below the

$5,000,000 threshold required under the contract for CSG to

receive a commission, (2) that Caldwell solicited a $75,000 bonus

as Magnolia Venture’s CEO, in part because he successfully

secured the $5,000,000 investment, (3) that Caldwell insisted

that Lee Gilliand was responsible for the investment when the

board questioned Caldwell about the commission, (4) that Caldwell

entered “confidential” as the payee of the $250,000 check issued

to CSG in Magnolia Venture’s check register, and (5) that

Caldwell told Lee Gilliand that the $225,000 of the commission

(which Caldwell deposited in his personal account) had been spent

on CSG’s expenses.12

12 Regarding his receipt of the $44,302.50, Caldwell points out that he directed Crawford to include 10% of the general partner’s share of Magnolia Venture’s profits in Caldwell’s paycheck each month and, thus, that this profit distribution was documented information available to the board. However, access to, or even actual knowledge of, the information at issue does not preclude a finding of a scheme to defraud by false or fraudulent representations. It is well-established that

33 We thus conclude that the government presented sufficient

evidence for a rational juror to find beyond a reasonable doubt

that Caldwell devised a scheme to obtain money by false, material

representations. Accordingly, it is unnecessary for us to

address the sufficiency of the evidence for the government’s

alternate theory that Caldwell’s scheme also aimed to deprive of

the right to honest services. See Powers, 168 F.3d at 753-54.13

“reliance is not an element of mail fraud.” Akin v. Q-L Investments, Inc., 959 F.2d 521, 533 (5th Cir. 1992); see also Neder, 527 U.S. at 24-25 (“The common-law requirement[] of ‘justifiable reliance’ . . . plainly ha[s] no place in the federal fraud statutes.”). Moreover, in the instant case, the two board members on the compensation committee testified that they were not aware of Caldwell’s receipt of a percentage of profits on the Fund’s money. Caldwell further contends that he believed in good faith that he was entitled to a percentage of Magnolia Venture’s profits under his employment contract. There was sufficient evidence for a rational juror to conclude otherwise. Liza Looser, who was present at the meeting during which the board confronted Caldwell about the internal audit committee’s findings, testified that when questioned regarding his taking of a percentage of the profits each month, Caldwell did not explain why he believed he had been authorized to do so, but rather responded that “[i]t was a stupid move” and that he “shouldn’t have done it.” Additionally, the testimony of several of the government’s witnesses indicated that it was readily apparent that Caldwell was not entitled to any profits under his contract or otherwise. 13 For this reason, we also need not address Caldwell’s further argument that there was insufficient evidence to support the “deprivation of honest services” theory of a scheme to defraud because “the government failed to show any tangible harm, economic or otherwise.” In any event, this court has made clear in cases involving the “deprivation of honest services” theory that “[a]lthough the Government must prove that some actual harm was contemplated by the defendant, it is well-established that a scheme which operates to deprive citizens of ‘intangible rights or interests’ is a scheme to defraud under section 1341.” Curry, 681 F.2d at 410-11 (emphasis added) (internal citation omitted);

34 2. The mailings underlying two of the mail fraud counts

Caldwell challenges the two mail fraud counts based on his

letters notifying board members about the special board meeting

that Caldwell called for the purpose of submitting his employment

contract and the CSG consulting contract for the board’s

approval. Relying on Parr v. United States, 363 U.S. 370 (1960),

and Curry, Caldwell contends that his convictions on the two

counts must be reversed because these two mailings were required

by Magnolia Venture’s bylaws and were not shown to be false. In

Parr, the Supreme Court held that members of a school board could

not be held liable for mail fraud based on mailings that were

required under state law unless the mailings were false or

fraudulent. See 363 U.S. at 391-92. Applying the Parr holding

in Curry, this court held that the defendant could not be

convicted of mail fraud based on affidavits that he mailed

pursuant to Louisiana’s statute governing campaign-finance

disclosure unless the government proved that the affidavits were

false and that the defendant either intended to defraud the state

agency to which they were mailed or mailed them “in a deliberate

see also Brumley, 116 F.3d at 735 (upholding the defendant’s conviction for “deprivation of honest services” mail fraud where the government had stipulated that it would not try to prove that the defendant had caused others a monetary loss, but rather had taken the position that “the quid pro quo was intangible, such as favoritism or other types of intangible matters”) (alterations omitted).

