United States 11th Circuit Court of Appeals Reports

U.S. v. KENNARD, 05-12742 (11th Cir. 12-15-2006) UNITED
ABRAHAM L. KENNARD, Defendants-Appellants. No. 05-12742.
United States Court of Appeals, Eleventh Circuit. December
15, 2006.

Appeals from the United States District Court for the
Northern District of Georgia, D. C. Docket No.

Before CARNES, MARCUS and KRAVITCH, Circuit Judges.

CARNES, Circuit Judge:

This case grows out of the intersection of two truths.
One, articulated by the Apostle Paul, is that “the love of
money is the root of all evil,” 1 Timothy 6:10 (KJV), and
the other, often attributed to P.T. Barnum, is that
“[t]here’s a sucker born every minute,” see A.H. Saxon,
P.T. Barnum: The Legend and the Man 1 (1989). Fraudulent
investment schemes are likely as old as the truths reflected
in those observations, but the one involved in this case
has a twist. A man of the cloth defrauded more than a
thousand churches and other non-profit organizations out of
millions of dollars by promising them miraculous returns on
their investments. The law of economic reality dictates
that all promises of wildly extravagant investment returns
will be broken, and legal realities mandate that litigation
must follow.


With the help of his brother Laboyce, Rev. Abraham Kennard
bilked hundreds of churches and other non-profit
organizations out of millions of dollars. A jury convicted
him of nine counts of mail fraud in violation of 18 U.S.C.
§ 1341, seventy-seven counts of conducting a
monetary transaction involving over $10,000 in
criminally-derived property in violation of 18 U.S.C.
§ 1957, twenty-seven counts of engaging in monetary
transactions to promote criminal activity in violation of
18 U.S.C. § 1956(a)(1)(A)(i), one count of conspiring
to launder money in violation of 18 U.S.C. §
1956(h), and one count of income tax evasion in violation
of 26 U.S.C. § 7201. The same jury found Laboyce
Kennard guilty of one count of conspiring to launder money
in violation of 18 U.S.C. § 1956(h). The two Kennard
brothers now appeal their convictions, and Laboyce
challenges the calculation of his 38-month prison sentence.
(For the sake of simplicity and to avoid needless
repetition, we will distinguish between the Kennard brothers
by using their first names without repeating their last

Abraham ran his scheme using a corporation he set up named
Network International Investment Corp. Targeting churches
and other nonprofit organizations seeking funds for capital
improvement projects, Abraham made his victims a simple
offer. In exchange for every $3,000 in “membership fees”
that the organizations paid into the Network corporation,
they would receive $500,000 in grants. Abraham told
prospective Network members that the grants were possible
because he had lined up “investors” — including
Evander Holyfield’s brother, Bernard — who would
provide tens of millions of dollars. Moreover, Abraham and
Network had plans to build a number of profit-generating
Christian resorts around the country. These, too, would
help him fund the grants.

Unfortunately for his victims, they believed Abraham’s plan
and accepted his offer. All told, Network raised more than
$8.7 million from more than 1,600 churches and other
nonprofits around the United States.

As Network “membership fees” poured in, Abraham deposited
them in the escrow account of his attorney, Scott
Cunningham. From there, Abraham could send the funds to any
number of destinations. One place they went was into a bank
account of Promotional Time International, Inc., a company
which Laboyce controlled. Laboyce deposited into that
account checks from both Cunningham’s escrow account and
from Abraham himself. From that account, Laboyce later
wrote checks to Abraham.

Abraham fled after learning of his initial indictment in
January 2004, leading authorities on a five-week manhunt
before being captured in Okolona, Mississippi. By the time
of trial a year later, the government had reached plea
agreements with several other players in the scheme, and
attorney Cunningham — who was eventually convicted
for his role in all of this — was granted a separate
trial. After a four-week trial, a jury found both Kennard
brothers guilty of all of the counts remaining against them
after the government had dismissed several mail fraud
counts against Abraham. Abraham and Laboyce were sentenced
to 210 months and 38 months, respectively.

