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    United States v. John Graves, 4th Cir. (2014)

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    This document summarizes a court case from the United States Court of Appeals for the Fourth Circuit involving John Robert Graves who was convicted of multiple counts of fraud, making false statements, and other charges. The summary details how Graves and his wife engaged in an elaborate scheme over several years to defraud elderly or inexperienced investors of around $1.3 million by misrepresenting investments and funneling the money to their personal accounts. Graves appealed his conviction arguing the evidence was insufficient, but the court found the evidence overwhelming and affirmed all convictions and the sentencing.

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    United States v. John Graves, 4th Cir. (2014)

    Uploaded by

    Scribd Government Docs
    41 views12 pages
    This document summarizes a court case from the United States Court of Appeals for the Fourth Circuit involving John Robert Graves who was convicted of multiple counts of fraud, making false statements, and other charges. The summary details how Graves and his wife engaged in an elaborate scheme over several years to defraud elderly or inexperienced investors of around $1.3 million by misrepresenting investments and funneling the money to their personal accounts. Graves appealed his conviction arguing the evidence was insufficient, but the court found the evidence overwhelming and affirmed all convictions and the sentencing.

    Original Description:

    Filed: 2014-11-21 Precedential Status: Non-Precedential Docket: 12-5037

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    This document summarizes a court case from the United States Court of Appeals for the Fourth Circuit involving John Robert Graves who was convicted of multiple counts of fraud, making false statements, and other charges. The summary details how Graves and his wife engaged in an elaborate scheme over several years to defraud elderly or inexperienced investors of around $1.3 million by misrepresenting investments and funneling the money to their personal accounts. Graves appealed his conviction arguing the evidence was insufficient, but the court found the evidence overwhelming and affirmed all convictions and the sentencing.

    Copyright:

    Public Domain
    Download as PDF or read online from Scribd
    Download as pdf
    41 views12 pages

    United States v. John Graves, 4th Cir. (2014)

    Uploaded by

    Scribd Government Docs
    This document summarizes a court case from the United States Court of Appeals for the Fourth Circuit involving John Robert Graves who was convicted of multiple counts of fraud, making false statements, and other charges. The summary details how Graves and his wife engaged in an elaborate scheme over several years to defraud elderly or inexperienced investors of around $1.3 million by misrepresenting investments and funneling the money to their personal accounts. Graves appealed his conviction arguing the evidence was insufficient, but the court found the evidence overwhelming and affirmed all convictions and the sentencing.

    Copyright:

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    of 12

    UNPUBLISHED

    UNITED STATES COURT OF APPEALS


    FOR THE FOURTH CIRCUIT

    No. 12-5037

    UNITED STATES OF AMERICA,


    Plaintiff - Appellee,
    v.
    JOHN ROBERT GRAVES,
    Defendant - Appellant.

    Appeal from the United States District Court for the Eastern
    District of Virginia, at Richmond.
    James R. Spencer, Senior
    District Judge. (3:11-cr-00246-JRS-1)

    Argued:

    October 30, 2014

    Decided:

    November 21, 2014

    Before WILKINSON, MOTZ, and FLOYD, Circuit Judges.

    Affirmed by unpublished per curiam opinion.

    ARGUED: Patrick L. Bryant, OFFICE OF THE FEDERAL PUBLIC


    DEFENDER, Alexandria, Virginia, for Appellant.
    Kevin Brian
    Muhlendorf, UNITED STATES DEPARTMENT OF JUSTICE, Washington,
    D.C., for Appellee.
    ON BRIEF: Michael S. Nachmanoff, Federal
    Public
    Defender,
    Alexandria,
    Virginia,
    Carolyn
    V.
    Grady,
    Assistant Federal Public Defender, OFFICE OF THE FEDERAL PUBLIC
    DEFENDER, Richmond, Virginia, for Appellant.
    Jeffrey H. Knox,
    Chief,
    Criminal
    Division,
    Fraud
    Section,
    UNITED
    STATES
    DEPARTMENT OF JUSTICE, Washington, D.C.; Neil H. MacBride,
    United
    States
    Attorney,
    Alexandria,
    Virginia,
    Jamie
    L.
    Mickelson, Assistant United States Attorney, OFFICE OF THE
    UNITED STATES ATTORNEY, Atlanta, Georgia, for Appellee.

