United States v. Lundberg

990 F.3d 1087

UNITED STATES of America, Plaintiff-Appellee,

v.Crystal LUNDBERG, Defendant-Appellant.

No. 19-3477

United States Court of Appeals, Seventh Circuit.

Argued February 24, 2021

Decided March 17, 2021

Thomas P. Peabody, Attorney, Office of the United States Attorney, Chicago, IL, for Plaintiff-Appellee.

Andrea Elizabeth Gambino, Attorney, Gambino & Associates, Chicago, IL, for Defendant-Appellant.

Before Flaum, Manion, and Kanne, Circuit Judges.

Kanne, Circuit Judge.

Over the course of less than two years, Crystal Lundberg went on a $5.8-million spending spree. In that short time, she spent more than a half-million dollars at exclusive stores, such as Nieman Marcus, Nordstrom, Gucci, and Louis Vuitton, and $23,000 at Victoria's Secret. She incurred rental expenses exceeding $100,000 for a mansion in California. She bought a Jaguar automobile, diamonds, and Rolex watches. She paid for plastic surgery and trips to places like Jamaica and Bora Bora. And she bought much, much more.

The problem? The money she spent wasn't hers. Nor was it Scott Kennedy's, the tormented boyfriend who gave her the credit card she used. No, the money and credit card belonged to Kennedy's employer, Nemera—intended for company purchases only.

Nemera eventually caught on, and the couple's scheme quickly unraveled. Kennedy cooperated with the government, pled guilty, and ultimately testified against Lundberg, who went to trial. The jury convicted Lundberg of five counts of wire fraud, and the court imposed a fifty-three-month sentence (plus well over $4 million in restitution).

Lundberg now appeals her conviction and sentence. Because we find no error in either, we affirm.

I. BACKGROUND

Nemera is a French company that designs and manufactures medical and drug-delivery devices. Scott Kennedy was an accountant employed as the controller for Nemera's facility in Buffalo Grove, Illinois. In this position, Kennedy had near-complete control over the facility's finances, including its financial reporting, accounting, internal controls, budgeting, credit cards, and central banking account.

In 2012, Kennedy hired an escort named Crystal Lundberg through a website called Backpage (which has since been seized by the government for enabling prostitution).

Evidently, Kennedy fell head over heels for Lundberg; he engaged her services several more times throughout the next few years, and they developed a romantic relationship.

In May 2015, Kennedy opened an American Express account on behalf of Nemera meant for company purchases from vendors. He had exclusive control over the card and was responsible for paying the bills from Nemera's account.

A couple months later, in July 2015, Lundberg asked Kennedy if she and her two daughters could move in with him. He readily agreed, paid off her hotel bill, bought her a car, and acquired a new apartment—then a five-bedroom house—to accommodate them all.

Kennedy expected their new living arrangement to be permanent, and because he was the sole source of income by this point, he promptly made efforts to stabilize their financial situation.

He spoke to Lundberg about his finances; asked her to sell some of her belongings to help cover expenses; requested that she put together a budget for things like her daughters’ academic and extracurricular club fees; and suggested that she look into getting a job or government assistance. He also added Lundberg to his personal credit cards (but capped her spending at $1,500 per month, which apparently wasn't enough for Lundberg, who opened a few additional credit lines for small amounts using Kennedy's information without his knowledge).

Despite these efforts, Kennedy's debt burden ballooned—and fast. By October 2015, his personal credit cards were all maxed out and his finances were in shambles.

The next month, Lundberg asked Kennedy for help with a "big Christmas" for her kids. Kennedy replied that he was "broke" and had "nothing more to give." Lundberg suggested that they use the Nemera corporate card. Kennedy objected at first—"Absolutely not. Can't do it."—and explained that the card was a business card for business use.

But he relented within a few days and handed over the Nemera card because he was "trying to be a provider for [the] family" and "make [Lundberg] happy." He reiterated to Lundberg that he did not have the money to cover the expenses and would have to use Nemera's funds. He also bought into Lundberg's tale that she would gain access to a trust account set up by her adoptive father when she turned thirty, and that that money could be used to pay back Nemera. (No such account existed.)

From that point on, Kennedy and Lundberg made thousands of personal purchases on the Nemera card. The credit-card bills exploded, and when they repeatedly hit their $125,000 limit, Lundberg would ask that Kennedy pay down the card. He always did, using Nemera's bank account.

