                             UNPUBLISHED

                   UNITED STATES COURT OF APPEALS
                       FOR THE FOURTH CIRCUIT


                             No. 07-4818


UNITED STATES OF AMERICA,

                 Plaintiff - Appellant,

           v.

DIANE W. PACE,

                 Defendant – Appellee.

-----------------------------------

BRENT EARL WOOD,

                 Amicus Supporting Appellee.



Appeal from the United States District Court for the Eastern
District of North Carolina, at New Bern.   Terrence W. Boyle,
District Judge. (5:05-cr-00044-BO)


Argued:   January 30, 2009                 Decided:   March 4, 2009


Before WILKINSON, MICHAEL, and MOTZ, Circuit Judges.


Reversed and remanded by unpublished per curiam opinion.


ARGUED: Anne Margaret Hayes, OFFICE OF THE            UNITED STATES
ATTORNEY, Raleigh, North Carolina, for Appellant.      Robert Daniel
Boyce, BOYCE & ISLEY, P.A., Raleigh, North            Carolina, for
Appellee.    ON BRIEF: George E. B. Holding,          United States
Attorney, J. Gaston B. Williams, Assistant            United States
Attorney, OFFICE OF THE UNITED STATES ATTORNEY,       Raleigh, North
Carolina, for Appellant. Brent Earl Wood, Cary, North Carolina,
Amicus Supporting Appellee.


Unpublished opinions are not binding precedent in this circuit.




                               2
PER CURIAM:

     The United States appeals from a judgment of acquittal and

conditional       new   trial     granted       to    Diane   Pace       after    a   jury

convicted      her      of     eight     charges       relating       to     fraudulent

misrepresentations made to investors in a venture capital fund.

Despite     the    jury’s      verdict,     the       district    court      found       the

Government’s evidence insufficient as a matter of law to sustain

Pace’s convictions.           For this reason, the district court granted

Pace a judgment of acquittal and, in the event of a reversal of

this judgment, a new trial.              Because substantial evidence in the

record    supports      the    jury’s    verdict       that   Pace    acted       with    an

intent to defraud investors, we reverse both the judgment of

acquittal and the conditional grant of a new trial, and remand

the case for sentencing.



                                           I.

                                           A.

     Between 1996 and 2000, Stanley Van Etten formed several

venture    capital      companies       based    in    Raleigh,      North       Carolina,

under the name “Mayflower Venture Capital” (Mayflower).                            Two of

these companies, Mayflower Funds I and II, solicited money to

invest    in   various        “portfolio    companies,”          which     ranged     from

magazines to Internet start-ups.                This case centers on Mayflower

Fund III, which a five-member committee managed.                             These five

                                            3
Mayflower Fund Managers were Diane Pace, who had a securities

background, an attorney (Brent Wood), a CPA (Tom Eilers), and

two salesmen (John Brothers and Scott Pollack) (collectively,

the “Fund Managers”).

     One of the Mayflower portfolio companies was BuildNet, a

private    software      firm    with    products       designed       to    coordinate

aspects of the home-building industry.                  Both Fund I and Fund II

invested in BuildNet.           On March 20, 2000, 1            BuildNet registered

with the SEC in preparation for a highly-anticipated initial

public offering (IPO).

     Mayflower     investors       were       eager     to     participate        in     the

BuildNet    IPO,   and    Mayflower       had    leverage       from    its       previous

investments in BuildNet.           On March 10, a letter from the Fund

Managers informed Fund I and II investors that Mayflower was in

the process of putting together Fund III “to take advantage of

. . . the success surrounding BuildNet.”                     A March 29 letter from

Van Etten and Pace informed investors that Fund III would have

the “primary purpose” of purchasing BuildNet IPO shares.                                  It

explained that Fund III was open only to Fund I and II investors

and that “[a]ny funds not used to purchase [BuildNet] IPO shares

. . . will be returned to the ‘lenders’ within 60 days from the

effective   date   of     the    BuildNet       IPO,”    or    within       60    days    if

     1
       Hereinafter,       all    dates    are    from        2000   unless       otherwise
indicated.


                                          4
BuildNet withdrew its SEC registration.

      The following day, Van Etten sent an internal memorandum to

the Fund Managers.             This March 30 memorandum explained:

      All of the money being depositing into Fund III is a
      loan.   These funds will be used to manage the short-
      term cash flow obligations [of Fund III] as well as to
      pay for all BuildNet IPO shares. . . .     [A]ny money
      not invested in BuildNet will be returned to the
      investor[s] . . . .