35 attempt to prevent discovery of his scheme to defraud.” 681 F.2d

at 412.

Pointing out that Parr and Curry both involved mailings

required under state law, the government argues that extending

Parr to “all matters which are required by the bylaws of a

corporation” would create an “exception that would swallow up

most of the mail fraud statute’s reach,” because “[v]irtually all

economic activity can be traced back to a bylaw requirement of

some business.” We agree that permitting the applicability of

the mail fraud statute to depend on corporate-created rules is

neither required under Parr nor desirable. Furthermore, even

assuming the mailings notifying the board members of the special

meeting were required under law as contemplated by the Parr

Court, the Parr exception is nevertheless inapplicable because

these mailings would not have been made but for Caldwell’s

alleged scheme to defraud. In Schmuck v. United States, 489 U.S.

705 (1989), the Supreme Court recognized this limitation on the

Parr rule:

Whereas the mailings of the tax documents in Parr were the direct product of the school district’s state constitutional duty to levy taxes and would have been made regardless of the defendants’ fraudulent scheme, the mailings in the present case, though in compliance with Wisconsin’s car-registration procedure, were derivative of Schmuck’s scheme to sell “doctored” cars and would not have occurred but for that scheme.

36 Schmuck, 489 U.S. at 713 n.7 (internal citation omitted); see

also United States v. Krenning, 93 F.3d 1257, 1264 (5th Cir.

1996) (finding that the “innocent mailings” exception of Parr did

not apply because “[e]ven assuming there existed a statute

requiring Sovereign Insurance to mail the policies and related

documents to the insureds[,] . . . [t]he continuing need to mail

policies out to new customers was . . . entirely derivative of

the Defendants’ decision to fraudulently operate an insolvent

insurance company”); United States v. Bright, 588 F.2d 504, 509-

10 (5th Cir. 1979) (“Under state law, the mailings in Parr would

have occurred irrespective of the defendants’ embezzlement . . .

Here, by contrast, . . . [i]f [the defendants] had not decided to

defraud the estate of their late cousin, they would not have had

to comply with the state law requiring them to file the

creditors’ notice.”).

Caldwell called the special meeting that was the subject of

the two challenged mailings for the specific purpose of securing

the board’s approval of his employment contract and of CSG’s

consulting contract, both of which were essential to the success

of Caldwell’s alleged scheme. Unlike the situation in Parr,

Caldwell’s mailings notifying the board members of the special

meeting would not have been necessary absent the fraudulent

37 scheme and, accordingly, are proper bases of the mail fraud

counts.14

Caldwell also attacks his convictions with several claims of

error in the district court’s evidentiary rulings and jury

charge. Many of these claims are essentially reassertions of his

challenges to the sufficiency of the evidence supporting the

“scheme” element of mail fraud (or are more appropriately framed

as such) and thus have been addressed above. As to Caldwell’s

other challenges to the district court’s evidentiary rulings and

jury charge, we find no reversible error.

III. SENTENCING CHALLENGES

Caldwell raises three challenges to his sentence on appeal.

Specifically, he contends that the district court (1) improperly

calculated the “loss” attributable to him for purposes of

determining his sentence for mail fraud under the Sentencing

Guidelines, (2) erroneously determined that the state of

Mississippi was entitled to restitution as a victim of Caldwell’s

scheme, and (3) improperly formulated the restitution payment

schedule.

14 As Caldwell’s claim that there is insufficient evidence supporting his money laundering conviction is derivative of his claim that there is insufficient evidence supporting his mail fraud convictions (mail fraud being the “unlawful activity” alleged in the money laundering count), we also reject Caldwell’s sufficiency-of-the-evidence challenge to his money laundering conviction.

