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APPEAL fro THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO. (D.C. No. 1:08-CR-00365-MSK).
Robert T. Fishman, Of Counsel, Ridley, McGreevy & Winocur, PC, Denver, Colorado, for Defendant-Appellant, Charles Sharp.
Norman R. Mueller, (Rachel A. Bellis, with him on the briefs), of Haddon, Morgan and Foreman, P.C., Denver, Colorado, for Defendant-Appellant, Michael Griggs.
Pegeen D. Rhyne, Assistant United States Attorney, (John F. Walsh, United States Attorney, with her on the consolidated brief), Denver, Colorado, for Plaintiff-Appellee.
Before BRISCOE, Chief Judge, HOLLOWAY[*] and PHILLIPS, Circuit Judges. HOLLOWAY, Circuit Judge, concurring in part and dissenting in part.
BRISCOE, Chief Judge.
Codefendants Michael Griggs and Charles Sharp appeal from their convictions for mail fraud and conspiracy to commit mail fraud. Griggs also challenges a $500,000 fine that was imposed by the district court as part of his sentence. Exercising jurisdiction pursuant to 28 U.S.C. § 1291, we affirm.
A. Factual background
1. The defendants and their operation of DRI
In 1986, defendant Griggs formed Disaster Restoration, Inc. (DRI), a Denver, Colorado-based corporation, and subsequently served as its owner and chief executive officer. DRI repaired and restored commercial and residential properties throughout Colorado that were damaged by fire, flood, or other disasters. DRI had four divisions, each of which engaged in a separate part of the restoration process: (1) the emergency services division, which responded immediately to disasters; (2) the contents division, which both moved and restored personal property; (3) the structural repair division, which performed needed structural repairs on the damaged commercial and residential buildings; and (4) the environmental division, which addressed environmental concerns arising out of a disaster. Approximately 85% of DRI's restoration work was performed by its own employees; the remaining 15% was performed by subcontractors hired by DRI.
In carrying out its business, DRI contracted directly with the owner of the damaged property. DRI would often, in turn, work directly with and be paid by the property owner's insurance company. In doing so, DRI would submit to the insurance company an estimate outlining the scope and proposed cost of the repair and restoration work that was to be performed. In preparing these estimates, DRI used Xactimate, a software program commonly utilized by insurance adjusters to calculate repair and construction costs. DRI's estimates also sometimes included manually-input line items relating to work to be performed by its subcontractors. Those line items referenced the name of the subcontractor and typically included the words " per invoice" or " per proposal."
In 2003, Griggs hired defendant Sharp to work as the chief executive officer and operating manager of DRI. Both Griggs and Sharp established company policies, and also trained and supervised DRI project managers and estimators.
Beginning in approximately 2004, Griggs and Sharp began instructing DRI employees who prepared DRI's estimates to add 20-30% to the price that DRI's subcontractors were charging DRI. As a result, the estimate sent by DRI to an insurance company would, in the case of a line item relating to subcontractor work, list an amount 20-30% higher than the subcontractor's bid for the work (and that DRI knew it would be paying the subcontractor for its work). Griggs and Sharp also instructed DRI employees to require DRI's subcontractors to provide DRI with two
invoices: one that listed the actual amount the subcontractor would charge and receive from DRI, and a second invoice that listed a total amount 20-30% higher than the first invoice. The invoices reflecting the actual charges to DRI went to DRI's accounts payable department for payment and were not shared with the insurance companies. The inflated invoices were kept in DRI's job files to be provided to insurance adjusters upon request. Thus, the sole purpose for the inflated invoice was to provide DRI with a document that would support the amount listed on the subcontractor line item of DRI's estimate.
On most DRI estimates, DRI employees also added 10% for overhead and 10% for profit, a total of 20% markup that was known and generally agreed to by insurers and was standard in the industry.
2. The individual jobs at issue
The counts of conviction at issue in these appeals stem from the following restoration jobs performed by DRI between 2005 and 2006.
a. The Belterra job (basis for Count 4)
In 2005, DRI performed restoration work on a property in Longmont, Colorado, owned by Belterra Inc. and insured by Travelers Insurance (Travelers). DRI employee Mark Troudt provided Travelers with a revised estimate that included two subcontractor line items: one in the amount of $62,430.01 for " ELECTRICAL" and another in the amount of $1,976.10 for " PLUMBING." Supp. ROA at 32. The line item for the electrical work stated " [t]he line item above represents the electrical repairs per detailed invoices from Master Electrician (A/C Electric)." Id. The line item for the plumbing work stated that the amount listed was " per the detailed break down [sic] from D& H Plumbing and Heating." Id. In fact, however, DRI paid only $45,486.96 to its subcontractor for the electrical work and $1,580.88 to its subcontractor for the plumbing work.
b. The Benaglio job (basis for Counts 7 and 8)
In 2005, DRI performed restoration work on a property in Broomfield, Colorado, owned by John Benaglio and insured by The Hartford Insurance Company (The Hartford). Troudt sent The Hartford a DRI estimate that included seven line items for vinyl windows that included the following language: " The line item above represents the actual cost of the window for installation and material per the invoice from Professional Window Service." Id. at 79, 83, 88, 91, 93, 94, 96. These seven line items in DRI's estimate totaled $4,084.72. But DRI paid its subcontractor, Professional Window Service, only $3,568.44 for the work.