The   Government         maintains        that       this    memorandum      evidences        Van

Etten’s     plan    to     use    the     Fund       III    money    not   solely    for      the

BuildNet IPO, but as, essentially, a bridge loan for Mayflower

until the IPO went through.

                                               B.

      The    Fund        Managers       sent     several        letters      to     Fund      III

investors     over       the     coming    few       months,    updating      them       on   the

progress     of      the       BuildNet        IPO     and     the       status     of     their

investments.         The       Government        maintained         at   trial    that     these

documents created and perpetuated a belief by investors that

Fund III money was to be used solely for the BuildNet IPO or

else returned -- when, in fact, Mayflower invested this money in

other companies.

      In a May 3 “Update Memorandum,” the Fund Managers explained

that they believed that the BuildNet IPO remained “on-track” and

informed investors that the formal legal documentation for Fund

III would be forthcoming.                 It went on to explain that Fund III


                                                 5
investors would soon be asked whether they wished to convert

their loan into preferred units, which “will be used to invest

in the BuildNet IPO.”

        The May 13 “Term Sheet” -- sent by Van Etten and Pace to

Mayflower investors, with Wood listed as “Securities Counsel” --

offered a summary of the terms of Fund III.                        It distinguished

between common units in Fund III, which had rights “in all Fund

III investments,” and preferred units, which had “equal rights

and   pro-rata     beneficial      ownership       rights       exclusively     in    the

BuildNet    IPO,   which    will    be    cashed     out    and    distributed       once

BuildNet trades publicly” (emphasis added).

      The May 25 “Offering Circular” constituted the official and

lengthy legal documentation for Fund III.                       The formal terms of

the Offering Circular appear to give the Fund Managers authority

to invest Fund III money in other companies.                       The accompanying

“Letter     of   Instruction”       and       “Notice      of     Loan    Conversion,”

however, give the clear impression that the preferred units will

be used only for BuildNet’s IPO.               For example, they explain that

“[b]y    converting    to    [preferred        units]      the     undersigned       also

understands that he, she or it will not be participating in the

other investments of the Venture Capital Fund” and that “[t]he

preferred    units     exist    strictly        to   facilitate          the   upcoming

BuildNet IPO.”        Most Fund III investors converted to preferred

units.

                                          6
       In an “Update Memorandum” dated July 18, the Fund Managers

sought to calm investors concerned with the delay in BuildNet’s

IPO.    Despite the fact that investors’ money had been invested

in   other   companies   and    was     illiquid        by    this   time,   the    Fund

Managers reiterated that preferred investors in Fund III would

have their money returned within 60 days if BuildNet withdrew

its SEC registration.

       An August 2 letter (signed only by Van Etten) continued to

profess a belief that the BuildNet IPO would go through.                             It

also    encouraged     preferred       unit      holders        to   convert       their

investments    to    common    units,       so   that    “[y]our     money   will     be

working for you today earning profit opportunities, as opposed

to sitting in the Preferred fund until BuildNet goes public.”

In reality, this money was not “sitting” in any fund, but had

already been invested in other companies.

       On October 24, BuildNet withdrew its SEC registration.                         On

November 20, the Fund Managers sent a third “Update Memorandum”

informing preferred investors that, pursuant to the terms of the

promissory    note,   they     had    the    option      to    request   that      their

investments be returned.             However, it encouraged investors to

convert their preferred units to common units.                        Most investors

asked for a return of their investment.                      In response, investors

were sent individual letters informing them that “it does not

appear that the invested funds can be paid” back as promised.

