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United States v. Dobson

August 16, 2005

UNITED STATES OF AMERICA
v.
MARSHA DOBSON, APPELLANT



On Appeal from the United States District Court for the Eastern District of Pennsylvania. (D.C. No. 02-cr-00616-7). District Judge: Honorable Michael M. Baylson.

The opinion of the court was delivered by: Sloviter, Circuit Judge

PRECEDENTIAL

Argued May 11, 2005

Before: SLOVITER, FISHER, and ALDISERT Circuit Judges.

OPINION

We have before us the appeal of Marsha Dobson who was convicted by a jury of three counts of mail fraud under 18 U.S.C. § 1341. Dobson argues, inter alia, that she is entitled to a new trial because the District Court failed to properly charge the jury with regard to the "culpable participation" component of the alleged fraudulent scheme.*fn1

I.

On September 25, 2002, a federal grand jury returned a ninety-nine count Indictment charging Marsha Dobson and nine other individuals--including Dobson's husband, Larry Dobson--with various counts of conspiracy, mail fraud, and money laundering. Dobson was charged in that Indictment with one count of conspiracy to commit mail fraud, three counts of substantive mail fraud, and three counts of aiding and abetting mail fraud.

Prior to trial, three of Dobson's co-defendants entered guilty pleas. In addition, the District Court severed Larry Dobson's case from that of his wife and the other defendants in order to avoid forcing him to choose "between the right to testify in one's own defense and the right not to testify adversely against a spouse. . . ." United States v. Dobson, No. Crim. 02-616-06, 2003 WL 22427984, at *2 (E.D. Pa. Aug. 18, 2003). Dobson and her five remaining co-defendants--Thomas Massara, Dawnell Griffith, Kimberli Lange, Karen Beam, and Alan Schall--proceeded to jury trial on September 9, 2003.

The evidence presented at trial, viewed in the light most favorable to the United States as the verdict winner, showed the following: Dobson had been a salesperson for Surplus Agents of America ("SAA"), which held itself out as being engaged in the business of locating and reselling surplus and liquidated merchandise, such as clothing, toiletries, and household items, from brand-name manufacturers who were unable to sell such goods through the regular channels of distribution. SAA located individuals who paid a fee to become a SAA "broker" on SAA's representation that, as brokers, they would be able to purchase discounted brand-name merchandise and resell it to third parties at a substantial profit.

After SAA ceased to exist in December 1994, William Kenneth Garrett, one of its principal managers, moved the operation to Fort Washington, Pennsylvania and established a similar business under the name Universal Liquidators ("UL"). At trial, Garrett, who had previously entered a plea of guilty, testified that due to the similarity between the UL and SAA operations, he had hired many of SAA's former employees, including Dobson, to work at UL.

As a UL salesperson, Dobson attended trade shows around the country where she marketed UL broker positions. In her sales presentations, Dobson told potential brokers that they could buy into UL's brokerage opportunity for a one-time payment of approximately $5,000.00. In return, the brokers were promised training, the materials they would need to start their business, and lists of manufacturers and distributors who would allegedly sell them the brand-name merchandise at prices substantially below market value which they could resell to the public at a profit.

Dobson used UL brochures and written materials in presenting her sales pitch about the company. Among other things, these UL materials represented that UL had relationships with various manufacturers who would supply brand-named merchandise to UL brokers at deep discounts. In fact, as Garrett himself testified at trial, UL had no relationships with any of the brand-name manufacturers as claimed in its sales materials. He also admitted that, contrary to its brochures and written materials, UL did not actually have any mechanisms or methods whereby it could obtain for its brokers the deeply discounted brand-name merchandise.*fn2

The trial evidence also showed that, in marketing the UL "opportunity" to prospective brokers, Dobson was not always truthful about the scope of her involvement with UL. Most pertinently, Dobson did not tell potential brokers that she was an employee of UL whose job it was to sell broker positions; instead, she told them that she herself was a broker.*fn3 Indeed, according to the testimony of one trade-show attendee, Dobson held herself out as a very successful UL broker who, among other things, had made enough money to buy "a horse ranch in Montana." App. at 170. Dobson further regaled prospective brokers with stories, examples, and details regarding the deals that she had supposedly negotiated for sizeable profits. None of this was true.

In addition to the falsehoods and misstatements made by Dobson, she used the false and fraudulent UL brochures and written materials in her presentation. Throughout the trial, Dobson vigorously denied both that she knew these materials to be untrue and that she knew of the overall fraudulent nature of UL's business plan.

The strongest evidence in the record that Dobson knew that UL and SAA were completely fraudulent operations was provided by Carol Brothers. Brothers testified that she had worked for SAA, first as a salesperson and later in SAA's offices. She testified that she quit SAA and reported its activities to federal law enforcement authorities when SAA's management "promoted me, moved me into the office and I realized everything that I was saying in the field, all of us were saying in the field[,] was not factual." App. at 279. Brothers further testified that after she had left SAA, she happened to encounter Dobson at a trade show and took the opportunity to tell Dobson that SAA was a scam and that what she was "saying in the field was a lie." App. at 283. To discredit Brothers' testimony, Dobson's attorneys brought out evidence during ...


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