On appeal, the brothers raise a total of seven issues. We
consider first the only issue relating to Abraham alone. We
then consider an issue the brothers raise jointly before
concluding with consideration of the five issues relating
to Laboyce alone.


Abraham contends that the district court erred by admitting
evidence of — and instructing the jury on —
his post-indictment flight. We review a district court’s
evidentiary rulings only for an abuse of discretion. United
States v. Word, 129 F.3d 1209, 1212 (11th Cir. 1997).
District courts also “have broad discretion in formulating
jury instructions provided that the charge as a whole
accurately reflects the law and the facts.” United States
v. Prather, 205 F.3d 1265, 1270 (11th Cir. 2000) (quotation

The jury could have inferred from the evidence that Abraham
learned of his indictment the day it was issued and he
began evading authorities on that day and continued to do
so until he was arrested five weeks later. During that
period, Abraham used only pre-paid phone cards and
payphones instead of the cell phone he owned. He used a
rental car that someone else had rented. He took evasive
measures such as parking several blocks away from a given
destination. And he never attempted to contact the FBI
agent with whom he had been speaking about Network’s
activities before the indictment and who had called
Abraham’s mother attempting to locate him. See United
States v. Blakely, 960 F.2d 996, 1000-01 (11th Cir. 1992)
(noting that the probative value of evidence of a
defendant’s flight stems from (1) the similarity among the
crimes with which the defendant is charged and (2) the
timing of the supposed flight). Furthermore, as Abraham
admits, the evidence of his fraud was “tremendous.”

In this case, as in United States v. Borders, 693 F.2d 1318
(11th Cir. 1982), the district court “correctly cautioned
the jury that it was up to them to determine whether the
evidence proved flight and the significance, if any, to be
accorded such a determination.” Id. at 1328. The fact that
Abraham presented jurors with his own explanation of the
post-indictment events in no way alters the propriety of
that instruction. It was a jury issue.

Abraham argues that the court should not have admitted
evidence of flight because it was more prejudicial than
probative. As for the evidence being prejudicial, the idea
seems to be that it was truly prejudicial because it made
Abraham look so guilty. Of course it did. People, including
jurors, realize that while “[t]he wicked flee when no man
pursueth,” Proverbs 28:1 (KJV), they really flee when law
enforcement is looking for them. That is why evidence of
flight is admissible and probative. Probative force is not
the same as legal prejudice. If it were, the stronger the
evidence of flight the less admissible it would be.
Abraham’s argument amounts to a general attack on any use
of flight evidence and is inconsistent with our decisions
on the issue, such as those we issued in the Blakely and
Borders cases. The district court did not abuse its
discretion in admitting the evidence of flight, and there
was no error in the instruction the court gave on the


Abraham and Laboyce both contend that the district court
erred in excluding the deposition testimony of Abraham’s
attorney, Cunningham, which, they say, is the only evidence
that they lacked the necessary criminal intent to commit
the money laundering crimes for which they were convicted.
The Securities and Exchange Commission took Cunningham’s
deposition in the fall of 2002 during civil proceedings the
Commission had filed against Abraham and Network.

Deposition testimony from a prior civil proceeding is not
admissible in a criminal case unless the declarant is
unavailable as a witness and the party against whom the
testimony is offered in the criminal case “had an
opportunity and similar motive to develop the testimony by
direct, cross, or redirect examination” in the prior civil
proceeding. Fed.R.Evid. 804(b)(1). The parties agree that
Cunningham was “unavailable” as a witness at the Kennards’
criminal trial because of his intention to invoke his Fifth
Amendment right to avoid self-incrimination. The question,
then, is whether the district court abused its discretion
in excluding the deposition after finding that the SEC’s
motive in deposing Cunningham was dissimilar from that of
the United States Attorney in prosecuting the brothers.