                                         7
      Of the approximately $15 million loaned by investors to

Fund III, only about $422,000 was ever returned to them.                           The

bulk of the money ($13 million) was invested in other portfolio

companies,        with    the     rest   going   to       Mayflower    Capital     and

administrative expenses.

                                           C.

      On the basis of these facts, the Government charged Diane

Pace, Brent Wood, and Stanley Van Etten with six counts of mail

fraud in violation of 18 U.S.C. §§ 1341 & 2 (2006), one count of

conspiracy to commit mail fraud in violation of 18 U.S.C. § 371,

one count of wire fraud in violation of 18 U.S.C. §§ 1343 & 2,

and   one   count        of   conspiracy   to    commit     money     laundering    in

violation of 18 U.S.C. § 1956(h). 2              Van Etten eventually pleaded

guilty, as did three of the five Fund Managers: Eilers, Pollack,

and Brothers.        The remaining two Fund Managers, Pace and Wood,

pleaded     not    guilty       and   preceded   to   a    joint    trial;   Eilers,

Pollack, and Brothers agreed to cooperate and testified for the

prosecution at that trial.




      2
       The six counts of substantive mail fraud correspond to the
six documents described above. The conspiracy count alleges an
unlawful agreement among Van Etten and the Fund Managers to send
these misleading letters to investors.      The money laundering
count alleges that the defendants used the fraudulently-obtained
funds to prop up Mayflower’s non-BuildNet investments, and thus
obscure the misuse of investor money.


                                           8
       The Government’s theory at trial was that Van Etten and the

Fund     Managers        (including     Pace      and       Wood)     deliberately

misrepresented to investors that their money would be held in a

separate account and used for the BuildNet IPO only.                         In fact,

management used the money as a bridge loan to invest in other

portfolio companies and thus prop up Funds I and II, which had

made unsuccessful investments.           The Government acknowledges that

the    Fund   Managers    may   have   believed      that   the     investor    money

would ultimately be repaid, but correctly maintains that this

does not excuse the fraudulent misrepresentations.                      See United

States v. Curry, 461 F.3d 452, 458 (4th Cir. 2006).

       At trial, Pace did not dispute that the documents described

above were sent to investors, and that management in fact used

the Fund III money to invest in companies other than BuildNet.

She did dispute her involvement in the scheme and her intent.

Pace    maintained       that   her    role    in       Fund   III     was     solely

administrative, that she was not aware of many documents until

after they had been sent to investors, and that she did not know

what    other   members    of   management     had    told     investors.        Pace

testified that she believed that the investors had authorized

her and the other Fund Managers to invest their money in other

portfolio companies.

       After a nine-day trial, a jury convicted Pace (and Wood) of

all counts but the charge of wire fraud.                 Following the verdict,

                                        9
the     defendants          renewed       their    motions        for     a    judgment      of

acquittal, which they had originally made at the conclusion of

the   Government’s          case-in-chief.          The     district          court   granted

these    motions     and         conditionally      granted       a     new    trial.     The

district court justified both the judgment of acquittal and the

conditional       new       trial    on    the    ground    that        the    evidence   was

insufficient       for       a    reasonable       juror     to       conclude    that    the

defendants    had       a    specific      intent   to     defraud       investors.       The

Government timely noted this appeal.



                                             II.

        The district court rested its decision to grant a new trial

solely on its assessment that “a rational trier of fact could

not review the evidence and conclude that either Wood or Pace

acted with a specific intent to defraud investors or to launder

money.”     On appeal, Pace adopts the district court’s view that

the Government failed to present sufficient evidence that she

acted with an intent to defraud.                    The Government points to the

testimony    of     Pace’s        co-conspirators        and      other       circumstantial

evidence from which, it asserts, the jury could infer such an

intent.

                                              A.

        Federal   Rule       of     Criminal      Procedure       29     provides     that   a

district court “must enter a judgment of acquittal [when] the

                                              10
evidence       is   insufficient        to    sustain        a   conviction.”              Fed.   R.

