United States of America, Cross v. Victor M. Pazos, Cross
Docket: 93-4864
Court: Court of Appeals for the Fifth Circuit; September 30, 1994; Federal Appellate Court
Victor M. Pazos was convicted of arson and four counts of mail fraud by the United States District Court for the Eastern District of Texas. The government objected to the sentencing guidelines' application, seeking a higher base offense level, but the district court overruled this objection, sentencing Pazos to 36 months of imprisonment for each count, to run concurrently.
The case details indicate that Pazos, along with his wife and father-in-law, formed a corporation to operate Bernard's Cajun Restaurant, which opened on November 12, 1990. Despite initial operations, the restaurant incurred significant financial losses each month, totaling over $20,000 in losses from November 1990 to January 1991. Prior to the fire, Pazos had increased the restaurant's insurance coverage significantly. The restaurant's financial difficulties were compounded by late lease payments and delinquent utility bills, leading to an urgent payroll situation just before the fire.
The security measures in place included a burglar alarm system known to all key holders. The west exit door was typically locked at night but had been found unlocked on a previous occasion. The court affirmed Pazos' conviction and the sentencing decision, with no errors found in the proceedings.
On January 27, 1991, the Pazos attended a restaurant for Super Bowl Sunday, where Victor Pazos brought a television from their apartment. After dining with friends, the Pazos returned home around 10:00 p.m. Victor later left again around 11:10 p.m. to buy Alka-Seltzer. A fire was reported at Bernard's Cajun Restaurant at approximately 12:22 a.m. on January 28, with evidence indicating it had been burning for 20 to 30 minutes prior. Firefighters found paper trails and flammable liquids throughout the restaurant, signs of tampering with the fire alarm, and multiple separate fires, including one in the attic.
Captain Bradley Pennisson noted that the west exit door was unlocked, and Victor Pazos claimed to be the last person in the building, asserting he locked up. However, he later admitted to having issues with two former employees. A sworn statement from Pazos after the fire revealed discrepancies: he initially claimed nothing was missing, yet $2,000 in proceeds were unaccounted for. He misrepresented the source of his business capital, stating it was from his father when it was actually insurance money from prior claims. His assertion that the restaurant was profitable was false, as it was losing money. Leroy Bernard testified that he contributed his expertise to the restaurant while Pazos provided the capital, noting that Pazos had difficulty securing bank loans and proposed increasing the restaurant's insurance.
Robert Davis, owner of the security service, testified that the restaurant's burglar alarm was set each night leading up to the fire on January 27, but on that night, it was not activated, and he found no indication of a computer malfunction. George Haynes, an insurance salesman, recounted that Pazos inquired about content and loss of earnings insurance shortly after January 1 and later requested an increase in coverage. Jack Morman, the fire insurance adjuster, received letters from a public adjuster hired by Pazos regarding the insurance claim, which influenced Morman's handling of that claim.
Pazos contends that the evidence is insufficient to uphold his convictions for arson and four counts of mail fraud. He asserts that he lacked the opportunity to commit arson, noting his timeline of activities that evening, including a trip to the grocery store which he argues did not allow sufficient time to set up the fire. Pazos further claims there is no evidence of his knowledge of flammable materials or possession of such substances, and he references potential financial support from investors as an indication of his innocence.
In evaluating the sufficiency of evidence, the court considers if a rational jury could conclude, beyond a reasonable doubt, that the essential elements of the offense were met. For the arson charge under 18 U.S.C. Sec. 844(i), the Government must prove that Pazos maliciously damaged or destroyed property by fire, and that the property was used in activities affecting interstate commerce.
At trial, the jury was presented with substantial evidence regarding the financial struggles of Pazos' restaurant, including his inquiry about the impact of a fire on insurance recovery and subsequent increase in his insurance coverage, which would make him eligible for $135,000 in proceeds from a fire loss. Evidence indicated that Pazos had opportunities to set the fire, had a key to the back door where the fire occurred, and was the only individual with access besides his wife and father-in-law, who were confirmed to be home after 10:00 p.m. Testimonies from fire investigators concluded that the fire was intentionally set, which was not disputed.
Pazos claimed he secured the restaurant and set the alarm before the fire, but this was contradicted by alarm records indicating the alarm was not activated and the back door was unlocked. Based on this evidence, a jury could reasonably conclude that Pazos committed arson, leading to the affirmation of his conviction.
Regarding the four counts of mail fraud, Pazos argued that the evidence was insufficient to support his conviction. The government presented letters from a public adjuster to the insurance adjuster, which included a request for a $5,000 advance and extensions for filing a proof of loss. Pazos contended that the use of mail was not integral to the fraud scheme and claimed that since he did not file a claim, there could be no scheme to defraud.
To convict Pazos of mail fraud under 18 U.S.C. § 1341, the Government must prove three elements: (1) a scheme to defraud, (2) the use of the mails in furtherance of that scheme, and (3) that the mails were integral to executing the scheme. Each use of the mails constitutes a separate offense, and the Government is not required to show that Pazos personally used the mails or intended their use. Evidence indicated that letters related to fire insurance proceeds were crucial for Pazos to achieve his goal of receiving fraudulent insurance payouts, leading to a reasonable jury conclusion that a scheme to defraud existed.
At sentencing, a presentence report recommended a base offense level of 20, which the Government contested, arguing for a level of 24 due to substantial risk posed to firefighters during the fire, as determined by the jury's finding of intentional arson. The district court upheld the level of 20, implying that the fire did not create a substantial risk of serious bodily injury. The review of factual findings is deferential, while legal interpretations of the Sentencing Guidelines are reviewed de novo. The court found the Government did not demonstrate that the district court’s findings were clearly erroneous.
Ultimately, the district court's judgment was affirmed, maintaining the base offense level at 20.