38 A. Calculation of “Loss” under the Sentencing Guidelines

Caldwell was sentenced under the 1998 edition of the

Sentencing Guidelines. In that edition, the guideline applicable

to mail fraud convictions increases the base offense level from

zero to eighteen levels depending on the amount of “loss” that

the sentencing court attributes to the defendant. See U.S.

SENTENCING GUIDELINES MANUAL § 2F1.1(b)(1), app. A (1998). Caldwell

argues that the district court’s calculation of loss is erroneous

for two reasons: (1) the court based its calculation on

Caldwell’s gain without making a threshold determination that

there was an actual loss, and (2) the calculation does not

account for the services rendered by Caldwell. In support of

these arguments, Caldwell relies on revisions of the definition

of “loss” in the guideline’s commentary made in Amendment 617,

which became effective on November 1, 2001 (after Caldwell was

sentenced). See U.S. SENTENCING GUIDELINES MANUAL app. C, supp. at

185 (1998-2001). Specifically, Caldwell points to the new

provisions in the commentary (1) that “[t]he court shall use the

gain that resulted from the offense as an alternative measure of

loss only if there is a loss but it reasonably cannot be

determined,” U.S. SENTENCING GUIDELINES MANUAL § 2B1.1 cmt. n.2(B),

and (2) that “[l]oss shall be reduced by . . . the services

rendered, by the defendant or other persons acting jointly with

39 the defendant, to the victim before the offense was detected,”

id. § 2B1.1 cmt. n.2(E)(i).

A district court’s calculation of loss attributable to a

defendant’s scheme to defraud is a factual finding that this

court reviews for clear error. United States v. Sidhu, 130 F.3d

644, 654 (5th Cir. 1997). Particular provisions of Amendment 617

apply retroactively to Caldwell’s case only if they are intended

merely to “clarify,” rather than to substantively change, the

guidelines or their commentary. United States v. Davidson, 283

F.3d 681, 684 (5th Cir. 2002). We need not make this

retroactivity determination, however, because the district

court’s loss calculation is consistent with Amendment 617.

The district court calculated the loss attributable to

Caldwell ($1,377,830.52) by adding the amounts paid by Magnolia

Venture (1) to CSG ($1,170,779.39), (2) to Caldwell for one of

his annual bonuses ($75,000), (3) to American Telesys

($75,483.89),15 (4) to Caldwell in monthly distributions from

Magnolia Venture’s profits ($44,302.50), and (5) to a country

club for Caldwell’s membership fees and purchases ($12,264.74).

Initially, Caldwell’s argument that this calculation was based on

gain is incorrect. The district court’s comments at the

15 In arriving at this figure, the district court accounted for the fact that Caldwell owned 72.9% of American Telesys: $75,485.89 is 72.9% of the total amount paid by Magnolia Venture to American Telesys.

40 sentencing hearing, as well as the amounts themselves, make clear

that the district court sought to determine the total amount that

Magnolia Venture actually lost as a result of Caldwell’s scheme

by focusing on the amounts that Magnolia Venture paid to Caldwell

and his companies. Because the court calculated loss in this

manner, Caldwell did in fact gain a substantial portion of the

total “loss.” However, the court adopted this approach (from

Caldwell’s presentence report) in order to determine the portion

of the total loss incurred by Magnolia Venture that could fairly

be attributed to Caldwell, not in order to account for Caldwell’s

gain.16

We also reject Caldwell’s contention that the district

court’s loss calculation does not account for services rendered.

As the government points out, by excluding certain amounts that

the presentence report counted as losses —— including Caldwell’s

salary, health and life insurance, and travel and entertainment

expenses —— the district court sufficiently accounted for any

services that Caldwell provided to the victims of his fraudulent

scheme. Moreover, even assuming that the district court had not

accounted for services rendered, the commentary to Amendment 617

indicates that the provision regarding deduction of value for

services rendered is a substantive change rather than a

16 Thus, the district court did not, for example, attempt to determine how much Caldwell actually gained of the total amounts paid to CSG and American Telesys.

41 clarification and, thus, may not be retroactively applied to

Caldwell’s sentence.17 Accordingly, the district court did not

clearly err in determining the loss attributable to Caldwell for

sentencing purposes.

