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United States v. Pinson

United States Court of Appeals, Fourth Circuit

June 19, 2017

UNITED STATES OF AMERICA, Plaintiff - Appellee,
JONATHAN N. PINSON, Defendant-Appellant.

          Argued: October 25, 2016

         Appeal from the United States District Court for the District of South Carolina, at Columbia. David C. Norton, District Judge. (3:12-cr-00974-DCN-1)


          William Walter Wilkins, NEXSEN PRUET, LLC, Greenville, South Carolina, for Appellant.

          Thomas Ernest Booth, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellee.

         ON BRIEF:

          Kirsten E. Small, NEXSEN PRUET, LLC, Greenville, South Carolina, for Appellant.

          Leslie R. Caldwell, Assistant Attorney General, Sung-Hee Suh, Deputy Assistant Attorney General, Criminal Division, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C.; William N. Nettles, United States Attorney, J.D. Rowell, Assistant United States Attorney, Jane B. Taylor, Assistant United States Attorney, Tommie D. Pearson, Assistant United States Attorney, Nancy C. Wicker, Assistant United States Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Columbia, South Carolina, for Appellee.

          Before AGEE, DIAZ, and THACKER, Circuit Judges.

          PER CURIAM:

         Jonathan Pinson appeals his convictions for conspiracy to participate in a racketeering enterprise under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), government program theft, honest services fraud, mail and wire fraud, money laundering, and making false statements to federal agencies. He argues that there was insufficient evidence for a jury to convict him, and also contends that the district court constructively amended the original indictment, necessitating a new trial.

         We conclude that there was insufficient evidence to support Pinson's convictions for RICO conspiracy and government program theft, and accordingly vacate those convictions and remand for resentencing. In all other respects, we affirm.



         This case arises out of Pinson's various business relationships and ventures from 2006 to 2012, including a diaper business (Supremes, LLC), a real estate development company (Village at River's Edge or "VRE"), a consulting business (Noel Group, LLC), and an investment company (Brixstone Group, LLC). During this time, Pinson also served on the Board of Trustees of South Carolina State University ("SCSU"), a state-supported school. The charges focus on Pinson's involvement with four ventures: (1) SCSU's homecoming concert; (2) SCSU's purchase of a luxury resort; (3) Supremes, LLC's private diaper business; and (4) VRE's real estate project. We summarize each venture in turn.


         The Homecoming Concert

         SCSU's annual homecoming concert had suffered from poor attendance in the past. In mid-2010, one of Pinson's closest friends, Eric Robinson, introduced him to concert promoter Willie Joy. After discussing promotion of the 2010 Homecoming concert with Robinson and Joy, Pinson contacted his friend Edwin Givens, who served as SCSU's General Counsel. Both Givens and Pinson persuaded other University officials to meet with Joy and Robinson about hiring them to promote the 2010 Homecoming concert. Their efforts, however, did not succeed because the University had already selected a promoter for 2010.

         In 2011, Pinson and Givens tried again to get SCSU to hire Joy and Robinson and this time, succeeded. Joy and Robinson's company, W.E. Entertainment, began contract negotiations with SCSU in mid-2011. In August 2011, W.E. Entertainment signed a concert promoter contract with SCSU, where W.E. would receive $12, 500 upon signing, $12, 500 on the day of the concert, and 40% of concert profits. Givens signed the contract on the University's behalf.

         Joy and Robinson had separately agreed to share any concert profits with Givens and Pinson. Additionally, both Givens and Pinson expected to get a portion of the $12, 500 signing payment. Joy refused to share the signing payment, but Robinson gave $500 cash to Givens in an envelope outside a hotel. In September 2011, Pinson texted Robinson with his bank account information, and Robinson went on to transfer $500 to Pinson's account as well. The concert took place on October 7, but did not generate a profit.