The brothers note that the subject of Cunningham’s
deposition by the SEC overlaps with that of their criminal
trial to the extent that the deposition concerns activity
involving the escrow account. They also point out that
there are occasions during the deposition in which the SEC
lawyers “challenged” Cunningham’s explanations.

The record is insufficient, however, to permit us to
conclude that the district court erred in finding that the
Kennards had not established a sufficient similarity of
motives — it actually went further and found that
there was a dissimilarity of motives. “[T]his inquiry is
inherently factual, depending in part on the similarity of
the underlying issues and on the context of the
questioning.” United States v. Miles, 290 F.3d 1341, 1353
(11th Cir. 2002) (per curiam) (citing United States v.
Salerno, 505 U.S. 317, 326, 112 S. Ct. 2503, 2509 (1992)
(Blackmun, J., concurring)). As proponents of the
deposition, it was the brothers who bore the burden of
establishing that it came within the former testimony
hearsay exception. See United States v. Acosta, 769 F.2d
721, 723 (11th Cir. 1985) (per curiam); cf. United States
v. Omar, 104 F.3d 519, 522 (1st Cir. 1997)(“[T]he evidence
in question being hearsay, it was the defendants’ burden to
prove each element of the exception they invoked.”)

The brothers did not carry their burden. All we know from
the record on appeal about the underlying issues or the
context of the SEC’s deposition is that the SEC lawyers
wanted “to ask [Cunningham] some questions in connection
with” a civil action the SEC had filed against Network in
the Eastern District of Pennsylvania. That is how those
lawyers prefaced their deposition questions. From the
exchange before the district court regarding the
deposition, we can tell only that the SEC was “worried
about whether somebody has violated the securities laws”
(according to the government’s counsel) and that the SEC
was seeking a restraining order (according to the district
court judge). What we do not know is precisely why the SEC
thought it needed information from Cunningham. Neither the
deposition transcript, nor the hearing on the deposition’s
admissibility, nor the parties’ briefs (including,
significantly, the Kennards’) tell us what relief the SEC
was seeking, what it had to show to obtain that relief, or
under what statutes the SEC was proceeding.

As they did before the district court, the brothers rest
their arguments primarily on the tenor of the questions
asked of Cunningham in the deposition. On appeal, they
present a laundry list of examples which, they say, show
repeated challenges to Cunningham’s responses and “a
meaningful attempt to discern . . . Cunningham’s
credibility.” Even if we accept this characterization of
Cunningham’s questioning, we still do not know enough about
the SEC’s motive. The brothers did not meet their burden of
showing that the SEC’s motive in questioning Cunningham was
similar enough to that of the prosecutors in this criminal
case against the Kennard brothers. We cannot say that the
district court abused its discretion by failing to admit
Cunningham’s deposition testimony.


We turn now to the five issues Laboyce raises on his own.


First, Laboyce challenges the sufficiency of the evidence
supporting his conviction for conspiracy to commit money
laundering. In particular, he contends that the government
presented no evidence that would allow a jury to find
beyond a reasonable doubt either the existence of a
criminal agreement or his knowing participation in it. We
review de novo the sufficiency of the evidence. United
States v. Harris, 20 F.3d 445, 452 (11th Cir. 1994).

To convict Laboyce on the money laundering conspiracy
charge, the government had to prove that some agreement
existed to launder the proceeds of Abraham’s church fraud,
and that Laboyce knowingly and voluntarily participated in
that agreement. See United States v. Silvestri, 409 F.3d
1311, 1328 (11th Cir. 2005). “Conspiracy may be proven by
circumstantial evidence and the . . . extent of [the
defendant’s] knowledge of details in the conspiracy does not
matter if the proof shows [he] knew the essential objective
of the conspiracy.” United States v. Gupta, 463 F.3d 1182,
1194 (11th Cir. 2006) (quotation omitted). Viewing the
evidence in the light most favorable to the government, as
we must in all sufficiency-of-the-evidence claims,
Silvestri, 409 F.3d at 1327, the record amply supports both

The evidence was sufficient to show that Laboyce was a
knowing participant in an agreement to launder the proceeds
of Abraham’s fraud. Laboyce set up the Promotional account
and made large deposits consisting of cashier’s checks from
Abraham and checks drawn on Cunningham’s escrow account
— the same account Abraham used to deposit Network
membership fees. Laboyce also made almost all of the
account’s withdrawals, which were mostly in cash and
included two cashiers checks made payable to Abraham.

