U.S. v. Stephens

Page 503

421 F.3d 503

UNITED STATES of America, Plaintiff-Appellee, v. Wayne STEPHENS, Defendant-Appellant.

No. 03-2964.

United States Court of Appeals, Seventh Circuit.

Argued October 28, 2004.

Decided August 29, 2005.

COPYRIGHT MATERIAL OMITTED

Christopher S. Niewoehner (argued), Office of the United States Attorney, Chicago, IL, for Plaintiff-Appellee.

Barry Levenstam, Irina Dmitrieva (argued), Jenner & Block, Chicago, IL, for Defendant-Appellant.

Before POSNER, KANNE, and ROVNER, Circuit Judges.

ILANA DIAMOND ROVNER, Circuit Judge.

Wayne Stephens was employed as a manager in a technical support unit for Accenture's New York office when he repeatedly used an "add to pay" function on his time and expense reports to obtain a total of approximately $67,395 in unauthorized cash advances for personal use. That conduct resulted in his criminal conviction for wire fraud in violation of 18 U.S.C. § 1343.

In his position at Accenture, Stephens was required to use the computer program called Automatic Remote Time and Expense System (ARTES) to file a bi-weekly time and expense report (hereinafter "expense report") that was used in calculating his paycheck. Through ARTES, employees would input information regarding expenses incurred, and Accenture would use that information to bill the client and to reimburse the employee in the paycheck. Employees could request reimbursement for business-related expenses by filling in the fields labeled "expenses without receipt," "expenses with receipt," and "business meals." In addition, the form included a "add to pay/deduct from pay" line which allowed employees to add to or deduct from their paychecks. The "deduct from pay" line could be used for certain personal expenses, such as charges incurred by employees as a result of personal telephone calls or use of a concierge service that Accenture operated for its employees. The proper use of the "add to" function was at issue in the trial. Some testimony indicated that the "add to" function was to be used only for business-related expenses such as expenses related to international assignments or employee relocations. Stephens, on the other hand, argued that there was no policy related to the use of that function, and that it could be used for personal expenses. Prior to January 2000, Accenture's written Policy 526 stated that "[c]ash advances are not provided via time reports nor through petty cash in the offices." In January 2000, however, that policy was replaced by Policy 63.044, which did not contain that sentence. Policy 526 was in place at the time Stephens was hired, but Policy 63.044 had subsumed it by the time of the criminal actions. Therefore, during the time period of the conduct at issue here, Accenture did not have a written policy regarding the availability of cash advances through the time and expense reports. Accenture's Policy 63.044 did expressly allow the use of corporate credit cards for cash advances or for personal expenses, but further declared that Accenture had no liability for the balance on the accounts and that employees were required to directly pay the entire balance on their monthly statements.

Once an employee completed the expense report, it was sent electronically to Accenture's processing center and its payroll department, where the employee's check was automatically generated based upon that information and deposited into the employee's bank account. Approximately 5% of the expense reports were audited after they were submitted. In addition, the expense reports contained a field for the name of the employee's supervisor, and a copy of the expense report was automatically sent to that designated supervisor upon submission. The supervisor could also access a supervisee's expense report by using the "auditor's view" of the ARTES program and typing in the supervisee's identification number.

When Stephens was hired in May 1999, his supervisor was Sandra Lieb-Gieger. Lieb-Gieger required Stephens to submit his expense report to her the day before it was due. She would then review it and once approved, would personally submit it to the processing center. While Lieb-Gieger was his supervisor, Stephens often recorded business expenses, but never sought a cash advance using the "add to" function. He also consistently entered Lieb-Gieger's name in the reviewer field. Beginning in March 2000, Neil Penney became Stephens' supervisor. Penney did not preapprove expense reports prior to submission to the processing department. Instead, Penney allowed Stephens to submit the expense reports directly to the processing department, but required Stephens to e-mail a copy to him. Penney testified, however, that he did not check those expense reports and did not notice when his supervisees failed to e-mail copies to him.

