                 IN THE UNITED STATES COURT OF APPEALS

                         FOR THE FIFTH CIRCUIT



                              No. 93-2085


                       UNITED STATES OF AMERICA,

                                       Plaintiff-Appellee,

                                VERSUS

                           DAVID J. RAGAN,

                                       Defendant-Appellant.



             Appeal from the United States District Court
                   for the Southern District of Texas

                            (June 14 1994)

Before WOOD*, SMITH, and DUHÉ, Circuit Judges.

HARLINGTON WOOD, JR., Circuit Judge:

         On September 21, 1992, a jury found David J. Ragan,

formerly the head securities trader for ContiArbitrage-Houston

(CAH), guilty of eighteen counts of mail and wire fraud pursuant

to 18 U.S.C. § 1341 and 18 U.S.C. § 1343.       Ragan raises several

issues on appeal, but we shall confine our analysis to Ragan's

argument that insufficient evidence existed for the jury to find

him guilty beyond a reasonable doubt.       We may so limit our

inquiry because the record clearly supports Ragan's contention

that every count of the jury verdict against him lacked adequate


     *
      Circuit Judge of the Seventh Circuit, sitting by
designation.

                                   1
support.

     From August 1981 through May 1984, Ragan worked for CAH, a

branch office of ContiCommidity Services, Incorporated (CCS).

CCS was a large commodity brokerage company registered with the

Commodities Futures Trading Commission as a futures commission

merchant.   CCS hired Ragan in 1981 to manage CAH and conduct a

government securities arbitrage program.   Arbitrage trades are,

in essence, simultaneous purchases and resales of government

securities with the anticipation of an immediate profit.    In

particular, Ragan purchased treasury bills and treasury notes in

the CAH government securities arbitrage program.

     Although the government permits some securities dealers,

known as primary dealers, to engage in direct competitive bidding

for securities at government securities auctions, CCS was not a

primary dealer.   Rather, CCS was a secondary dealer, having to

trade securities on the Federal Reserve Wire.   CCS would purchase

government securities from a primary dealer via the Federal

Reserve Wire, the primary dealer would pass the securities on to

CCS in the name of CCS, and CCS would in turn internally credit

ownership of the securities to its customers.

     As part of that process, Ragan's clients at CAH executed

powers of attorney authorizing Ragan to conduct legitimate

trading at his discretion.   Ragan received commissions on each of

these trades.   The transactions were highly leveraged, meaning

that the client actually invested ten percent or less of the

total amount invested, a high risk that carried with it a


                                 2
targeted rate of return on the invested equity of fifteen to

twenty percent.   Clients covered their potential losses by giving

CAH margins, collateral sufficient to cover any losses incurred

at the close of trading on a given day.

     When Ragan made trades for his customers, he sent them

confirmation slips explaining what was bought, what was sold, and

what the price was.   The clients also received monthly statements

summarizing their trading activity for the month.   In 1983, CCS

hired Computed Information Services (CIS) to generate

confirmation slips and monthly statements.   CAH transmitted its

data via modem to the Chicago office of CIS for processing.    The

following day, a Chicago CCS employee would compare trade tickets

or a trade blotter from the previous day to the data generated by

the computer.   That year, several of Ragan's clients began to

question the amount of profits or losses on their trading based

on the statements they had received.

     The government investigated Ragan's trading activities, and

came to believe that Ragan had not only been involved in

legitimate government securities trading, but that he also had

conducted several fictitious trades for the purpose of generating

commissions for himself.   The government further believed that

Ragan would allocate portions of the fictitious trades to CCS

customers, including himself and his father, and that he then

would transfer the information by wire communication to CIS for

processing, constituting wire fraud in violation of 18 U.S.C. §

1343.   Because the information processed by CIS was sent through


                                 3
the mail to Ragan's customers, the government also concluded that

Ragan's activities might constitute mail fraud in violation of 18

U.S.C. § 1341.

     The government therefore sought an indictment against Ragan,

and on January 30, 1992, a federal grand jury indicted Ragan on

eighteen counts of mail and wire fraud.   The case went to trial

on August 17, 1992, and after the government presented its case

in chief, Ragan rested without putting on a defense.   On

September 14, 1992, the jury found Ragan guilty of all offenses

alleged in the indictment.   On September 21, Ragan moved for a

judgment notwithstanding the verdict or alternatively a new

trial, which the district court denied on September 28.     On

January 12, 1993, the district court sentenced Ragan to

concurrent five-year terms of imprisonment on each of the first

seventeen counts and five years on count eighteen (which it

ordered suspended for five years), and ordered Ragan to pay

$50,000 in restitution and a special assessment of $900.

     Ragan now appeals, contending that insufficient evidence

existed to link him to the fictitious trades in question.     In

analyzing this issue, we must be cognizant that courts of appeal

should not substitute their judgment for that of the jury.

Rather, when determining if sufficient evidence existed to

support a guilty verdict, we must determine whether "viewing the

evidence and the inferences therefrom in a light most favorable

to the jury's guilty [verdict], a rational trier of fact could

have found [the defendant] guilty beyond a reasonable doubt."


