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United States v. Hansen

United States Court of Appeals, Eighth Circuit

June 30, 2015

United States of America, Plaintiff - Appellee
v.
Randal Kent Hansen, Defendant - Appellant

Submitted: February 12, 2015.

Page 864

Appeal from United States District Court for the District of South Dakota - Sioux Falls.

For United States of America, Plaintiff - Appellee: Jeffrey C. Clapper, Assistant U.S. Attorney, U.S. Attorney's Office, Sioux Falls, SD.

For Randal Kent Hansen, Defendant - Appellant: Andrew Greenlee, Andrew B. Greenlee, P.A., Sanford, FL; Mark K. McCulloch, Brownstone Law, Winter Park, FL; Robert L. Sirianni Jr., Brownstone, P.A., Winter Park, FL; Richard L. Travis, May & Johnson, Sioux Falls, SD.

Randal Kent Hansen, Defendant - Appellant, Pro se, Sioux Falls, SD.

Before GRUENDER, SHEPHERD, and KELLY, Circuit Judges.

OPINION

Page 865

SHEPHERD, Circuit Judge.

A jury convicted Randal Kent Hansen of mail fraud, wire fraud, and conspiracy to commit mail fraud and wire fraud, as a result of actions Hansen took while operating a hedge fund that cost its investors millions of dollars when it collapsed in 2011. The district court[1] sentenced Hansen to 108 months imprisonment and ordered him to pay over $17 million in restitution. Hansen appeals his conviction, challenging the district court's (1) denial of his motion for judgment of acquittal, (2) giving of a willful blindness instruction, and (3) instruction on conspiracy. We affirm.

I. Background

In reviewing the denial of Hansen's motion for judgment of acquittal and the giving of a willful blindness instruction, we view the evidence and all reasonable inferences supported by that evidence in the light most favorable to the government. See United States v. Foster, 740 F.3d 1202, 1205 (8th Cir.) (motion for judgment of acquittal), cert. denied, 134 S.Ct. 2714, 189 L.Ed.2d 754 (2014); United States v. Florez, 368 F.3d 1042, 1044 (8th Cir. 2004) (willful blindness instruction). Randal Kent Hansen is a farmer from South Dakota who gained investment experience by investing his own money and by serving for several years as a trust officer at a bank. At some point during the 1990s, Hansen met a stock broker named Anthony Johnson and the two developed a rapport. In 2003, Johnson offered Hansen the opportunity to invest in Hudson Capital Partners (the " Hudson Fund" ), a hedge fund Johnson ran with Ward Onsa and Vincent Puma. Hansen invested in the Hudson Fund and then continued investing in other funds with Johnson, Onsa, and Puma. Johnson, Onsa, and Puma eventually proposed creating a new fund with Hansen as their co-partner. Hansen agreed.

After several years of this arrangement, Hansen and Johnson decided to create yet another hedge fund. In 2007, they formed a limited partnership named RAHFCO Funds, LP, short for Randy and Anthony's Hedge Fund Company. Hansen served as RAHFCO's general partner. As the general partner, he retained ultimate control over all of RAHFCO's investment activities. Once RAHFCO became operational, however, Hansen delegated responsibility for executing RAHFCO's trades to the Hudson Fund, RAHFCO's sub-advisor.[2] Thus while Hansen retained control over RAHFCO's investing, in practice, Onsa and Puma, through the Hudson Fund, executed RAHFCO's trades.

In his role as general partner, Hansen made numerous misrepresentations about RAHFCO to investors. Hansen worked with Sadis & Goldberg, a financial services law firm, to create a private placement memorandum (" PPM" ) to help solicit investments. The PPM described RAHFCO as having a conservative investing strategy. It stated RAHFCO generally would be able to satisfy withdrawal requests. And it assured investors RAHFCO would receive regular audits. All of these representations proved untrue.

Hansen made other false statements directly to investors. For example, Hansen elaborated on the fund's investing strategy, explaining it would place 95% of investors' money in low-risk treasuries and only 5% in higher-risk options. He reiterated that the fund would honor withdrawal requests.

Page 866

And at one point he assured an investor that RAHFCO was covered by the Securities Investor Protection Corporation (" SIPC" ), which he explained was like the Federal Deposit Insurance Company but for securities. None of these statements was true.

Throughout RAHFCO's existence, moreover, Hansen sent investors quarterly earnings statements, which he had prepared, that falsely inflated the fund's performance. The statements showed the fund performing well even as it lost all its money. Hansen testified he was unaware the quarterly earnings statements were false because he relied on Onsa and Johnson to provide him the numbers and never confirmed the numbers himself. The quarterly earnings statements also falsely stated they were " Presented by SFG Accounting." While Hansen hired SFG Accounting to do some work for RAHFCO, it did not prepare the quarterly earnings statements and had no knowledge Hansen used its name.

Hansen additionally assured investors, as the PPM had done, that RAHFCO would be audited regularly. However, no audits took place. Hansen hired the accounting firm Spicer Jeffries to conduct an audit in 2007, but Spicer Jeffries ceased its audit after Hansen refused to authorize Spicer Jeffries to obtain a brokerage statement confirming that RAHFCO had actually made the investments it reported it had. When Sadis & Goldberg learned that Spicer Jeffries had discontinued its audit, the law firm withdrew from its representation of RAHFCO. Hansen never informed investors that Spicer Jeffries ceased its audit or that Sadis & Goldberg withdrew its representation. Nor did he attempt to find another auditor.

Hansen testified that he became concerned about RAHFCO's lack of transparency after Sadis & Goldberg withdrew as counsel. He visited Onsa, who had been executing RAHFCO's trades, to ease his concerns. Although Onsa showed Hansen a trading account that contained $25 million, Onsa never confirmed any of the fund's ...


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