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United States v. H.G. Frost, Jr., Also Known as Jack Frost
Citation: 321 F.3d 738Docket: 02-2523
Court: Court of Appeals for the Eighth Circuit; April 10, 2003; Federal Appellate Court
H.G. Frost, Jr. was convicted of multiple financial crimes, including one count of mail fraud, two counts of wire fraud, sixty-two counts of money laundering, three counts of filing false tax returns, one count of making a false declaration before a grand jury, and one count of obstruction of justice. On appeal, Frost argued that the evidence was insufficient to support his convictions for mail fraud, one wire fraud count, and thirty-three counts of money laundering related to those frauds. The court affirmed the convictions. Frost, a certified public accountant, worked for the Jones Investment Company and the Harvey and Bernice Jones Charitable Trust, where he served as a trustee alongside Bernice Jones. After Harvey Jones's death, Frost continued to draw compensation from the Jones Investment Company, and he misappropriated funds from the Trust without consent from Bernice Jones, including investments in oil wells and personal stock purchases. He falsely claimed to the IRS that trustees would not be compensated from the Trust. Despite the Trust’s requirement for both trustees' signatures on checks, Frost forged Bernice's signature on numerous transactions. From 1993 to 1997, he received over $1.1 million for his services and misappropriated approximately $1.85 million for personal use. Frost claimed that under Arkansas law he was allowed to withdraw reasonable compensation without consent, arguing this justified the fraud and money laundering charges related to his compensation from the Trust and a wire transfer to his Goldman Sachs account. A challenge to the sufficiency of the evidence is reviewed by considering it in the light most favorable to the verdict, with all reasonable inferences accepted. Legal determinations are reviewed de novo, and a conviction is upheld if a reasonable jury could find guilt beyond a reasonable doubt. For mail fraud, the prosecutor must demonstrate that the defendant intentionally devised a fraudulent scheme, intended to defraud, foresaw the use of the mails, and used the mails as part of the scheme. Wire fraud requires a scheme to defraud, use of interstate wires, and intent to cause harm. In this case, evidence showed that Frost devised a scheme to defraud the Trust, intended to defraud it, and utilized both mails and wires to carry out his actions. Frost’s compensation practices involved submitting invoices for work done for the Trust, funded by the Jones Investment Company. However, he believed he needed Bernice Jones's consent for compensation from the Trust, which required both his and her signatures. Frost forged her signatures to authorize payments. He did not contest the evidence against him on statutory elements but argued that Arkansas law did not require consent from both trustees for compensation. The court disagreed, stating the government need only prove the statutory elements and noting that Arkansas law requires co-trustees to act jointly. Citing the Restatement (Second) of Trusts, the court affirmed that trustees could only authorize compensation jointly, leading to the affirmation of the judgment.