Crim.    P.     29(a).       We    review        a    district         court’s     grant     of     a

judgment of acquittal de novo, assessing whether, taking the

evidence       in    the   light     most        favorable        to    the     Government,         a

rational trier of fact could have found all of the elements of

the   charged        offense      beyond     a    reasonable           doubt.        See    United

States v. Singh, 518 F.3d 236, 246 (4th Cir. 2008).

        With respect to the counts of substantive mail fraud, the

Government was required to prove (1) the existence of a scheme

to defraud, and (2) the use of mails to execute the scheme.

United States v. Vinyard, 266 F.3d 320, 326 (4th Cir. 2001).                                       To

prove    the    first      element,     the      Government         must      show    that    “the

defendants acted with the specific intent to defraud, which ‘may

be inferred from the totality of the circumstances and need not

be proven by direct evidence.’”                        United States v. Godwin, 272

F.3d 659, 666 (4th Cir. 2001) (quoting United States v. Ham, 998

F.2d 1247, 1254 (4th Cir. 1993)).

        With    respect     to    the   count         of   conspiracy         to   commit     mail

fraud, the Government was required to prove (1) an agreement to

commit mail fraud, (2) willing participation by the defendant,

and (3) an overt act in furtherance of the agreement.                                       United

States     v.       Edwards,      188      F.3d       230,       234    (4th       Cir.     1999).

Conspiracy          to   commit     mail         fraud       also      requires       that        the

Government show that the defendant acted with a specific intent

                                                 11
to defraud.    Ham, 998 F.2d at 1254.            This specific intent may be

proven wholly by circumstantial evidence.                       United States v.

Burgos, 94 F.3d 849, 858 (4th Cir. 1996) (en banc).

     With respect to the count of conspiracy to commit money

laundering,    the    Government        was     required    to    prove      (1)   an

agreement to commit money laundering existed, (2) the defendant

knew that the money laundering proceeds had been derived from

illegal     activity,     and    (3)      the     defendant       knowingly        and

voluntarily joined the conspiracy.              Singh, 518 F.3d at 248.

     Because each of these crimes requires, at most, 3 that the

Government    prove   that    Pace   acted      with    a   specific     intent     to

defraud -- and the parties only dispute the evidence of this

element -- we must reinstate the jury verdict if the Government

presented    sufficient      evidence    from     which     a   reasonable     juror

could find the required intent beyond a reasonable doubt.

                                        B.

     Pace’s    alleged       co-conspirators,          Pollack    and     Brothers,

provided     the     Government’s       strongest        evidence       of    Pace’s

fraudulent intent.       On July 23, Pollack sent an email to Wood,

with a copy to Pace.       At the time, Pollack was looking to secure


     3
        On appeal, the Government argues that conspiracy to
launder money in violation of 18 U.S.C. § 1956(h) does not
require a specific intent, but only knowledge of the conspiracy.
See Brief of Appellant at 53. Because we conclude the evidence
sufficed to show a specific intent, we do not reach this issue.


                                        12
a short-term loan for Mayflower from two of its investors, but

explained     that       he   did    not    wish    to    disclose    confidential

financial information to them because:

       If these two investors, or any of several investors
       for that matter, find out that their “IPO money” has
       been spent as it has . . . in my opinion we will not
       only not get this bridge loan, additional larger
       problems may be brought on by these investors.

Both Wood and Pace testified that the July 23 email provided

their first knowledge that investors had been told that Fund III

preferred units were to be limited to investment in BuildNet.

Wood’s response email indeed professed ignorance:                      “I am not

sure   what   was    told     to    investors    when    they   originally    loaned

money to Fund III.            I very carefully prepared the notes so that

the money could be used for any purpose we deemed appropriate.”

       Pollack, however, contradicted this claim, testifying that

he was “surprised” at Wood’s email response “because I’m quite

sure that everyone of us [i.e., the five Fund Managers] knew

what    investors        were       told”    (emphasis      added).         Brothers

corroborated Pollack’s testimony, stating that “we told every

single investor, and everybody knew, that [Fund III] was for the

sole   purpose      of    investing     into     BuildNet   IPO.”      He    further

explained that “[w]e talked as a group and said this is what

we’re doing . . . we said we’re going to borrow this money for

the IPO shares.”