In March 2000, shortly after Penney became his supervisor, Stephens submitted his expense report and e-mailed a copy to Penney. Stephens did not request a cash advance through the "add to" function on that expense report. Beginning on April 30, 2000, however, Stephens began utilizing the "add to" function to secure cash advances. His April 30 expense report requested a cash advance in the amount of $7,800. Stephens did not include Penney's name in the reviewer field of that expense report, instead designating himself as his own reviewer, and he did not e-mail a copy to Penney. He also requested reimbursement for business expenses in the amount of $78.00. The government argued at trial that Stephens used the $7,800 figure in the "add to" function because, if confronted, he could argue that it reflected his business expenses of $78.00 and was a mistake in the placement of the decimal point.

Stephens continued that use of the "add to" function for the next six expense reports. On each of six expense reports between April 30 and July 31, 2000, Stephens requested cash advances in amounts between $9,800 and $9,985, increasing his cash advance yield to $67,395. None of those reports were reviewed by Penney because Stephens did not e-mail a copy to Penney and did not include Penney's name in the reviewer field, thus bypassing the automatic sending of the report to Penney.

In his August 15, 2000, expense report, Stephens deviated from his previous pattern of keeping his requests slightly under the $10,000 mark. Instead, he requested a cash advance of $22,980. That request was noticed by Accenture's audit team, and Stephens was fired on August 23, 2000 based on unauthorized cash advances.

Stephens was subsequently convicted of wire fraud and sentenced to 21 months' imprisonment, 2 years supervised release, and $50,000 in restitution. He appeals that conviction, alleging that the evidence was insufficient to support the jury verdict and that the jury selection process violated the Equal Protection Clause.

I

We turn first to Stephens' challenge to the sufficiency of the evidence. In considering this claim, we consider the evidence in the light most favorable to the government, making all inferences in its favor, and must affirm if a rational trier of fact could have found all the elements of the offense beyond a reasonable doubt. United States v. Owens, 301 F.3d 521, 527 (7th Cir.2002); United States v. Paneras, 222 F.3d 406, 410 (7th Cir.2000). In order to convict Stephens of wire fraud under 18 U.S.C. § 1341, the jury had to find that: (1) there was a scheme to defraud; (2) wires were used in furtherance on the scheme; and (3) Stephens participated in the scheme with the intent to defraud. Owens, 301 F.3d at 528. Stephens contends that the jury could not rationally find either a scheme to defraud or the intent to defraud. Instead, Stephens contends that the evidence at best establishes simple theft. He argues that the government failed to demonstrate that Accenture's policy expressly prohibited Stephens from making requests for personal cash advances. Furthermore, he asserts that the government failed to establish that he made affirmative misrepresentations or misleading statements when seeking the cash advances or that he engaged in elaborate efforts to conceal his cash requests.

In determining whether conduct evinced a scheme to defraud, the Supreme Court has noted that the words "to defraud" in the mail fraud statute "refer `to wronging one in his property rights by dishonest methods or schemes,' and `usually signify the deprivation of something of value by trick, deceit, chicane or overreaching.'" McNally v. United States, 483 U.S. 350, 358, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987), quoting Hammerschmidt v. United States, 265 U.S. 182, 188, 44 S.Ct. 511, 68 L.Ed. 968 (1924); United States v. Lack, 129 F.3d 403, 406 (7th Cir.1997); see also United States v. Wingate, 128 F.3d 1157, 1162 n. 3 (7th Cir.1997) ("Cases construing the mail fraud statute are equally applicable to the wire fraud statute."). We have previously held that "a necessary element of a scheme to defraud is the making of a false statement or material misrepresentation, or the concealment of a material fact." Williams v. Aztar Indiana Gaming Corp., 351 F.3d 294, 299 (7th Cir.2003). We have held that the concept includes both statements that the defendant knows to be false, as well as a "half truth" that the defendant knows to be misleading and which the defendant expects another to act upon to his detriment and the defendant's benefit. Emery v. American General Finance, Inc., 71 F.3d 1343, 1346 (7th Cir.1995). In Emery, we further noted that "[a] half truth, or what is usually the same thing a misleading omission, is actionable as fraud ... if it is intended to induce a false belief and resulting action to the advantage of the misleader and the disadvantage of the misled." Id. at 1348. The mere failure to disclose information will not always constitute fraud, but an omission accompanied by acts of concealment or affirmative misrepresentations can constitute fraud.

The government presented sufficient evidence for a rational...