         Sportsman's Retreat

         Around this time, SCSU also considered buying a new off-campus retreat facility. Michael Bartley, Chief of Police at SCSU, knew both Pinson and Richard Zahn, a Florida developer who owned a luxury resort in South Carolina called "Sportsman's Retreat." After Zahn put Sportsman's Retreat up for sale, Bartley took various SCSU officials to view the property, including the University President. Bartley also encouraged Pinson to meet with Zahn.

         Zahn invited Pinson, Bartley, and others to Florida for entertainment at Zahn's expense, and afterwards talked to Pinson over the phone about doing various business deals together. Zahn told Pinson he would sell Sportsman's Retreat for below its appraised value, and discussed how to guide University officials through the sale. Both Bartley and Pinson expected a commission in exchange for helping with the sale; for example, Zahn testified that Pinson asked him for a Porsche Cayenne. Pinson tried persuading University officials to buy the property but told Bartley that he would recuse himself when the Board of Trustees voted on the matter. Pinson also asked Givens for help in facilitating the transaction, promising him some funds from the sale. On October 31, 2011, at Pinson's request, Givens sent a letter to Zahn indicating SCSU's intent to purchase Sportsman's Retreat. Ultimately, SCSU did not purchase the property.


         Supremes, LLC

         Outside his involvement in the University, Pinson helped manage a diaper business called Supremes, LLC. The prior owner of the business, Collin Brown, had struggled to make a profit. In 2008, Brown met with Robinson, who eventually introduced him to Pinson and businessmen Robert Williams and Lance Wright. Together, the group planned to relocate the business to Marion County, South Carolina and revitalize it.

         To help with the relocation, Pinson met with Marion County officials to obtain a state or federal grant. In exchange for the jobs expected to be brought to the area, the County agreed to help fund the retrofit of an aging commercial building that the County owned, so that it could be used by Supremes, LLC as a diaper factory. In September 2009, the County signed a grant award and performance agreement with Supremes, LLC and the South Carolina Coordinating Council for Economic Development ("CCED"), which provided the money. The grant prohibited using the funds for payroll, manager bonuses, owner repayment, or for compensating state or federal officials. Wright persuaded a colleague named Phillip Mims to serve as project manager for the retrofit. Mims's job was to receive the invoices from the contractors, and package and submit them to the County.

         Mims and Williams testified that they, Pinson, and Wright repeatedly submitted inflated or false invoices to Marion County for work not actually completed. Some of this money went directly to Mims's company, PDM Management, while other funds were issued to the Noel Group, a company owned by Pinson. Neither PDM Management nor the Noel Group, however, did any significant work on the retrofit. As a result of these false invoices, Marion County (using the grant money it received) sent a $62, 100 check to the Noel Group. Pinson in turn sent checks ranging from $5, 000 to $10, 000 to Mims, Williams, and Wright from the Noel Group's bank account.


         Village at River's Edge

         Finally, Pinson also helped manage a housing development known as the Village at River's Edge. In 2006, Pinson and another business partner had purchased a tract of land for VRE in Columbia, South Carolina. After the other partner sold his interest, Wright and Williams invested in VRE.

         VRE soon began talks with the Columbia Housing Authority ("CHA"), a local quasi-governmental agency which provides subsidized housing to low-income residents. CHA had just received a $10 million federal grant from the Department of Housing and Urban Development. In 2010, VRE contracted with CHA to build numerous housing units, 60 of which would be owned by the Authority. Under the contracts, CHA agreed to provide $5.6 million in construction costs and a $381, 000 developer's fee from its federal grant money to VRE. Mims served as a project manager for VRE, which also hired a company named SK Builders to actually build the units. VRE submitted a monthly pay application to CHA on a federal housing grant form documenting overall expenses, so that CHA could send VRE payments. VRE, in turn, was required to pay SK Builders for its work.