                                            13
       In    addition   to     this     co-conspirator      testimony,    the

Government     presented     other    evidence   of   Pace’s   intent.    One

Mayflower investor, Stephen Lack, testified that his impression

that investments in the BuildNet IPO would be separated from

other Fund III investments came from a personal meeting with

Pace and Van Etten.          Another investor testified that Brothers

told him in March 2001 that “[the Fund Managers] had known in

the summer of 2000 that the money was gone, but were afraid to

disclose it to investors.”            Although Pace denies knowing about

some of the documents sent to investors detailed above, many of

these documents appear to be sent from her (as a Fund Manager)

or contain her signature; her knowledge of these documents was a

fact question properly left to the jury.                 Moreover, financial

records introduced by the Government indicate that Pace bore

personal responsibility for disbursing $5,452,281 of Fund III

money to non-BuildNet companies.

       The Government thus presented evidence from which a jury

could conclude that Pace (1) knew what the investors were being

told, and yet (2) disbursed their money to companies other than

BuildNet.     To be sure, Pace contradicted this evidence in her

testimony, which professed ignorance of the misrepresentations

made to investors.         But her co-conspirators explicitly stated

that “everyone of us knew” what was going on.              The jury was thus

free    to    disbelieve     Pace     and,   moreover,     view   her    false

                                       14
exculpatory testimony as probative of her intent.                        In short,

viewing    the   evidence      in   the         light   most   favorable    to    the

Government, as we must, the Government presented evidence more

than sufficient for a rational juror to conclude that Pace had

the specific intent to defraud and launder money.                      The district

court therefore erred in granting Pace a judgment of acquittal.



                                       III.

      The Government next asserts that the district court erred

in conditionally granting a new trial.                    We review a district

court’s grant of a new trial for an abuse of discretion.                        United

States    v.   Wilson,   118   F.3d    228,       237   (4th   Cir.    1997).     The

district court may order a new trial if the evidence weighs so

heavily against the verdict that to deny a new trial would be

contrary to the “interest of justice.”                    Fed. R. Crim. P. 33;

United States v. Campbell, 977 F.2d 854, 860 (4th Cir. 1992).

Unlike a judgment of acquittal, a district court may consider

the credibility of witnesses and need not view the evidence in

the   light    most   favorable       to    the     government    in    determining

whether to grant a new trial.          Campbell, 977 F.2d at 860.

      Although the decision to grant a new trial lies within the

discretion of the district court, respect for the role of the

jury demands that a court exercise this discretion “sparingly,”

United States v. Smith, 451 F.3d 209, 217 (4th Cir. 2006), i.e.,

                                           15
only when “the evidence weighs so heavily against the verdict

that it would be unjust to enter judgment.”                         United States v.

Arrington,    757    F.2d      1484,     1485    (4th     Cir.    1985).        Here,    the

district court offered only a single sentence to explain its

decision to grant a new trial, asserting, without support, its

conclusion    that      “the     evidence       in   this    case     weighs      heavily

against the verdict.”            We do not believe a district court should

overturn a jury verdict so lightly.                     Because the court did not

otherwise explain its decision, 4 we must presume that it granted

a   new   trial   for   the      same    reasons     it    granted       a    judgment    of

acquittal: that the evidence was insufficient to support the

verdict.      Because       we    have    concluded        that    the       evidence    was

sufficient, we must find the grant of a new trial an abuse of

discretion.



                                           IV.

      For the foregoing reasons, we reverse the district court’s

judgment of acquittal and its conditional grant of a new trial.

We remand for further proceedings consistent with this opinion.



                                                             REVERSED AND REMANDED


      4
       For example, the district court did not offer any reason
why it (unlike the jury) found Pace credible, or Pollack and
Brothers incredible.


                                           16