On this same DRI estimate, Troudt also listed three subcontractor line items for " ELECTRICAL" work. Id. at 108-09. Each of these line items stated that the amounts were " [p]er invoice from Ruby Electric." Id. However, DRI actually paid Ruby Electric 20% less for each line item than was listed on its estimate to The Hartford.
c. The Cahall job (basis for Count 15)
In 2005, DRI performed restoration work on a property in Broomfield, Colorado, owned by Rosemary Cahall and insured by the Kemper Insurance Company (Kemper). DRI employee Justin Blackburn submitted to Kemper a DRI estimate that included two subcontractor line items, one in the amount of $8,009 and the other in the amount of $5,550, for work performed by subcontractor D& H. Id. at 184-85. Each of these line items included the wording " per estimate from D& H Heating and Air." Id. DRI, however, paid D& H only $6,407 for this work.
On the same DRI estimate, Blackburn also listed a subcontractor line item for " Electrical repairs - per estimate from H& H Electrical" in the amount of $4,180. Id. at 184. The actual work, however, was performed by Ruby Electric and DRI paid Ruby Electric only $2,686.40 for the work.
d. The Clear Creek job (basis for Counts 16 and 17)
In 2005, DRI performed restoration work on a property in Empire, Colorado, owned by Clear Creek Investments and insured by State Farm Insurance Company (State Farm). Troudt sent State Farm a DRI estimate that listed a single subcontractor line item in the amount of $6,231.90 for " HEAT, VENT & PLUMBING" work performed by D& H. Id. at 226. Written below the line item was the phrase " per the the [sic] invoice and breakdown from D& H Heating in the amount of 5193.25 x contractor overhead and profit of 20% = the cost of $6231.90." Id. Troudt also sent a cover letter that stated, in pertinent part, " The break down [sic] is per invoice received from D& H Heating for labor and material completed to date." Id. at 225. In fact, however, D& H had agreed to perform the work for $3,879.60 and invoiced DRI for that amount.
e. The Evans job (basis for Counts 22 and 23)
In 2005, DRI performed restoration work on a property in Boulder, Colorado, owned by Kent and Marilyn Evans and insured by State Farm. DRI employee Jason Cain sent State Farm a DRI estimate that included a subcontractor line item in the amount of $267.52 for " Electronics Cleaning per RescueTech." Id. at 336. Included with the line item was the following statement: " Electronics cleaning includes 20% O& P." Id. Rescue Tech provided DRI with an estimate in the amount of $223.03, but ultimately agreed to accept $178.42 from DRI for the work.
Cain also sent State Farm a DRI supplemental estimate that included subcontractor line items in the amount of $3,550 for " PAINTING . . . Per CertaPro Painting,"
id. at 347, and in the amount of $5,899.85 for " CONCRETE - garage slab,"
id. at 348. Along with the supplemental estimate, Cain sent State Farm the false proposals from these subcontractors that matched the dollar figures listed on the supplemental estimate. In fact, however, CertaPro charged DRI $1,760, and TBD (the subcontractor that performed the concrete work) charged DRI $4,719.88.
f. The Jones job (basis for Count 30)
In 2006, DRI performed restoration work on a property in Boulder, Colorado, owned by David Jones and insured by American Family Insurance (American Family). Blackburn sent American Family a DRI estimate that contained two subcontractor line items: one in the amount of $4,995.98 for " Plumbing repairs - per invoice from Broomhall Brothers Plumbing," and another in the amount of $4,456 for " Electrical repairs - per invoice from Ruby Electrical." Id. at 710. In fact, however, DRI
paid both of these subcontractors 20% less than the amounts listed on DRI's estimate.
g. The Justen job (basis for Count 31)
In 2005, DRI performed restoration work on a property in Lakewood, Colorado, owned by Kathleen Justen and insured by Amica Insurance (Amica). Blackburn sent Amica a DRI estimate with a subcontractor line item in the amount of $5,700 for " Asbestos abatement - per estimate from Rocky Mountain Abatement." Id. at 739. Together with the DRI estimate, Blackburn sent Amica a proposal from Rocky Mountain that listed a contract price of $5,750. However, DRI actually paid Rocky Mountain $4,025 for the work.
h. The List job (basis for Count 36)
In 2005, DRI performed restoration work on a property in Niwot, Colorado, owned by Don List and insured by Allstate Insurance Company (Allstate). Blackburn sent Allstate a DRI estimate that included a subcontractor line item in the amount of $8,551.22 for " Electronics cleaning - per invoice from ICC Technical Loss Consultants of $7,126.02 plus ten and ten." Id. at 779. ICC provided DRI with an inflated invoice that matched the $7,126.02 figure. But DRI actually paid ICC $5,700.60 for the work.
