United States v. Joseph Brunson

482 F. App'x 811
CourtCourt of Appeals for the Fourth Circuit
DecidedJune 6, 2012
Docket11-4071, 11-4072, 11-4073
StatusUnpublished
Cited by3 cases

This text of 482 F. App'x 811 (United States v. Joseph Brunson) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fourth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Joseph Brunson, 482 F. App'x 811 (4th Cir. 2012).

Opinion

Affirmed by unpublished PER CURIAM opinion.

PER CURIAM:

Joseph Brunson, Timothy McQueen, and Tony Pough (collectively the Appellants) operated a Ponzi scheme that bilked investors out of more than $56,000,000.00. Following a jury trial, the Appellants were convicted of numerous offenses arising from this scheme. They raise three issues *813 on appeal: (1) whether the district court erred when it appointed full-time counsel over their respective objections; (2) whether the district court erred in sentencing each of them to the low-end of their respective Guidelines range; and (3) whether the district court abused its discretion in keeping portions of a related civil receivership case sealed until after the trial. For the reasons stated below, we affirm.

I

From approximately September 2004 until August 2008, the Appellants, who refer to themselves as the “Three Hebrew Boys,” operated a Ponzi scheme primarily through Capital Consortium Group (CCG), a business entity created to facilitate the scheme. 1 CCG offered investors, referred to as “constituents” by the Appellants, thousands of investment products, but the vast majority of these products related to either debt elimination or high-yield returns. The debt elimination products marketed by CCG guaranteed to eliminate the debt (e.g., mortgage, auto, credit card, or student loan) of the purchaser of the product. Typically, the purchaser agreed to pay up-front a fraction of the debt and agreed to wait a period of time before realizing any return on the investment. For its part, CCG agreed to eliminate the debt at the conclusion of this waiting period.

The high-yield return products offered what amounted to a fanciful return on the principal. For example, the “Short-Term Program” guaranteed that the investor would earn 10% per month on his or her principal until the end of the year at which time the investor was returned the principal. A 5% fee was charged up-front for this program. The “Long-Term Program” allowed investors to invest any amount, and, after ninety-one business days, they received 10% of their principal every month for the rest of their lives. A 5% fee was also charged up-front for this program. The “College Tuition Program” offered $100,000.00 toward four years of college tuition. The fees charged depended on what grade the student was in at the time the money was invested. For example, if the student was a freshman in high school, for a $2,100.00 fee, the student would receive $25,000.00 per year for four years of college.

Like many Ponzi schemes, early investors received exceptionally high rates of return. Such returns, of course, were not generated by the success of the investment products, but rather through the contributions of new investors or from earlier investors who continued to invest their money. In fact, very little of the money received by CCG was invested at all. 2 Instead, the Appellants used the money for their personal use, to buy, among other things, real estate, a $1,000,000.00 RV, a Gulfstream jet, luxury cars, football stadium skyboxes, and other luxury personal items. The actual loss generated by the scheme was approximately $56,000,000.00.

Unfortunately, the individuals the Appellants targeted to invest in their fraudulent investment programs were church *814 members, their families, and friends, and military service members, their families, and friends. 3 Investment seminars were often held in churches and homes, and secrecy was a touchstone of the scheme— investors were required to sign a nondisclosure agreement which subjected them to a $1,000,000.00 fine if they disclosed the contents of the program. Over 7,000 individuals were victimized by the actions of the Appellants, with an actual loss in excess of $56,000,000.00.

In August 2006, state law enforcement officers in South Carolina began to investigate CCG after receiving information from the North Carolina Secretary of State’s office concerning a complaint filed with that office challenging the business practices of CCG. In June 2007, a state search warrant was executed at CCG’s offices in Columbia, South Carolina. During the search, a thumb drive was seized which contained a spreadsheet listing the names and addresses of over 7,000 investors. The spreadsheet showed that these investors invested over $82,000,000.00 in approximately 14,000 CCG programs.

On August 1, 2007, the government filed a sealed, ex parte motion for a preindictment restraining order to prevent the Appellants from disposing of assets related to CCG and to appoint a receiver who would identify and preserve CCG-related assets while the investigation into CCG was pending. The following day, the district court entered a sealed order granting the government’s motion. On August 31, 2007, the district court converted the restraining order into a preliminary injunction.

On September 5, 2007, the district court entered an order outlining the receiver’s duties, as well as listing the Appellants’ responsibilities concerning their cooperation with the receiver. Among other things, the order specified that the Appellants were to deliver property, monies, books, and records upon the receiver’s demand and were to take no action, directly or indirectly, to hinder, obstruct, or otherwise interfere with the receiver in the conduct of his duties or with the custody, possession, management, or control by the receiver of the funds, assets, or premises involved in the case.

On May 27, 2008, a criminal complaint against the Appellants was filed in the United States District Court for the District of South Carolina. On June 20, 2008, a federal grand jury in the District of South Carolina returned an indictment charging the Appellants with one count of conspiracy to commit mail fraud under 18 U.S.C. §§ 1341 and 1349 (Count One) and thirty-five substantive counts of mail fraud under 18 U.S.C. §§ 1341 and 2 (Counts Two to Thirty-Six). The indictment also included a number of criminal forfeiture counts.

On August 21, 2008, the grand jury returned a superseding indictment against the Appellants which added ten counts of transporting stolen funds in interstate commerce under 18 U.S.C. §§ 2314 and 2 (Counts Thirty-Seven to Forty-Six) and twelve counts of money laundering under 18 U.S.C. §§ 1957 and 2 (Counts Forty-Seven to Fifty-Eight).

Prior to trial in the criminal case, the district court released certain deposition transcripts in the receivership case to the Appellants.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

STATE v. DIST. CT. (KIRK, JR.) (CRIMINAL)
141 Nev. Adv. Op. No. 60 (Nevada Supreme Court, 2025)
United States v. Doyle Smith
830 F.3d 803 (Eighth Circuit, 2016)
Marcus Jamez Lewis v. State
Court of Appeals of Texas, 2015

Cite This Page — Counsel Stack

Bluebook (online)
482 F. App'x 811, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-joseph-brunson-ca4-2012.