United States v. Hughes

191 F.3d 1317 (1999)

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United States v. Hughes

United States Court of Appeals for the Tenth Circuit
191 F.3d 1317 (1999)

Facts

Rhoades and Schluneger (defendants) provided performance bonds for a government contract and became liable on the contract when the contractor defaulted. After accepting a lower bid to complete the work than the amount remaining on the government contract, Rhoades and Schluneger agreed with the government agency that they would not be compensated for any amount over the actual cost of completing the work. Before signing that agreement, Rhoades and Schluneger entered into three agreements prepared by attorney Hughes (defendant) that were intended to distribute to Rhoades and Schluneger the difference between the amount remaining on the contract and the lower bid. Two of Hughes’s business trusts, ARCO Business Services and ARCO Properties (defendants), were used as conduits for the distribution of the funds to Rhoades and Schluneger. Pursuant to a subcontract prepared by Hughes, the contractor agreed to complete the work for the full amount remaining on the government contract but understood it was to receive only the lower amount it had bid and pay the rest to Rhoades and Schluneger as fees for supposed finder and engineering-consulting services. The fees for those services, though never provided, were included in the progress reports the contractor submitted to the government agency. Rhoades received payments from the government agency and then disbursed funds to the contractor. Pursuant to the other agreements prepared by Hughes, the contractor paid a percentage of the monies it received to ARCO Business Services, which then made payments to ARCO Properties, which in turn distributed funds to Rhoades, who shared the funds with his wife and Schluneger. As compensation for Hughes’s role in the scheme, Rhoades discharged a debt Hughes owed him. When the contractor abandoned the project, ARCO Business Services sent a letter to Rhoades, signed by Hughes as trustee for ARCO Business Services, stating that ARCO Business Services considered the contract canceled and asking that this position be conveyed to the other involved parties. After Schluneger and Rhoades defaulted, Rhoades, Schluneger, Hughes, ARCO Business Services, and ARCO Properties were charged with conspiracy to defraud the government. At trial, the jury found that ARCO Business Services had withdrawn from the conspiracy but that neither Hughes nor ARCO Properties had withdrawn. Hughes and ARCO Properties moved for a judgment of acquittal or a new trial on the ground that the jury should have found that Hughes and ARCO Properties had withdrawn from the conspiracy. The district court denied the motion, and Hughes and ARCO Properties appealed.

Rule of Law

Issue

Holding and Reasoning (Magill, J.)

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