After a jury convicted him of “conspiracy to defraud the
United States and to commit wire fraud, in violation of 18 U.S. Code § 371”,
Mark Daniel Leitner appealed. U.S. v.
Leitner, 2014 WL 572340 (U.S. Court of Appeals for the 11th Circuit 2014). The opinion notes that the conspiracy was a “dual object
conspiracy”
to impede the government's assessment
and collection of taxes and to defraud customers of Pinnacle Quest
International (`PQI). Leitner was a salesman for PQI and sold memberships in
PQI falsely representing the membership would show the individuals how to
conceal income and avoid paying their taxes and credit card debt.
U.S. v. Leitner,
supra. You can read more about the
charges in this press release.
In his appeal, Leitner argued (i) that the evidence
presented at trial was not sufficient for a reasonable jury to convict him of
conspiracy and/or (ii) that the trial judge committed reversible error “in
admitting the government's evidence of the arrests and prosecutions of
individuals who had worked for PQI's predecessor organization selling these
same type of memberships.” U.S. v. Leitner, supra. The Court of Appeals began its analysis of his
arguments by noting that last November it addressed both issues in ruling on
the appeal of one of Leitner’s co-defendants.
U.S. v. Leitner, supra. As the press release noted above explained,
Leitner was tried with seven other defendants.
The court noted that while the prior decision “does not
control our analysis of the issues here, it is nevertheless instructive.” U.S. v.
Leitner, supra. It explained that it would therefore “focus exclusively
on defendant Leitner's role in PQI and the evidence to support his personal
involvement in that criminal conspiracy.” U.S.
v. Leitner, supra.
The Court of Appeals began its analysis by noting that the
indictment
alleged and the government proved at trial
that Leitner worked as a `qualified consultant’ for PQI. In this role, Leitner
sold PQI memberships to individuals. At trial, extensive evidence showed that,
as a qualified consultant, Leitner sold information intended to help
individuals flaunt tax laws.
U.S. v. Leitner,
supra.
It then reviewed that evidence, which fell into three
categories: communications with an
undercover Internal Revenue Service (IRS) agent; testimony from someone he
recruited to buy a PQI membership; and his failure to pay income taxes. U.S. v.
Leitner, supra.
Teresa Hampton, the undercover agent, testified that in
2003 she accessed the “nettaxfreedom.com” website. U.S. v.
Leitner, supra. When she “requested additional information
from the website’s operator”, she
received an email stating, “’Are you
still paying taxes? Did you know that most people are legally and lawfully
eligible to be tax exempt? This invitation comes directly from the Internal
Revenue Service.”’
U.S. v. Leitner,
supra.
Hampton used “a false identity” to respond to this “email by
requesting additional information”, which led to her receiving “another email,
this one coming from the address `PQIServicesæaol.com.’” U.S. v. Leitner, supra. It read as follows:
`Hi,
my name is Mark Leitner and I am a consultant for the educational organization
PQI. We are for expert consultation, education and services in the area of debt
elimination, asset protection, and freedom and privacy. . . . If you are
looking to reduce or eliminate your income tax burden legally and immediately,
then this is information that can help you. Our education will blow your socks
off and leave your toes smoking. And we have a money back guarantee to . . .
back that statement up.’ . . .
`[Y]ou may also wish to be introduced to a few of
the many people that have taken advantage of our services and are now living a
tax-free lifestyle. . . . We have helped tens of thousands. Our financial tools
and processes are applicable to almost everyone. W–2 wage earners will be able
to keep most of their paycheck in as soon as several weeks time. Our experts
will handle all paperwork and correspondence for you. . . .
`I am looking forward to speaking with you and hope
to help you on your way to living completely income tax and debt free. You will
find beyond a doubt that PQI's education services will elevate you above the
vast majority of Americans in knowledge and financial freedoms. You will have
many advantages and opportunities that most Americans will never know about. .
. .
`. . . prosperously yours, Mark Leitner.’
U.S. v. Leitner, supra.
Leitner also called and left a message on her voicemail, which the
government played for the jury. U.S. v. Leitner, supra. Hampton returned the call, and Leitner used
that occasion to tell her “about PQI's various tax elimination products,
including the IMF Decoder.” U.S. v.
Leitner, supra. Hampton testified Leitner told her that after she bought a
PQI membership and used “PQI's IMF Decoder, she `wouldn't have to pay any more
taxes.’” U.S. v. Leitner, supra. “The government's evidence showed Leitner
received $150 for each PQI member he referred to IMF Decoder.” U.S. v. Leitner, supra.
He then started sending “Hampton daily emails” in which he tried to
convince her to buy a PQI membership” and provided “links to articles on tax
and debt elimination.” U.S. v. Leitner,
supra. One purported to “contain all
that would be needed to get the IRS off your back.” U.S. v. Leitner, supra. Using
her alias, Hampton bought a “Q1–level PQI membership” from Leitner for $1,280. U.S. v. Leitner, supra. She received an email from
“ClientCareæsupportæPQI.cc” that “assured her” Leitner was “a qualified
consultant in good standing with PQI.” U.S.
v. Leitner, supra. Hampton “later learned” $1,000 of the money she paid for
her PQI membership went directly to Leitner.”
U.S. v. Leitner, supra.
Hampton stayed in contact with Leitner and later bought “a Q2–level PQI
membership” through him because “`he was my upline person, which was the person
who I contacted for everything. I had to go to him for anything that I did.’” U.S. v. Leitner, supra. When she became a Q2-level member, PQI invited
her to conferences. U.S. v. Leitner,
supra. Before she attended one,
Hampton had to sign a document in which she
`agree[d] not to disclose to any person
who is not in attendance at [the] conference—at [the] event, any conference information
or speaker contacts.’ Leitner explained this provision to [her] stating that
she `didn't want to talk about this with people who were not like-minded like
ourselves because they wouldn't understand.’
