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United States v. Allen

United States District Court, E.D. Tennessee, Knoxville Division

December 31, 2014

JOYCE E. ALLEN, Defendant.


THOMAS A. VARLAN, Chief District Judge.

This criminal case is before the Court on the defendant's Post-Trial Motion for New Trial pursuant to Federal Rule of Criminal Procedure 33 [Doc. 254]. The government has responded in opposition [Doc. 269]. Having reviewed the record and considered the parties' arguments in light of the relevant and controlling law, the defendant's motion will be denied.

I. Background

The defendant, Joyce E. Allen, was charged in all ten counts of the Third Superseding Indictment, four for conspiracy and six for uttering fraudulent securities [Doc. 141]. The charges relate to her role in marketing purported investments in Benchmark Capital, a Ponzi scheme orchestrated by Charles Candler that collapsed upon his suicide in March 2012 ("the Benchmark Scheme") [Doc. 255 p. 1]. The Benchmark Scheme involved presenting investors with materials that appeared to be authentic and making false representations about the investments and about how the funds would be used [Doc. 141 p. 5].

Count one charged the defendant with conspiracy to commit mail and wire fraud, in violation of 18 U.S.C. § 1349 [ Id. at 8]. Count two charged her with conspiracy to commit wire fraud, in violation of the same [ Id. at 17]. Counts three and ten charged her with conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956(h) [ Id. at 19, 23]. Counts four through nine charged the defendant with uttering fraudulent securities, in violation of 18 U.S.C. § 513 [ Id. at 20].

On September 8, 2014, the defendant proceeded to a jury trial [Doc. 255 p. 1]. The jury returned a verdict on September 22, 2014, finding the defendant guilty on all counts [ Id. ]. The defendant now asserts that, "[i]n the unique circumstances of this case, the Court should grant the defendant a new trial as the jury's verdict was against the manifest weight of the evidence. It was apparent from the evidence and testimony that Allen was not aware that Benchmark was a Ponzi scheme and was deceived and used by Candler" [ Id. at 4-5]. The defendant does not specify which of the jury's ten findings she is contesting, but from footnote five and the motion as a whole, it appears she is contesting all of them [ See generally id. ].

II. Analysis

A. Standard of Review

Rule 33 of the Federal Rules of Criminal Procedure provides that, upon the defendant's motion, the Court may grant a new trial "if the interest of justice so requires." Fed. R. Crim. P. 33(a). A motion for a new trial under Rule 33(a) "may be premised upon the argument that the jury's verdict was against the manifest weight of the evidence." United States v. Hughes, 505 F.3d 578, 593 (6th Cir. 2007). "Generally, such motions are granted only in the extraordinary circumstance where the evidence preponderates heavily against the verdict." Id. at 592-93 (citation and internal quotation marks omitted). In considering a Rule 33(a) challenge to a conviction based on the weight of the evidence, a court "can consider the credibility of the witnesses and the weight of the evidence to insure that there is not a miscarriage of justice. It has often been said that... [the judge] sits as a thirteenth juror." United States v. Ashworth, 836 F.2d 260, 266 (6th Cir. 1988) (citation omitted).

B. Evidence Discussed by the Parties

Allen's motion highlights the trial evidence that she claims supports that she did not know Benchmark was fraudulent [ See Doc. 255 p. 5-7]. She discusses her trial testimony, her emails to Charles Candler and others, and her request for updated passwords to access the status of her and her husband's investments in Benchmark [ Id. at 5-6]. In essence, Allen argues that knowledge of the fraudulent scheme is entirely inconsistent with referring to company policies in emails, requesting access to her and her husband's account information, and encouraging close family members to invest in Benchmark [ See id. at 5-6]. Allen also emphasizes that none of her emails or the government's surreptitiously-recorded conversation between her and a codefendant indicate that Allen knew about the scheme [ See id. at 5-7].

The government responds that Allen's "purported lack of knowledge cannot be squared with the facts of the case" [Doc. 269 p. 5]. The government begins by listing evidence that indicates Allen knew or should have known Benchmark was a scam: there was no agent training; each client's application had the same "Deposit Control Number"; Allen was permitted to write her own commission checks; and Allen did not receive, for example, phone calls, faxes, or promotional materials from the Chicago headquarters of what Allen allegedly believed was a major company [ Id. at 6].

The government then points to "more blatant indicators of Benchmark's true nature" [ Id. ]. In 2008, Allen was named in the Muncey lawsuit [ Id. ]. The lawsuit specifically alleged that neither Candler nor Benchmark was licensed to sell insurance in Tennessee, that Candler had fraudulently held out Benchmark as a Chicago corporation even though it was not registered there, and that Benchmark was being fraudulently held out as a member of "North American Association for Life and Health, " an entity that did not exist [ Id. ]. A copy of the complaint and papers associated with the Muncey lawsuit were found in Allen's desk drawer [ Id. ].

Next, the government recalls the significance of the state and federal investigators' testimony [ See id. at 6-7]. Allen sidestepped the state investigator's demands for information and an interview and, when she did not comply with a subpoena for the same, she was stripped of the insurance license she had held for twenty-three years [ Id. ]. The witness from the Securities and Exchange Commission testified as to the J. Allen & Associates website, where Allen claimed to sell products from numerous companies other than Benchmark [ Id. at 7]. Later in the trial, Allen admitted ...

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