His own involvement notwithstanding, Kennedy made tepid efforts to stop or slow Lundberg's spending. For example, in February 2016, he emailed Lundberg a detailed accounting of his earnings and the mounting bills to show her that they were living beyond their means. And after Lundberg made one $4,000 purchase at Louis Vuitton on the Nemera card, Kennedy told her: "Crystal, please don't buy anymore [sic]. We can't afford it, and we really don't need it."

By June 2016, the spending had taken a toll on Kennedy, who checked himself into a hospital for mental health treatment. He also wrote Lundberg an email:

I feel like I'm not being heard or believed, just used ... . I have crossed my moral and ethical boundary by allowing you to spend on my corporate Amex and using company funds to pay the balances. This should have never happened. I have put myself out on a limb to provide all that you want at the risk of jail, my livelihood, and my sanity.

But to no effect; Lundberg thereafter used the card to move herself out to San Diego, California, prepare to open her own spa, and lease a 7,000 square-foot home. (She was approved for the lease only after providing the leasing company with doctored versions of Kennedy's tax forms that appeared to reflect her personal income.)

Even while pleading with Lundberg to stop spending, however, Kennedy continued taking no small part in it himself. For example, he took a trip to Hawaii with Lundberg in July 2016 (on the corporate card), and when American Express's fraud-detection system blocked an attempted purchase (with the corporate card) at a jewelry kiosk, Kennedy—Lundberg at his side—called American Express to authorize the purchase.

During a trip to Miami (on the corporate card) for Lundberg to receive plastic surgery (on the corporate card), Lundberg told Kennedy that she did not want to go to jail. Kennedy rejoined that they could stagger their sentences so someone could remain at home with the kids.

In October 2016, Kennedy wrote another email to Lundberg, but he sent it to himself first so he could edit it. The email he sent to himself read:

Am I just a bank account? You live in a mansion in California, constantly buying new gadgets, while I live in a hotel. All this spending is putting my career, my livelihood and my freedom at risk. I am committing fraud and theft by allowing you to continue to spend and live your dream, and what do I get in return?

Kennedy later testified that he sent a substantively identical email to Lundberg but deleted it after Lundberg responded through a series of text messages: "Omg please delete that email"; "Admitting your [sic] committing fraud"; "Delete that are you fucking crazy."

All the while, Kennedy diligently worked to conceal the fraud from his employer. He fabricated and altered Nemera's financial records to reflect that purchases made on the card were for legitimate business purposes. He even doctored select records that were to be reviewed by Nemera's external auditor. But by January 2017, Kennedy texted Lundberg, "We need to be careful in spending now. I have run out of hiding spots in the financials." Lundberg's reply: "Sorry."

And still Kennedy enabled Lundberg's spending, even flying out to California to assist her with the purchase of a $40,000 Rolex watch for her birthday.

Ultimately, the personal charges made on the Nemera card from late 2015 to early 2017 included, among other things:

• Trips to Texas, Disney World, Hawaii, Jamaica, Miami, and Bora Bora;

• $159,805 worth of products from Nieman Marcus;

• $138,640 worth of products from Nordstrom;

• $55,364 worth of products from Louis Vuitton;

• $25,572 worth of products from Gucci;

• $22,989 worth of products from Victoria's Secret;

• $85,150 worth of products from the House of Diamonds;

• $6,376 worth of products from Christian Louboutin;

• $103,398 in rent for a 7,000 square-foot home for Lundberg in California;

• $10,000 worth of NBA tickets;

• $31,000 to a plastic-surgery center;

• $61,000 on two Rolex watches;

• $12,000 for a piano;

• $40,000 for a Jaguar automobile;

• $55,617 for "pet care."

The scheme came to a swift end in March 2017, when American Express contacted Nemera about suspected fraud. Nemera suspended, and then terminated, Kennedy.

When Kennedy told Lundberg the jig was up, she barraged Kennedy with texts: "I am going to have to start selling myself again"; "I was so close"; "To being financially free"; "And you miss using [sic] your corp card scares the fuck out of me"; "They could come and take everything that was ever bought on that card." She was concerned that she'd go to jail: "Do I create a will for my kids in case I'm taken from them[?]"

In August 2017, a grand jury indicted Kennedy and Lundberg on six counts of wire fraud under 18 U.S.C. § 1343 and alleged that they jointly participated in a scheme to defraud Nemera by using the corporate card for personal expenditures. Kennedy cooperated with the government and entered a plea agreement. Lundberg went to trial.

At trial, Kennedy testified about the above details of the scheme. Other government witnesses included a Nemera...