    Unpublished opinions are not binding precedent in this circuit.

    PER CURIAM:
    John Robert Graves and his wife engaged in an elaborate
    scheme to swindle at least eleven clients out of approximately
    $1.3

    million.

    making

    On

    false

    investigation
    investment

    appeal,

    he

    statement

    and

    challenges

    in

    the

    committing

    adviser,

    as

    course

    fraud

    well

    his

    as

    while
    a

    convictions
    of

    government

    serving

    two-level

    for

    as

    an

    sentencing

    enhancement applied for conducting fraud through sophisticated


    means. We find no merit in his contentions, and hereby affirm.
    I.
    After

    resigning

    from

    the

    FBI,

    Graves

    registered

    as

    an

    investment adviser and broker to offer tax advice and estate


    planning services through his company, Brook Point Management,
    Inc. (BPM). He was also employed by, and served for a time as
    president of, an Indiana-based investment company called Compass
    Financial Advisors (Compass). His wife, Sara Graves, served as
    the

    managing

    member

    of

    another

    company,

    Dupont

    Auburn

    Real

    Estate (DARE), which was created to facilitate the purchase of


    an office building in Indiana in which Compass could rent office
    space. In time, the couple used these three entities, along with
    several

    personal

    accounts,

    to

    further

    their

    fraudulent

    transactions.
    Gravess

    victims

    were

    generally

    elderly

    or

    inexperienced

    investors seeking a safe haven for large sums of money they had
    3

    acquired,

    often

    through

    inheritance

    or

    insurance

    payments.

    Graves would pitch investments in BPM or DARE to them, while


    neglecting to mention that DARE was nominally owned by his wife.
    For example, Graves became Janice Robinsons investment adviser
    for funds she inherited from her late husband. He advised her to
    invest $200,000 in BPM and DARE, which she did. She later gave
    Graves another $23,000 to hold in escrow, which he and his wife
    instead put into the DARE account to use for other purposes. Of
    the $223,000 she invested, Robinson was only able to recover
    $9,000.
    In 2008, Barbara Wren sent Graves $150,000 to invest from
    money

    inherited

    from

    her

    mother.

    Graves

    used

    the

    funds

    to

    purchase and offer for rent a house in Partlow, Virginia -where Wren herself lived. When Wren raised questions in 2009
    about the lack of paperwork, he offered her $150,000 in AIC
    stock -- another company associated with the defendant -- which
    turned out to be virtually worthless.
    Around the same time, Christine Taugher and her two sons
    contacted

    Graves

    retirement

    savings

    to

    invest

    and

    life

    money

    they

    insurance

    had

    funds

    obtained
    after

    from

    Taughers

    husband passed away. Graves recommended investing in real estate


    as

    safe

    received
    neglected

    investment

    $578,000
    to

    with

    from

    mention

    his

    the

    reasonable

    returns

    family

    to

    connection

    to

    and

    invest
    DARE,

    in

    and

    eventually
    DARE.
    the

    He

    family

    never recovered its investment. Other victims recounted similar


    experiences, also resulting in a complete loss of their savings.
    In the fall of 2008, Graves and his business partner, John
    Lauer, arranged to acquire a controlling ownership interest in
    Compass by making several significant payments in 2009 and 2010.
    Several of these payments, including one for $200,000 due June
    30, 2009, were personally guaranteed by Graves and his partner.
    Failing to pay on time would cost both of them their shares in
    the company and any investment made to date. Graves used his
    fraudulent transactions to pay off these debt obligations, as
    well as to fund other personal expenses for himself and his
    wife.
    FBI

    Special

    Graveses

    scheme,

    defendants
    Taughers

    Agent

    traced

    various

    money

    Tyler

    June

    Kennedy,

    the

    Taughers

    accounts.
    29,

    who

    2009,

    Graves
    the

    day

    investigated

    money

    through

    received
    before

    the
    the

    Christine

    the

    $200,000

    payment was due for Compass. After only a few days in the DARE
    account, Taughers money was transferred to a joint personal
    savings account on July 1, 2009. That day, Sara Graves closed
    the joint account and opened a new account in her name only with
    Taughers

    funds.

    The

    money

    was

    disbursed

    from

    there

    to

    pay

    various personal debts, including the funds owed to Compass.