B. Restitution: Proper “Victim” and Payment Schedule

The district court ordered Caldwell to “pay restitution in

the amount of $1,377,830.52” to the treasurer of Mississippi

“during incarceration, with any remaining balance to be paid in

thirty-two equal monthly installments during supervised release,

beginning the first full month of supervision.” Caldwell

challenges the district court’s restitution order on two grounds:

(1) there was no evidence that the state of Mississippi is a

“victim” entitled to restitution under the applicable law, and

17 In particular, the commentary states that this provision “codifies the ‘net loss’ approach that has developed in the case law, with some modifications,” and that “[t]his crediting approach is adopted because the seriousness of the offense and the culpability of a defendant is better determined by using a net approach.” U.S. SENTENCING GUIDELINES MANUAL app. C, supp. at 188 (1998-2001) (emphasis added). We have found that such language indicates an intention to effect a substantive change with the amendment. Cf. Davidson, 283 F.3d at 684 (concluding that the “substantive nature of this amendment provision is evident” in light of commentary stating that the Sentencing Commission had “adopted” an approach from caselaw); United States v. McIntosh, 280 F.3d 479, 485 (5th Cir. 2002) (concluding that “the substantive intent is reflected in th[e] commentary, which states in part [that] ‘[t]he amendment responds in several ways to concerns that the penalty structure existing prior to this amendment for such offenses did not reflect adequately the culpability of the defendant or the seriousness of the money laundering conduct’”) (quoting U.S. SENTENCING GUIDELINES MANUAL app. C, supp. at 233-34 (1998-2001)).

42 (2) the financial information that Caldwell submitted to the

court indicates that he does not have the ability to make the

payments as required by the schedule imposed by the district

court.

“Once we have determined that an award of restitution is

permitted by the appropriate law, we review the propriety of a

particular award for an abuse of discretion.” United States v.

Hughey, 147 F.3d 423, 436 (5th Cir. 1998). In the instant case,

the district court imposed restitution under the Victim and

Witness Protection Act, 18 U.S.C. § 3663 et seq. (2000) (the

“VWPA”), which provides for mandatory restitution to victims of

certain offenses, including mail fraud. Id. § 3663A(a)(1),

(c)(1)(A)(ii). As Caldwell’s claim that Mississippi is not a

“victim” under the VWPA challenges the legality of the district

court’s restitution order, we address this claim first, and our

review is de novo. See United States v. Mancillas, 172 F.3d 341,

342 (5th Cir. 1999).

The VWPA defines a “victim” as “a person directly and

proximately harmed as a result of the commission of an offense

for which restitution may be ordered including, in the case of an

offense that involves as an element a scheme . . ., any person

directly harmed by the defendant’s criminal conduct in the course

of the scheme.” 18 U.S.C. § 3663A(a)(2). Thus, the VWPA’s

definition of “victim” serves to “restrict[] the award of

43 restitution to the limits of the offense.” Mancillas, 172 F.3d

at 343 (internal quotations and citation omitted). In Caldwell’s

case, there is ample evidence in the record supporting the

district court’s determination that Mississippi was directly and

proximately harmed by the commission of Caldwell’s offenses.

Caldwell’s contention that Mississippi is not a victim of

his offenses appears to be based on the assumption that his

actions as CEO and chairman of the board of Magnolia Venture

could have directly and proximately harmed only Magnolia Venture,

which according to Caldwell is a private, and not a state,

entity. We find this notion implausible. It is undisputed that

Magnolia Venture was created by state statute and funded by state

bonds. The bond director for the Mississippi State Treasury

testified at Caldwell’s trial that the interest on the “Magnolia

Venture” bonds is paid out of the state treasury’s general fund,

which consists of tax revenues. Similarly, the district court

noted at Caldwell’s sentencing that the state treasurer had sent

letters to the court “express[ing] his outrage on behalf of the

[state]” and informing the court that when the bonds mature, “the

state will have paid over $14,000,000 in interest.”18

Furthermore, Magnolia Venture was created, and the money

from the bond issue provided to Magnolia Venture, for the

18 The bond director testified that the total amount of interest that the state is obligated to pay over the fifteen-year life of the Magnolia Venture bonds is $14,346,667.50.

