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After Kevin W. Gray got caught offering to help free an accused tax evader in Florida by bribing a jury and enlisting the aid of high-powered politicians, he tried to explain away his conduct by calling it too absurd to be believed. Even his defense lawyer called him a fool. But a federal trial jury didn’t buy it. And last week, neither did the 11th U.S. Circuit Court of Appeals. In a 2-1 vote, a three-judge panel affirmed Gray’s mail fraud conviction and 28-month sentence, saying that while Gray’s offers to help Pensacola, Fla., businessman Frank Patti Sr. were “absurd or fanciful,” a reasonable person in Patti’s position would have believed that Gray could pull off the proposition. For his efforts, Gray had hoped to collect $185,000. In April 2002, Patti, 73, was two weeks away from standing trial on charges that between 1993 and 1996 he’d filed false income tax returns for himself and one of his companies, Patti Shipyard Inc. He was also accused of failing to collect payroll taxes for employees of Joe Patti Seafood Inc., a popular tourist attraction and Pensacola hangout, from 1994 to 1998. Patti faced five years in prison. Enter Gray, now 43, who in the summer of 2001 had moved to Pensacola from his native North Carolina, and who learned about Patti’s case in the newspapers. The two men had never met. Gray mailed his unsolicited offer to Patti from Raleigh, N.C., while on a business trip two weeks before Patti’s April 2002 trial was scheduled to begin. Along with his fiancee, Gray was in the business of renovating foreclosed homes and reselling them across the Southeast. In his letter to Patti, Gray claimed that the businessman’s lawyers weren’t helping him, just using him to get rich. Gray said he and unnamed associates had read confidential legal files from Patti’s defense. He intimated that he and Patti had a mutual acquaintance who he did not name. Gray also told him there were people in power who wanted to help. He even included betting odds on the chance of a conviction. Gray told Patti, first in the anonymous letter and later in phone conversations, that then-U.S. Sen. Jesse Helms of North Carolina, a congressman and a five-star general could help free Patti. He gave Patti a code name and told him to respond by altering a neon lobster sign in front of Patti’s restaurant. After two days of speaking with Gray by phone, Patti told his defense lawyer about the oddball scheme. The attorney notified the FBI, who with Patti’s cooperation recorded follow-up conversations. The plausibility of Gray’s scheme rivaled the defense raised by Patti, who had publicly blamed his accountant for his tax problems and claimed amnesia after he crashed his truck into a local landmark in the center of town. While the FBI investigated Gray, Patti pleaded guilty to two counts of tax fraud. And he continued to cooperate with agents in their pursuit of Gray. A few days after Patti accepted the plea deal, federal agents traced the calls to a Pensacola, Fla., pay phone, where they arrested Gray as he spoke with Patti. In July 2002, a federal judge sentenced Patti to 79 months in prison and nearly $5 million in back taxes and fines. He appealed his sentence, but the 11th Circuit upheld it last July, saying U.S. District Judge Lacy Collier of Pensacola was right to enhance Patti’s sentence because of the businessman’s eccentric behavior. Collier departed from the guidelines, citing Patti’s faked amnesia and credible evidence that Patti tried to burn down his accountant’s office. Two weeks ago, Patti’s son-in-law was indicted and charged with conspiracy to obstruct the Internal Revenue Service investigation into Patti’s businesses. Prosecutors claim Russell D. Scarritt, 39, bought investigative documents in 1998 from an IRS agent in order to help Patti. The former IRS agent was also charged two weeks ago. She left the IRS after 12 years in 1999 to become the Pensacola Police Department’s planning and budget director and is on leave from that position. For his efforts, Gray got 28 months on the mail fraud conviction. Writing for the majority in Gray’s case, Appeals Judge Gerald Bard Tjoflat said Patti, as a result of widespread media attention, was ripe for approaches from people such as Gray. “This publicity, in turn, exposed him to unsavory characters who sought to exploit his legal woes for pecuniary gain,” Tjoflat said, writing for the majority. “Enter the appellant, who devised a scheme to bait Patti into forking over $185,000 in exchange for not being sent to prison.” The court said Patti saw Gray’s offer as a “ray of light” in a strange situation. “To some extent the peculiar circumstances surrounding a particular victim — in this case Patti’s exposure to criminal tax charges — have to be considered by the jury,” Tjoflat wrote. “Otherwise fraudulent schemes aimed at people who find themselves in extraordinary situations would always lie beyond the purview of the criminal statutes penalizing fraud because the jury could only consider whether a given scheme to defraud would have deceived a person of ordinary prudence and not a reasonable person ‘under the same circumstances’ faced by the fraud victim.” Dissenting Judge Rosemary Barkett rejected the majority’s contention that though Gray’s offer was strange, it was no stranger than Patti’s behavior. Barkett said the majority ignored its own precedent, set in 1996 in United States v. Brown, which held that any scheme in a mail fraud case has to be believable in order to be criminal. In that case, which was tried in Miami, the 11th Circuit reversed the mail fraud convictions of four business partners in Florida’s largest development company at the time, General Development Corp., because their scheme couldn’t have fooled a “reasonably prudent person.” The developers targeted customers in snow states via mail, offering to sell them houses at inflated prices. The judges said that had the homebuyers checked the homes’ values in Florida newspapers, the developers couldn’t have deceived them. Gray’s appellate attorney, Chet Kaufman, an assistant federal public defender based in Tallahassee, Fla., said Barkett took the “correct view.” “There’s nothing in this case that’s different about Brown,” said Kaufman, who declined further comment. But the majority said Brown is distinguishable from Gray’s case because his offer was illegal and thus, unverifiable. They said under Barkett’s reading of Brown, only defendants charged with making “false promises to engage in legal, moral, and ethical activities” could be punished criminally while those suggesting illegal activities would be shielded from the mail fraud law. But that’s not what Barkett said they feared. “The ‘bizarre result’ the majority fears is really an expression of dissatisfaction with our holding in Brown that a mail fraud scheme must be calculated to deceive ‘persons of ordinary prudence,’” she said. “Once again, whether or not we believe this should be the rule, we are nevertheless bound by it.” But Judge Tjoflat and Senior Judge James C. Hill said Brown does not extend so far as to preclude a jury from considering the unique circumstances informing a fraud victim’s state of mind. “If a jury could not take into account the material circumstances surrounding a scheme to defraud, almost no mail fraud conviction could be upheld in cases where the victim faced a ‘peculiar situation’ far removed from the circumstances with which most people of ordinary prudence are generally familiar, and where, as in the instant case, the defendant tailored his scheme to defraud that particular individual because of the unique circumstances confronting the victim,” Tjoflat said.

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