    Taughers sons investment was likewise only in the DARE account
    a few weeks before being moved to other accounts. A portion of
    5

    it was used to fund the purchase of the AIC stock given to Wren
    for her investment. However, when Graves was specifically asked
    about

    the

    repayment

    to

    Wren

    during

    the

    investigation,

    he

    represented that she had been paid using money his wife had
    inherited from her mother.
    On

    October

    4,

    2011,

    the

    Graveses

    were

    indicted

    for

    conspiracy to commit mail and wire fraud in violation of 18


    U.S.C. 1349, mail fraud in violation of 18 U.S.C. 1341, and
    four counts of wire fraud in violation of 18 U.S.C. 1343. In
    addition, John Graves was indicted for three counts of fraud in
    violation of the Investment Advisers Act, 15 U.S.C. 80b-6 and
    80b-17, and one count of making false statements in a matter
    within the jurisdiction of the executive . . . branch of the
    Government in violation of 18 U.S.C. 1001. After a four-day
    jury

    trial,

    the

    Graveses

    were

    convicted

    on

    all

    counts.

    John

    Graves was sentenced to 135 months of imprisonment and three


    years of supervised release, and was ordered to pay nearly $1.3
    million in restitution. The 135 months of imprisonment was the
    minimum amount of time recommended by the Sentencing Guidelines
    range, which included a two-level enhancement for sophisticated
    means.
    On

    appeal,

    Graves

    challenges

    the

    sufficiency

    of

    the

    evidence supporting the false statement conviction. He claims


    that the FBI agents question was ambiguous and that his answer
    6

    was also ambiguous and in fact true, and therefore could not
    constitute a false statement. He also challenges the sufficiency
    of the evidence for the Investment Advisers Act conviction by
    arguing that the government failed to prove that he was serving
    as an investment adviser rather than a broker-dealer -- which is
    an

    exception

    under

    the

    Act

    --

    when

    he

    committed

    the

    fraud.

    Finally, he challenges the two-level sentencing enhancement for


    sophisticated means. Because we find that there was more than
    sufficient evidence to support the convictions and sentencing
    enhancement, we affirm.
    II.
    Graves first contends that there was insufficient evidence
    to support the false statement conviction. A jury verdict must
    be upheld on appeal if a reasonable factfinder could accept
    [the

    evidence]

    as

    adequate

    and

    sufficient

    to

    support

    conclusion of a defendants guilt beyond a reasonable doubt.


    United States v. Burgos, 94 F.3d 849, 862 (4th Cir. 1996) (en
    banc). The evidence must be viewed in the light most favorable
    to

    the

    government

    and

    in

    cumulative

    context

    rather

    than

    piecemeal. Id. at 862-63.


    Graves claims the government failed to introduce sufficient
    evidence to prove that he knowingly made a materially false,
    fictitious,

    or

    fraudulent

    statement

    or

    representation

    in

    matter within the jurisdiction of the federal government. 18


    7

    U.S.C. 1001(a). He singles out the following exchange as the


    false statement he is alleged to have made:
    Agent Kennedy: And thats where the $150,000
    went, came from to go to Barbara Wren?
    Graves: I guess.
    J.A. 924. Graves argues that both the question and answer were
    ambiguous and that, in part owing to the ambiguity, the answer
    was factually correct. Though literal truth and ambiguity are
    both defenses to false statement claims, see United States v.
    Good, 326 F.3d 589, 592 (4th Cir. 2003); cf. Bronston v. United
    States,

    409

    U.S.

    352,

    360-62

    (1973)

    (overturning

    perjury

    conviction), these exceptions are narrow, and must account for


    the context of the statement and the intention of the witness.
    United States v. Sarwari, 669 F.3d 401, 406 (4th Cir. 2012); see
    also United States v. Strohm, 671 F.3d 1173, 1179-80 (10th Cir.
    2011).
    Graves distorts the issue here by extracting the slightest
    snippet of the exchange between himself and Agent Kennedy. The
    brief

    exchange

    cited

    by

    Graves

    followed

    more

    extensive

    discussion that began with questions about where the defendant


    had obtained the money to repay Wren. In response to questions
    about the $150,000, Graves stated falsely that Sara Graves paid
    the $150,000 to Wren out of the $714,000 Sara received from her
    mothers estate. Discussions about the inheritance followed and
    8

    eventually

    resulted

    in

    the

    tidbit

    quoted

    by

    the

    defendant.

