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Conviction for fraudulent investment scheme upheld

Lawrence Foster was charged and convicted in Miami following a federal court jury trial of conspiring to commit wire fraud and six counts of wire fraud in violation of 18 U.S.C. section 1349. He raised three challenges. First, he claimed the trial judge erred by denying his motion for judgment of acquittal. Second, he claimed the loss amount was incorrectly calculated. Third, he claimed his verdict should be set aside due to jury misconduct.

Foster was charged with defrauding investors who thought they were investing in property in the island of Rum Cay in the Bahamas. He solicited investors by offering them two investment opportunities. They could either purchase Rum Cay land or lend money to his company Paradise is Mine (PIM) in return for a security interest in the land. Foster used several marketing strategies including celebrity endorsements to promote PIM. He also represented to prospective investors that hundreds of news organizations including USA Today and the Wall Street Journal had featured articles about PIM. But PIM was a scam because it never owned the land that it claimed it owned and the newspaper reports were not legitimate. Some articles were created by Foster himself. The investors never received tit to the land.

After the Miami federal jury convicted, Foster moved for a judgment of acquittal that was denied by the trial judge. Several days after the trial, a juror sent a letter alleging that some of the jurors had bullied her into reaching guilty verdict which she now regretted. The trial judge denied the motion for new trial. At the sentencing hearing the trial judge determined the total loss was the full value of the victims’ investments.

The court of appeals rejected these arguments finding from all the evidence a reasonable jury could have concluded beyond a reasonable doubt that Foster made material misrepresentations or omissions calculated to deceive investors and thus deprive t hem of their money. It found that PIM represented itself as owner of the Rum Cay land when it was not. If found that PIM misrepresented the various news articles which investors relied upon for making their decision to invest. Furthermore, the money from investors was not used to acquire or improve any land. Foster transferred the money to other accounts and failed to file income tax returns for the funds.

The court of appeals upheld the federal criminal trial court’s loss calculation and rejecting Foster’s argument that the loss amount should be reduced because he provided value to his investors in the form of land and therefor an offset should have been applied.   None of the investors ever obtained title to the Rum Cay land. The court concluded Foster may not receive credit for value that is provided to his victims for the sole purpose of enabling him to conceal or perpetuate the scheme. There is no evidence that Foster created PIM for any reason other than to commit fraud.

The court found no juror misconduct during deliberations. The juror’s note that she was bullied to vote guilty only concerned internal matters during deliberations and was not evidence of any improper outside influence.