Laboyce’s substantial involvement in Network events shows
his knowing involvement in the scheme to launder the
proceeds of the fraud and evidences that he knew the
“essential objective of the conspiracy.” Gupta, 463 F.3d at
1194. In March 2002, for instance, Laboyce went with
Abraham to a Network meeting in Charlotte, North Carolina at
which Abraham gave Network members fake, oversized
disbursement checks instead of the grant money he had been
promised. Two months later, Laboyce videotaped Abraham
conducting a sham groundbreaking ceremony for one of the
Christian resorts Abraham had promised that Network would
build, the plan being to show the video to members in an
attempt to forestall their complaints. Laboyce later
“worked security” for Abraham at a July Network meeting in
Orlando where those in attendance reacted angrily to
Abraham’s announcement that their grants would again be
delayed. And in October, Laboyce attended a meeting at
which Abraham informed him that an FBI investigation of
Network had led to the seizure of Cunningham’s escrow
account. All of this evidence is enough for a jury to find
beyond a reasonable doubt that Laboyce knowingly
participated in the conspiracy to launder the proceeds of
the fraud.

Laboyce argues in the alternative that there was a fatal
variance between the crime charged in the indictment and
the evidence the government presented at trial. The
indictment charged that Laboyce conspired to launder the
fraud proceeds with Abraham, Cunningham, and two others,
including Abraham and Laboyce’s halfbrother, Alvin Jasper.
Laboyce argues, however, that the government’s evidence at
most suggested his participation in one, smaller-scale
conspiracy with Abraham alone. This conspiracy, he argues,
was “separate and distinct” from those involving Abraham
and any of the other actors named in the indictment. We
will not reverse convictions based on a variance unless
that variance was both material and substantially
prejudicial to the defendant. United States v. Calderon,
127 F.3d 1314, 1327 (11th Cir. 1997).

Laboyce’s variance argument is not convincing. As the
government points out, Laboyce does not even acknowledge
the substantial prejudice requirement, much less try to
meet it. Moreover, at trial the government did present
enough evidence to prove a larger conspiracy consisting of
the five actors named in the indictment. For instance, the
government showed that Laboyce received checks from
Cunningham to deposit in the Promotional account. And both
Laboyce and Jasper were present when Abraham told them of
the FBI’s investigation and that he needed his money back
from them. At one point, Laboyce received $38,000 from
Jasper in Houston to deliver to Abraham. The government
thus proved what the indictment promised it would. There
was no variance.


Laboyce’s next contention is that there was no basis for
the district court’s deliberate ignorance jury charge
because there was no evidence suggesting that he took
affirmative steps to avoid learning about the nefarious
nature of the Network enterprise. See United States v.
Puche, 350 F.3d 1137, 1149 (11th Cir. 2003) (“An instruction
on deliberate ignorance is appropriate only if it is shown
[among other things] . . . that the defendant purposely
contrived to avoid learning all of the facts in order to
have a defense in the event of a subsequent prosecution.”
(quotation omitted)). For its part, the government points
us to several items of evidence it says justifies the
deliberate ignorance instruction.