    Graves had recorded this entire exchange, unbeknownst to Agent


    Kennedy, and the recording was played at trial for the jury. The
    jury

    thus

    context

    of

    had

    the

    the

    opportunity

    full

    to

    conversation,

    gauge
    whether

    for

    itself,

    Graves

    had

    in

    the

    made

    false statement in the course of a government investigation. It


    determined beyond a reasonable doubt that he had.
    The jury had the chance to observe firsthand and weigh in
    its totality all witness testimony and other evidence. We will
    not disturb its verdict when, taken in context, the evidence
    reasonably supports the conclusion that Graves falsely stated
    and intentionally concealed the origins of the funds given to
    Wren. As that was clearly the case here, we affirm the false
    statement conviction.
    III.
    Graves also contends that his convictions on Counts Seven,
    Eight,

    and

    Nine,

    charging

    violations

    of

    the

    criminal

    fraud

    provisions of the Investment Advisers Act, were not supported by


    sufficient

    evidence

    and

    Investment

    Advisers

    Act

    defined

    by

    the

    Act,

    must

    therefore

    prohibits
    from

    be

    overturned.

    investment

    defrauding

    their

    The

    advisers,

    as

    clients

    and

    prospective clients. See 15 U.S.C. 80b-6. Graves argues that


    the government failed to prove that he was in fact acting as an

    investment adviser rather than a broker-dealer when he committed


    the fraudulent acts.
    Gravess contention fails for several reasons. First, he
    stipulated at trial that for purposes of 15 U.S.C. Sections
    80(b)(6) and 80(b)(17), Section 206 of the Investment Advisers
    Act, John Robert Graves was an Investment Adviser from 2006 to
    2010. J.A. 144. The broker-dealer exception is contained within
    the definition of an investment adviser and prevents brokers
    and

    dealers

    from

    being

    drawn

    into

    the

    Acts

    prohibitions

    by

    their incidental investment advising activities; the exception


    cannot rescue someone who has already stipulated that he meets
    the Acts definition of an investment adviser. See 15 U.S.C.
    80b-2(11).

    Furthermore,

    he

    did

    not,

    and

    indeed

    could

    not

    because of the stipulation, object to the proof of that element


    of the crime at trial, raising the whole matter for the first
    time

    on

    appeal.

    Finally,

    as

    practical

    matter,

    Graves

    was

    registered as an investment adviser during the relevant time


    period, and providing investment advice for a fee to his victims
    to prompt them to invest in his and his wifes companies was
    essential to his fraudulent scheme. For the foregoing reasons,
    we affirm the conviction.
    IV.
    Finally, Graves disputes the two-level sophisticated means
    enhancement

    applied

    to

    his

    advisory
    10

    Sentencing

    Guidelines

    calculation. Whether a defendant used sophisticated means is a


    finding of fact that we review for clear error. United States v.
    Adepoju, 756 F.3d 250, 256 (4th Cir. 2014).
    Defendants are subject to a two-level enhancement under the
    Sentencing
    schemes
    The

    Guidelines

    using

    Guidelines

    if

    they

    sophisticated
    describe

    this

    perpetrate

    means.
    term

    their

    U.S.S.G.

    as

    fraudulent

    2B1.1(b)(10).

    especially

    complex

    or

    especially intricate offense conduct pertaining to the execution


    or concealment of an offense. U.S.S.G. 2B1.1 cmt. n.9(B).
    Though

    the

    Guidelines

    identify

    conduct

    that

    would

    merit

    the

    enhancement, these examples are merely illustrative. Any given


    element of the scheme need not itself be particularly complex or
    intricate; rather, the scheme should be viewed as a whole. See
    United States v. Jinwright, 683 F.3d 471, 486 (4th Cir. 2012).
    The district court had ample basis for its finding that the
    Graveses

    scheme

    was

    sophisticated.

    Graves

    and

    his

    wife

    transferred the funds multiple times through multiple accounts,


    in one case channeling Taughers money through four accounts in
    a matter of days. J.A. 662-66. Defendants did not merely move
    money from one account to another; they engaged in a veritable
    shell game, switching money here and there between personal and
    business accounts, to conceal the source of the funds and hide
    their fraud. The district court did not clearly err in applying
    the two-level sophisticated means enhancement.
    11

    The judgment is in all respects affirmed.


    AFFIRMED

    12

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