U.S. v. Leitner,
supra. Leitner “also referred
Hampton to the PQI website, which falsely stated that PQI vendors' products
would make her `lien, levy, and judgment proof.’” U.S. v. Leitner, supra.
The other witness was Andrew Cordova, who testified that in
2002, Leitner persuaded
him to purchase a PQI membership.
Leitner told Cordova PQI was `[b]asically an investment club’ with `offers of
areas to invest in’ and `[v]arious plans on how to either avoid or not pay
taxes’” During their first meeting, Leitner told Cordova that he (Leitner)
`wasn't paying taxes.’ Cordova learned Leitner had `structured’ his finances so
as to hide his assets from the government.
After one meeting with Leitner, Cordova
decided to join PQI, purchasing a Q2–level membership for himself and his wife.
PQI charged approximately $9,000 per married couple for a Q2–level membership.
Cordova summarized his relationship with Leitner, stating: `Mark introduced me
[to PQI], sold me the Q2 package, sold me on PQI being a viable entity and a good
thing to be interested in.’
Within
. . . a year, Cordova lost $100,000 as a result of PQI-related activities.
Cordova testified that, after losing money, he `asked Mr. Leitner to look into
this, and he said, oh yeah, he would talk to the leadership group again, and I
never heard from Mark again.’
U.S. v. Leitner,
supra.
Finally, the jury also heard evidence that Leitner failed to
pay income taxes:
An IRS records custodian testified that
the IRS had conducted an audit and assessed penalties on Leitner for . . .
1999, 2000, and 2001. For those years, including penalties and interest,
Leitner owed: (1) $3,599.75 for 1999; (2) $4,336.33 for 2000; and (3) $3,768.62
for 2001. The records custodian also affirmed that `[t]here were no tax returns
filed or received by Mark D. Leitner for [the] years, 2002 through 2007.’
U.S. v. Leitner,
supra.
The Court of Appeals found that “there was overwhelming
evidence of Leitner's guilt, and we affirm his conviction.” U.S. v.
Leitner, supra. It explained that
The conspiracy statute under which the
jury convicted Leitner criminalizes conspiracies to either: (1) commit any
offense against the United States; or (2) defraud the United States. 18
U.S. Code § 371. At trial, the government was required to prove: “(1) the existence
of an agreement to achieve an unlawful objective; (2) the defendant’s knowing
and voluntary participation in the agreement; and (3) the commission
of an act in furtherance of the agreement.” U.S. v. Adkinson, 158
F.3d 1147 (U.S. Court of Appeals for the 11th Circuit 1998). The indictment
charged Leitner and his co-defendants conspired: (1) to defraud the United
States by impeding and defeating the lawful functions of the IRS in the
assessment and collection of taxes; and (2) to commit other offenses against
the United States, specifically wire fraud in violation of 18 U.S. Code §1343.
Here,
the jury convicted Leitner of the dual object conspiracy to impede the IRS's
assessment and collection of taxes and to defraud PQI customers. As for the
conspiracy to defraud the United States, the indictment alleged that Leitner
and his co-defendants conspired to do so by defeating the lawful functioning of
the IRS. In such a case, the government must show: `there was an agreement whose
purpose was to impede the IRS (the conspiracy), and that each
defendant knowingly participated in that conspiracy.’ . . . `[F]ailure
to properly report income can constitute the require act in furtherance of’
such a conspiracy. Id.
U.S. v. Leitner, supra
(emphasis in the original).
The court then found that the evidence showed that Leitner
participated in a
scheme to defraud PQI customers by
keeping from customers the fact that PQI memberships were essentially
worthless. Ample evidence showed that Leitner and his co-defendants knew that
the PQI vendors' products did not work. Nevertheless, the conspirators charged
high rates for the right to purchase those ineffective products.
A reasonable
jury could thus infer, then, that the conspirators sold these memberships
without disclosing the uselessness of the PQI vendors' products in order to
deceive the consumers out of money.
There
was extensive evidence that Leitner himself knew that the PQI memberships were
of no use to consumers. For example, the government's evidence showed that
Leitner made promises to Hampton about the usefulness of the IMF Decoder
product and encouraged her to purchase that product.
But, Leitner did not reveal
to Hampton that he had a personal financial incentive to persuade her to buy
the product. A reasonable jury could infer from this evidence that Leitner knew
his claims about the IMF Decoder product were false, and that he only made them
because he wanted to receive a commission from IMF Decoder.
A reasonable jury could
also infer that Leitner knew that the PQI vendors' products did not work from
Cordova's testimony that he (Cordova) told Leitner about his substantial
financial losses as a result of using a PQI vendor product, that Leitner
promised to investigate, and then promptly stopped communicating with Cordova.
Cordova indicated that this occurred sometime in 2003.
However, Hampton testified that between
2003 and 2005, Leitner made numerous sales pitches to her and promises about
the value of PQI memberships. A reasonable jury could conclude from this
evidence that Leitner encouraged Hampton to buy a PQI membership and use PQI
vendors' products knowing that at least one PQI member, Cordova, had lost
$100,000 as a result of those products.
U.S. v. Leitner,
supra.
The Court of Appeals therefore found that there was
“extensive evidence” to support Leitner’s conviction, which it affirmed. U.S. v.
Leitner, supra.
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