We need not decide whether the evidence justified the
deliberate ignorance instruction, because our decision in
United States v. Stone, 9 F.3d 934 (11th Cir. 1993), says
that it does not matter. In that decision we held that any
error in giving an unwarranted deliberate ignorance
instruction is harmless if the jury could have convicted on
an alternative, sufficiently supported theory of actual
knowledge. Id. at 937-40. As we have already discussed,
there was enough evidence to convict Laboyce of conspiracy
to launder money on the basis of actual knowledge. The jury
here, like the jury in Stone, id. at 937-38, was instructed
that it could convict Laboyce by finding beyond a
reasonable doubt either that he actually knew about the
church fraud or that he deliberately closed his eyes to
what was obvious in order to avoid learning the criminal
nature of the activity. In this case, as in Stone, the jury
was instructed in the alternative, and because we assume
that juries follow their instructions, id. at 938, any
shortcoming in the evidence about deliberate ignorance was
rendered harmless by the sufficiency of the evidence of
actual knowledge, id. at 940.


For the first time on appeal, Laboyce also contends that
the district court erred in not telling the jury that it
could not convict unless it was unanimous in finding the
object of the conspiracy. The indictment alleges that
Laboyce and the others conspired to violate “Title 18,
United States Code, Sections 1956 and 1957” in violation of
18 U.S.C. § 1956(h). Absent an appropriate
instruction, Laboyce argues that “the jury would have been
permitted to return a guilty verdict even if half thought
the defendant conspired to violate § 1956 and half
thought he conspired to violate § 1957.”

We will not correct an error the defendant failed to raise
in the district court unless (1) the district court did, in
fact, err, (2) the error was plain, (3) the error affects
the defendant’s substantial rights, and (4) the error
seriously affects the fairness, integrity, or public
reputation of judicial proceedings. United States v.
Rodriguez, 398 F.3d 1291, 1298 (11th Cir. 2005), cert.
denied, 545 U.S. 1127, 125 S. Ct. 2935 (2005). The third
requirement always puts a defendant to the burden of
proving that the alleged error affected the outcome of the
trial, which means he must show a reasonable probability of
a different result but for the error to which he failed to
object. Id. at 1299. The burden of showing that “is
anything but easy,” id., and Laboyce has not carried it. He
has failed to point to anything indicating that the jury
would have reached a different verdict if the instruction
he did not request had been given.


Next, Laboyce contends that the district court erroneously
denied his motion to sever his trial from that of Abraham.
To reverse a conviction because of an improper denial of a
severance, a defendant must carry the “heavy burden” of
demonstrating that he “suffered compelling prejudice” and
received an unfair trial. United States v. Walser, 3 F.3d
380, 386 (11th Cir. 1993) (quotation omitted). We review a
district court’s ruling on a severance motion only for
abuse of discretion. United States v. Cross, 928 F.2d 1030,
1037 (11th Cir. 1991).

Laboyce points us to three potential sources of prejudice:
(1) the egregious nature of the fraud with which his
co-defendant Abraham was charged; (2) his fraternal
relationship with Abraham; and (3) the fact that Abraham
represented himself. What Laboyce does not do is show that
he actually suffered the “compelling prejudice” necessary to
win reversal of his conviction. As Laboyce acknowledges in
his brief, a court’s cautionary instructions ordinarily
will mitigate the potential “spillover effect” of evidence
of a co-defendant’s guilt. See United States v. Alvarez,
755 F.2d 830, 857-59 (11th Cir. 1985). There is no
suggestion in this case that the jury could not follow the
district court’s instruction to consider “the case of each
defendant . . . separately and individually.” We will not
reverse based on speculation.


Finally, for the first time on appeal, Laboyce contends
that the district court erred in calculating his 38-month
prison sentence. He grounds this argument on the Sentencing
Guideline for money laundering, U.S.S.G. §
2S1.1(b)(2), which requires the sentencing court to add one
or two points to a defendant’s base offense level depending
on which of two federal money laundering statutes he
violated. Since the jury did not expressly rest its
conviction of Laboyce on the statute requiring the
two-level increase he actually received, he argues he should
have gotten the lesser increase.

Even if the court had given Laboyce the one-level increase
he says was applicable, the 38-month sentence he received
would still fall within the resulting guideline range. That
means he has not carried his burden of showing that his
“substantial rights” were violated, as required in order
for him to be entitled to relief under the plain error rule.