         In 2011, SK Builders started work and began submitting invoices to VRE. Pinson and Mims, on behalf of VRE, submitted numerous pay applications to CHA on the federal form, certifying that VRE had paid subcontractors for their work. Of the funds VRE received from CHA, some were wired to Pinson's personal account or withheld from SK Builders. After a period of complaints, SK Builders contacted CHA directly and threatened a work-stoppage; when CHA contacted Pinson about the issue, he admitted that he had "juggled" funds and promised to make catch-up payments. Ultimately, CHA began paying SK Builders directly, and while the project was eventually completed, SK Builders was never paid in full.


         A grand jury returned an indictment charging Pinson with the following crimes under Title 18 of the United States Code: (1) conspiracy to engage in racketeering (RICO conspiracy) in violation of § 1962(d); (2) theft from government programs in violation of § 666; (3) extortion in violation of § 1951; (4) honest services fraud in violation of § 1346; (5) mail and wire fraud in violation of §§ 1341, 1343; (6) money laundering in violation of §§ 1956, 1957; and (7) false statements in violation of § 1001. The government relied on statements and evidence provided by many of Pinson's colleagues, including Williams, Mims, Zahn, Bartley, and Givens, who testified in exchange for lesser sentences.

         During a two-week jury trial, the government presented evidence from these witnesses and University employees, F.B.I. agents, and other government officials, as well as records of Pinson's financial transactions. The evidence also included records of Pinson's phone calls and text messages, obtained through a federal wiretap conducted from July to November 2011. Pinson then moved for a judgment of acquittal, which the district court denied. Following four days of deliberations, the jury convicted Pinson on Counts 1 (RICO conspiracy), 2 and 3 (government program theft), 12 and 18 (honest services fraud), 25-34 (mail and wire fraud), 35-41 (money laundering), and 43-46 and 48-50 (false statements). Robinson, Pinson's co-defendant, was acquitted of all charges. The court sentenced Pinson to sixty months' imprisonment on each count to run concurrently, and ordered him to pay $340, 743.02 in restitution and penalties. [1]This appeal followed.


         Sufficiency of the Evidence

         Pinson first challenges the district court's denial of his motion for a judgment of acquittal, a decision we review de novo. United States v. Reed, 780 F.3d 260, 269 (4th Cir. 2015). In considering Pinson's challenge to the jury's verdict, we view the evidence in the light most favorable to the government. United States v. Barefoot, 754 F.3d 226, 233 (4th Cir. 2014). Through this lens, we must sustain a conviction if the record contains "substantial evidence, " that is, "evidence that a reasonable finder of fact could accept as adequate and sufficient to support a conclusion of a defendant's guilt beyond a reasonable doubt." United States v. Chittenden, 848 F.3d 188, 195 (4th Cir. 2017) (quoting United States v. Jaensch, 665 F.3d 83, 93 (4th Cir. 2011)). Although this standard presents a "heavy burden, " reversal is appropriate if "the prosecution's failure is clear." Id. (quoting Burks v. United States, 437 U.S. 1, 17 (1978)).

         After reviewing the record, we find sufficient evidence to support Pinson's convictions for honest services fraud, mail and wire fraud, money laundering, and false statements. We are not so persuaded as to Pinson's convictions for RICO conspiracy and government program theft, and therefore vacate them.


         RICO Conspiracy

         We first consider Pinson's RICO conspiracy conviction. Pursuant to 18 U.S.C. § 1962(d), to prove a RICO conspiracy, evidence must show the existence of a RICO "enterprise" in which the defendant conspired to participate, and that the defendant conspired that a member of the enterprise would perform at least two racketeering acts constituting a "pattern of racketeering activity." Salinas v. United States, 522 U.S. 52, 62 (1997); United States v. Cornell, 780 F.3d 616, 621 (4th Cir. 2015) (quoting United States v. Mouzone, 687 F.3d 207, 218 (4th Cir. 2012)). Although such "conspiracy may exist even if a conspirator does not agree to commit or ...

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