i. The Lusman job (basis for Count 37)
In 2006, DRI performed restoration work on a property in Morrison, Colorado, owned by Charles Lusman and insured by Sentry Insurance (Sentry). Blackburn sent to James Lynch, an independent adjuster who was working for Sentry, a falsely inflated Rocky Mountain Abatement proposal for $4,038 plus a $450 inspection fee. Id. at 803-05. Lynch relied on the false Rocky Mountain Abatement proposal and incorporated it as a line item in the claim estimate that he created for Sentry on the Lusman job. Unbeknownst to Lynch and Sentry, Rocky Mountain Abatement had agreed to perform the work for $3,250 plus a $450 inspection fee.
j. The Taddonio job (basis for Count 53)
In 2005, DRI performed restoration work on a property in Lakewood, Colorado, owned by Louise Taddonio and insured by Ohio Casualty. Id. at 1047. Blackburn sent Ohio Casualty a DRI estimate that included a subcontractor line item in the amount of $4,293.44 for " Motorized shades - per proposal from Ananda and Suns." Id. at 1048. Ananda and Suns provided DRI with two invoices: one in the amount of $4,293.44, and another in the amount of $3,484.32. Id. at 1055-56. DRI provided Ohio Casualty with a copy of the higher invoice, but actually paid Ananda and Suns the lower of these two amounts.
B. Procedural background
On September 8, 2008, a federal grand jury returned a sixty-count indictment against Griggs, Sharp, and eight other DRI employees. Count 1 charged Griggs, Sharp, and the other defendants with conspiracy to commit mail fraud, in violation of 18 U.S.C. § 371. Counts 2 through 57 charged Griggs, Sharp and various other defendants with individual counts of mail fraud, in violation of 18 U.S.C. § § 1341 and 2. Counts 58 and 59 charged Sharp with extortion, in violation of 18 U.S.C. § 1951. Count 60 was a forfeiture charge against all of the defendants.
Four of the named defendants -- Jason Cain, Brett Harding, Peter Jennings and Garland Scott Risdon -- pleaded guilty. The government dismissed all charges against defendants Matthew Kaskel and Mark Troudt, as well as certain of the charges against Griggs, Sharp (in particular the extortion counts) and the remaining two defendants, Justin Blackburn and Daniel Travers.
The joint trial of Griggs, Sharp, Blackburn and Travers began in early July 2012. Following approximately five weeks of evidence and approximately one week of deliberations, the jury returned a partial verdict, convicting Sharp and Griggs of several counts. Specifically, the jury convicted Sharp on Counts 1 (conspiracy), 4, 15, 22, 23, 30, 31, 36, 37, and 53, and convicted Griggs on Counts 1, 4, 7, 8, 15, 16, 17, 22, 23, 30, 31, 36, 37, and 53. As for Blackburn and Travers, the jury either acquitted them or was unable to reach a verdict on certain of the counts. Consequently, neither Blackburn nor Travers were found guilty on any count. Following the trial, the district court, acting pursuant to the government's motion, dismissed all of the counts on which the jury was unable to reach verdicts.
The district court sentenced Griggs to a term of imprisonment of fifty months, to be followed by a three-year-term of supervised release. The district court also ordered Griggs to pay restitution in the amount of $477,643.49, plus a fine of $500,000.
The district court sentenced Sharp to a term of imprisonment of thirty-six months, to be followed by a three-year-term of supervised release. The district court also ordered Sharp to pay restitution in the amount of $477,643.49.
A. Sharp's Appeal
Sharp raises five issues in his appeal: two sufficiency-of-the-evidence issues, two instruction-related issues, and, lastly, a challenge to his convictions based upon this court's decision in United States v. Cochran, 109 F.3d 660 (10th Cir. 1997). We conclude, for the reasons we shall discuss in greater detail below, that all of these issues lack merit.
1. Was the evidence presented at trial sufficient to establish that Sharp obtained money by false pretenses or representations?
Sharp argues in his first issue on appeal that his convictions for mail fraud and conspiracy to commit mail fraud must be reversed because the evidence presented by the government at trial was insufficient to establish that he obtained money by false pretenses or representations. " We review the sufficiency of evidence de novo." United States v. Serrato, 742 F.3d 461, 472 (10th Cir. 2014). " The question for the court is 'whether, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt." Id. (quoting Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979)).
The district court in this case instructed the jury that to find the defendants guilty of mail fraud, the government had to establish beyond a reasonable doubt each of the following elements:
1. That the named defendant devised or participated in a scheme to defraud or to obtain money or property by means of false pretenses or representations as that scheme is described in the Indictment.
2. That the named defendant acted with the specific intent to defraud or to obtain money or property by false pretenses or representations.
3. That the scheme involved a person making false pretenses or representations that were material, and
4. That the named defendant knew or could have reasonably foreseen that a person would use the mails or an interstate private or commercial ...