44 statutory purposes of, inter alia, “creating new jobs for

Mississippi” and “enhancing tax revenue for the state.” MISS.

CODE ANN. § 57-77-3 (1996). As we concluded above, the jury’s

finding that Caldwell schemed against Mississippi officials and

taxpayers to obtain money is sufficiently supported by evidence

indicating that Caldwell fraudulently diverted Magnolia Venture’s

money to himself and his companies instead of expending it in

accordance with these statutory purposes. Accordingly, we find

it clear that the district court’s designation of Mississippi as

a victim of Caldwell’s offenses is proper under the VWPA.

Caldwell also challenges the district court’s restitution

order on the ground that the payment schedule is improper.

Pointing out that his adjusted gross income was $43,692 in 1997

and $72,072 in 1998, Caldwell argues that he does not have the

ability to comply with the payment schedule. We review the

propriety of the district court’s restitution payment schedule

for abuse of discretion. See Hughey, 147 F.3d at 436. The VWPA

instructs sentencing courts to “order restitution to each victim

in the full amount of each victim’s losses as determined by the

court and without consideration of the economic circumstances of

the defendant.” 18 U.S.C. § 3664(f)(1)(A). The court must take

the defendant’s financial situation into account, however, in

determining “the manner in which, and the schedule according to

which, the restitution is to be paid.” Id. § 3664(f)(2). The

45 VWPA sets forth the following mandatory factors to be considered

in determining a restitution payment schedule:

(A) the financial resources and other assets of the defendant, including whether any of these assets are jointly controlled; (B) projected earnings and other income of the defendant; and (C) any financial obligations of the defendant; including obligations to dependents.

18 U.S.C. § 3664(f)(2).

We will reverse a district court’s restitution payment

schedule “only if the defendant demonstrates that it is probable

that the district court failed to consider one of the mandatory

factors and the failure to consider that factor influenced the

court.” United States v. Schinnell, 80 F.3d 1064, 1070 (5th Cir.

1996). We find that Caldwell has not met this burden. The

district court relied on the financial information in Caldwell’s

presentence report, including that “the majority of the

defendant’s assets are jointly owned with his wife,” that he “has

been the sole financial provider [for his wife and two children]

in recent years,” and that “[d]espite considerable income from

1994 through 1996, the defendant and his wife appear to have

accumulated a fairly substantial amount of personal debt and have

little equity in their home.” The payment schedule, although

stringent, does not indicate a probability that the district

court failed to consider these aspects of Caldwell’s financial

46 situation. The schedule does not require any specific amounts to

be paid while Caldwell is incarcerated, but only that “the

balance” be paid in thirty-two equal monthly installments after

he is released. Further, the district court specified that

interest would not accrue on Caldwell’s restitution obligation.

According to the presentence report, after Magnolia

Venture’s board terminated him, Caldwell obtained employment at a

computer resale company where he earned a salary of $97,000 in

1997. It is thus reasonable to assume that he will have a

significant earning potential after his release from prison.

While meeting the payment schedule may require considerable

frugality on Caldwell’s part, the schedule is not an abuse of the

district court’s discretion in light of Caldwell’s financial

circumstances. Further, as the government points out, if

Caldwell finds himself unable to make payments under the schedule

at some point in the future, the district court may adjust the

schedule “as the interests of justice require.” 18 U.S.C.

§ 3664(k). We thus affirm the district court’s restitution

order.19

19 Caldwell also makes a conclusory claim that this court should review “statements of witnesses in F.B.I. 302s” for exculpatory material because the district court overruled his request for production of these statements after reviewing the documents in camera. Because Caldwell fails to provide any supporting analysis for this claim, we consider it abandoned as inadequately briefed. See, e.g., Edmond v. Collins, 8 F.3d 290, 292 n.5 (5th Cir. 1993) (“On appeal, we do not review issues not briefed.”).

47 IV. CONCLUSION

For the foregoing reasons, we AFFIRM Caldwell’s convictions

for mail fraud and money laundering and his sentence.