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United States v. Hagen

United States Court of Appeals, Eighth Circuit

February 28, 2019

United States of America Plaintiff - Appellee
v.
Keith Hagen Defendant-Appellant

          Submitted: October 25, 2018

          Appeal from United States District Court for the District of South Dakota - Aberdeen

          Before WOLLMAN, LOKEN, and ERICKSON, Circuit Judges.

          LOKEN, CIRCUIT JUDGE.

         Keith Hagen and Amanda Holy Bull, then husband and wife, established Holy Bull Cattle Company ("HBCC") in 2004 to provide custom grazing services to cattle producers on pasture land leased through the Bureau of Indian Affairs ("BIA"), which manages and leases land the federal government holds in trust on behalf of individual Indian owners. Hagen served as point of contact with cattle producers and worked the cattle, while Holy Bull arranged pasture land leases through the BIA.

         Hagen and Holy Bull were charged with three counts of wire fraud, four counts of mail fraud, and one count of conspiracy to commit mail and wire fraud after cattle producers who contracted for grazing services during the 2012-2014 seasons received neither those services nor refunds of payments made to HBCC. Holy Bull pleaded guilty to the conspiracy count and testified for the government at Hagen's trial. After a three-day trial, the jury convicted Hagen of all eight counts. He was sentenced to concurrent terms of 46 months imprisonment and 3 years of supervised release on each count, restitution in the amount of $236, 000, and a $100 special assessment on each count. Hagen appeals, arguing the evidence was insufficient to prove he had the requisite intent to defraud, and two mailings were not in furtherance of any fraud. Reviewing the evidence in the light most favorable to the jury's verdict, we affirm Hagen's conviction of conspiracy and two substantive fraud counts but vacate the conviction and special assessments on the other five substantive counts.

         Sufficiency of the Evidence

         The grazing season in this region of South Dakota runs from May 15 to October 15 each year. The BIA leases pasture land through a negotiation process with individual trust land owners or through an advertised and open bid process each spring. Most leases run for one, three, or five years; payment is due in October of the year prior to the lease. In each lease, the BIA provides a default grazing ratio for the entire season of one cow-calf pair per six acres of land. A person seeking to graze more cow-calf pairs per acre must submit a grazing plan to the BIA for approval.

         From 2004 through 2011, HBCC provided custom grazing services for one or two cattle producers each year on land leased through the BIA's negotiation process. Hagen promoted HBCC's services and contacted producers seeking pasture using an agricultural publication, the Farm Forum, known locally as the "Green Sheet." Business with producers ran smoothly these years, but the BIA wrote letters to Hagen and Holy Bull noting their noncompliance with the agency's leasing procedures -- signing multi-year leases in May 2008 that were later cancelled for nonpayment, grazing cattle on land where leases had not been paid, letting cattle get loose and trespass on other property, and overgrazing leased land. Hagen and Holy Bull never responded and did not submit grazing plans to deviate from the default grazing ratio.

         In 2012, the first of the grazing seasons at issue, Holy Bull leased 347.53 acres of pasture through the BIA for grazing. Under the BIA grazing ratio, that land could support a full season of grazing for 57.92 cow-calf pairs. Without submitting a grazing plan to deviate from that ratio, Hagen and Holy Bull contracted with three cattle producers to graze at least 100 cow-calf pairs and 200 heifers. Andrew Stroschein grazed at least 70 pairs, as planned. Only 33 of John Haefner's 100 cow-calf pairs grazed with HBCC, and only for one day. Bruce Penner needed to find temporary grazing land at the beginning of the season because HBCC had not properly leased BIA land, and was forced to remove his 200 heifers five weeks early because the land HBCC supplied could not support the cattle. Haefner and Penner paid $30, 000 and $46, 000 in advance for HBCC grazing services; neither received a refund for services not provided.

         In 2013, Holy Bull leased 547.53 acres of pasture through the BIA, which could support 91.26 cow-calf pairs under the BIA default ratio. Hagen contracted with six different producers to graze a total of 380 cow-calf pairs without submitting a grazing plan to the BIA. Each producer paid in full up front, a total of $126, 500. Not a single cow grazed on HBCC-leased land, and no producer received a refund.

         In 2014, Hagen and Holy Bull leased 40 acres of pasture through the BIA, which could support 6.67 cow-calf pairs under the default ratio. Hagen contracted with three different producers to graze 300 cow-calf pairs. Once again the producers paid in full up front, a total of $102, 500. No producer brought a single cow to pasture, and none received a refund. One producer, Calvin Herrboldt, was able to avoid a loss by stopping payment on his check before Hagen could cash it.

         The Conspiracy Count -- Count 1

         Count 1 charged Hagen and Holy Bull with conspiracy to commit mail and wire fraud by contracting with twelve different cattle producers to graze over 700 cow-calf pairs and 200 heifers during the 2012-2014 grazing seasons for over $300, 000, fulfilling only one contract, and failing to refund cattle producer payments for services not provided. Mail fraud is use of the mails to execute a "scheme or artifice to defraud," 18 U.S.C. § 1341; wire fraud is use of the wires to do the same, 18 U.S.C. § 1343; conspiring to do either is a separate offense, 18 U.S.C. § 1349. Each offense requires proof of intent to defraud, proof that the defendant willfully participated in a scheme with knowledge of its fraudulent ...


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