                                 4
United States v. Velgar-Vivero, 8 F.3d 236, 239 (5th Cir. 1993)

(citations omitted).    Although the strict nature of this standard

demonstrates our reluctance to interfere with jury verdicts, this

case is an example of why courts of appeal must not completely

abdicate responsibility for reviewing jury verdicts.

     To establish that Ragan committed mail fraud in violation of

18 U.S.C. § 1341, the government was required to prove that Ragan

used the mails for the purpose of executing a scheme to defraud.

United States v. El-Zoubi, 993 F.2d 442, 445 (5th Cir. 1993).    To

establish that Ragan committed wire fraud in violation of 18

U.S.C. § 1343, the government was required to prove that Ragan

used or caused the use of wire communications in furtherance of a

scheme to defraud.     United States v. Dula, 989 F.2d 772, 778 (5th

Cir. 1992).   The core question of each statutory provision, then,

is whether Ragan was in fact involved in a scheme to defraud.    If

the government failed to present evidence of Ragan's involvement,

a rational trier of fact could not have found Ragan guilty of

mail or wire fraud beyond a reasonable doubt.     See Velgar-Vivero,

8 F.3d at 240-41 (evidence was insufficient because government

failed to sufficiently link defendant to the criminal activity in

question).

     Here, both parties agree that Ragan never personally entered

any information onto the fictitious trade tickets that were

transmitted via wire and mail to CCS and its customers.    Rather,

another employee at CAH, Steve Davis, entered all of the

information on the tickets.    Because Ragan was not directly


                                   5
linked to the trades, the government was required to establish

that Ragan was so involved with the information being placed onto

the trade tickets by Davis that one could say Ragan "caused" the

information to be given to customers and CCS; without such

evidence, no rational jury could have convicted Ragan.    See

United States v. Vontsteen, 872 F.2d 626, 628 (5th Cir. 1989).

To prove this linkage, the government relied exclusively on the

testimony of Davis.

     The government contends that Davis testified that Ragan

supplied him with the information that eventually appeared on the

fictitious trade tickets.   Although the government identifies

three pages in the record in which Davis purportedly linked Ragan

to the indictment trades, the government's characterizations of

what Davis said and what the record actually reveals on those

cited pages are quite dissimilar.    The first government citation

to the record1 concerns whether Davis believed that a particular

trade ticket was a test ticket or an actual ticket,2 and contains

no testimony regarding Ragan.

     In the second cited part of the record,3 Davis testified

that "[g]enerally, Mr. Ragan gave us most of our transactions."

     1
      The government first cited to page 1186 of the record.
     2
      Ragan sought to establish on cross-examination that the
transactions in question were not actual trades, but rather were
tests of the CIS data processing system. We need not address the
true nature of the relevant trades, however, given our conclusion
that insufficient evidence existed to establish linkage between
Ragan and the trades, whether real or fictional.
     3
      The second citation was to page 1191 of the record, and
relevant information continues on page 1192.

                                 6
The trial court let this testimony in, however, with a very

forceful limiting instruction:

     Ladies and gentlemen, I'm going to allow this in. Keep
     in mind that eventually the Government is going to have
     to link up all of the charges in the indictment to
     [Ragan]. All right. They're talking about general
     policy in the office and what generally went on, and
     [to] this extent I'll allow him to do it, but the
     questions you will receive will be very pointed as to
     Mr. Ragan.

As the limiting instruction made clear, Davis's testimony

regarding general office procedure would become important only if

the government actually linked Ragan to the indictment tickets.

     On the third page of the record cited by the government,4

the following exchange is recorded:

     Q.   As to the last group of trade tickets that you
     were shown, Mr. Davis, . . . [w]here would you have
     gotten the information that appears on those trade
     tickets?

     A.   From Mr. Ragan.

This, the government contends, is the critical testimony linking

Ragan to the indictment tickets.       A closer examination of the

record, however, reveals no demonstration of linkage whatsoever.

     The question asked of Davis began, "As to the last group of

trade tickets . . . ."   To what group of tickets does this refer?

The record reveals that the last group of trade tickets the

government asked Davis about were uncharged trades, not the

indictment transactions.    In fact, the only testimony by Davis

regarding the indictment transactions reveals that Davis had no

     4
      The third citation was to page 1217 of the record, but page
1217 refers to information beginning on page 1199 and continues
through page 1221.

                                   7
knowledge of whether those trades originated with Ragan:

     Q. I know you were asked on direct: "Well, who told
     you to do what?" It always seems to be Dave Ragan, but
     when I'm asking you specifically because this is the
     counts of the indictment, do you remember him telling
     you to do that?

     A.   No, I do not remember him telling me.

When further asked about individual indictment tickets, Davis

testified that he did not recall Ragan giving him those tickets.

     In our reading of the record, we can identify no evidence

linking Ragan to the indictment transactions.     Without such

evidence, a rational trier of fact could not have found Ragan

guilty beyond a reasonable doubt.    Because the government's

evidence against Ragan was legally insufficient to establish

guilt beyond a reasonable doubt, the jury verdict against Ragan

must be REVERSED.




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