7th Circuit extinguishes fraudster-arsonist’s appeal

A convicted insurance fraudster whose M.O. was arson has lost his appeal of his mail fraud convictions, with the 7th Circuit Court of Appeals rejecting his argument that evidence of arson was improperly admitted at his fraud trial.

The case against Michael Thomas involved eight fires set over nine years at The Born’s mobile home park in North Judson. The first fire was set in September 2004, when Thomas confided to a friend that he’d had a family member start the blaze at his mobile home, on which he had taken out multiple insurance policies. After the fire, Thomas collected $75,000.

Then in November 2010, fires were set at four more properties: Thomas’ new mobile home, his mother-in-law’s home and two abandoned homes in the park described as “distractor” fires. After those fires, Thomas collected $50,000.

The sixth fire was set in January 2013, after which Thomas collected $60,000 in insurance proceeds. Finally, in April 2013, the site of the first arson again caught fire — this time twice in one incident — and Thomas collected $426,227.31 in insurance money.

Thomas’ last insurance collection was paid out in four checks, which ultimately were the basis for the four counts of mail fraud he was indicted on in April 2018. The indictment said the fraud scheme included each of the fires, but a magistrate judge struck from the indictment one paragraph related to the “diversionary” fires in 2010. However, the magistrate judge declined to strike language related to the 2004 fire, the other two fires set in 2010 and the January 2013 fire. Also, the Indiana Northern District Court denied a motion in limine to exclude evidence of the 2004 fire and the two 2010 “distractors.”

After a jury trial, Thomas was convicted under 18 U.S.C. § 1341 and was sentenced to 7½ years.

On appeal, Thomas argued the 2004, 2010 and January 2013 fires were improperly admitted as character evidence because they were not part of his fraud “scheme,” unlike the April 2017 fire. The 7th Circuit disagreed in a Friday opinion.

As to the two blazes set on Thomas’ properties in 2010 and the one set in January 2013, 7th Circuit Judge Michael Brennan wrote that “(t)hey were similar occurrences designed to defraud in a similar way and took place over a relatively short period of time.” Thus, “the district court did not abuse its discretion in determining that these fires were part of the same scheme under 18 U.S.C. § 1341.”

“Because the fires in 2010 and January 2013 on Thomas’s properties were direct evidence of Thomas’s mail fraud scheme, (Federal Evidence) Rule 404(b) is not implicated, and the evidence was properly admitted,” Brennan wrote. “Neither was the probative value of this evidence substantially outweighed by its risk of unfair prejudice to Thomas under Federal Rule of Evidence 403.”

Likewise as to the 2010 diversionary fires, “The district court correctly reasoned that efforts to conceal a scheme can be part of the scheme itself,” Brenann wrote.

As to the 2004 blaze, the 7th Circuit concluded that while the district court properly excluded that fire from the scheme, it was still properly admitted as evidence of Thomas’ modus operandi. Brennan pointed to two “salient points” to support that holding.

“First is the timing of the insurance policy,” he wrote. “Like the fires that were part of the scheme, the insurance policy renewal in 2004 was less than 30 days before the fire.

“… The second is the geographical proximity of the first,” the judge continued. “… The 2004 fire occurred at 2961 Julia Drive, the same location as the April 2013 fire. Like the other fires, it happened in the one-square-mile mobile home park.

“These two similarities separate the 2004 from a random fire or act of arson,” Brennan concluded.

Finally, Brennan wrote, even if evidence of the 2004 fire was erroneous, the error was harmless.

The case is United States of America v. Michael Thomas, 19-2969.