Unpublished Disposition, 869 F.2d 1497 (9th Cir. 1988)

MEMORANDUM^* 

Doyle Edward Jack Needham appeals his conviction on six counts of mail fraud, 18 U.S.C. § 1341. Needham argues that the district court gave erroneous and insufficient instructions, that the court made erroneous evidentiary rulings, and that the prosecution knowingly used perjured testimony. We affirm.

* Needham was chief executive officer of the Needham Skyles Oil Co. ("NSO"), an oil development company. Beginning in March 1980, Needham sold stock in the company on the basis of various material misrepresentations that he made orally or by prospectus for the private placement. In particular, Needham told investors that he had been very successful in several business ventures, when in fact his ventures had uniformly resulted in failure, and he had filed for personal bankruptcy in 1978. Needham also informed investors that NSO was a low-overhead company, when in truth Needham used a large percentage of the investors' funds to support his extravagant lifestyle, which he used as further evidence of his success. When NSO went bankrupt in 1982, some $2 million worth of stock sold to investors became worthless.

On March 7, 1986, Needham was indicted for six counts of mail fraud under 18 U.S.C. § 1341. The preamble to the indictment described in detail "a scheme and artifice to defraud and to obtain money and property from investors in NSO by means of false and fraudulant [sic] pretenses, representations and promises." The scheme involved numerous acts of concealment and misrepresentation, to be proven by complex evidence, but its gist, as explained by the government's brief, was relatively simple: "1) fraudulently inducing people to invest in NSO; 2) looting the assets of NSO; and 3) preventing or delaying the victims from finding out they had been defrauded." The indictment charged six specific counts of mail fraud. Each count consisted of a specific act of mailing or receiving an item in furtherance of the scheme.

Needham's trial lasted five weeks. The jury convicted him of all six counts on May 14, 1987. Needham timely appealed his conviction. Fed. R. App. P. 4(b). We have jurisdiction over this appeal of a final judgment. 28 U.S.C. § 1291.

II

Needham first alleges that the judge's instructions on the elements of mail fraud were improper. We review jury instructions in the context of the entire trial for an abuse of discretion.¹  United States v. Frazin, 780 F.2d 1461, 1468 (9th Cir.), cert. denied, 479 U.S. 839 (1986). Whether a jury instruction misstated the elements of the crime is a question of law reviewed de novo. United States v. Douglass, 780 F.2d 1472, 1475 (9th Cir. 1986).

The indictment alleged a scheme "to defraud and to obtain money and property...." Needham objected to jury instructions that described the offense by more directly paraphrasing the statutory language: a "scheme or artifice to defraud, or to obtain property or money by means of false and fraudulent representations, as charged." Needham's objection was based upon case law holding that a scheme to defraud was a separate offense from fraudulently obtaining money or property that deserved separate instructions. See United States v. Halbert, 640 F.2d 1000, 1007 (9th Cir. 1981) (per curiam). Needham concedes that, whatever the merits of this objection at the time, it was mooted by the Supreme Court's decision in McNally v. United States, 107 S. Ct. 2875 (1987).

McNally collapsed the distinction between the "defraud" part of the statute and the "property or money" part by holding that section 1341 is limited to the protection of property rights, and does not make criminal a deprivation of an intangible right to honest state and local government. Id. at 2881. Needham thus argues that McNally renders the instructions fatally deficient because Needham could have been convicted for a non-pecuniary scheme no longer punishable under section 1341. Needham alleges that since the instructions allowed a conviction for a non-pecuniary fraud by being framed in the disjunctive, and the jury rendered a general verdict, it is reasonable and likely that he was convicted illegally. See, e.g., Zant v. Stephens, 462 U.S. 862, 881 (1983) (general verdict must be set aside if jury is instructed as to two independent grounds, of which one is insufficient for conviction).

The entire scheme, as described in the indictment and proved at trial, involved the taking of money and assets under false pretenses. Moreover, the addition of "as charged" to the instruction specifically limited the jury to considering the money fraud charged in the indictment. Under these facts, which convincingly showed the solicitation of stock investments by false pretenses, no rational jury could have found a scheme to exist to defraud investors of an intangible right to good management of NSO, but not a scheme to deprive them of money or assets. The instructions were not ideal in light of the later decision in McNally, but they were not an abuse of discretion. Their slight ambiguity was far from the unambiguous instructions as to an unacceptable ground for conviction we have found to merit reversal. See United States v. Hilling, No. 87-3121, slip op. 15367, 15373 (9th Cir. Dec. 20, 1988); United States v. DeLuca, 692 F.2d 1277, 1281 (9th Cir. 1982).

III

Needham further contends that the jury verdict must be reversed for a possible lack of unanimity. He argues that the disjunctive jury instruction, coupled with the mutiplicity of evidentiary facts as to the numerous deeds, misdeeds, and representations of Needham, allowed the jury to convict on the basis that each juror found a scheme to defraud, but that more than one scheme was in the minds of the jurors. When the indictment and proof vary so as to raise the question whether one scheme or multiple schemes exist, the test is whether any rational jury could have found the essential elements of a single scheme beyond a reasonable doubt. United States v. Mastelotto, 717 F.2d 1238, 1246-47 (9th Cir. 1983) (quoting Jackson v. Virginia, 443 U.S. 307, 319 (1979)). "The evidence need not exclude every hypothesis but that of a single unitary scheme to defraud, but rather must simply be sufficient to support a finding of such a scheme." Mastelotto, 717 F.2d at 1246.

In this case a rational trier of fact clearly could have found a single scheme to defraud. It is likewise possible that more than one scheme could rationally be found to exist, although the mere fact that the evidence was complex does not lead per se to that conclusion. See United States v. Feldman, 853 F.2d 648, 653 (9th Cir. 1988). Needham had a constitutional right to a unanimous verdict on a single scheme to defraud. Mastelotto, 717 F.2d at 1247.

The district court gave the required general unanimity instruction, telling the jury that it "must find beyond a reasonable doubt--that the defendant participated in the same single scheme ... as the overall fraudulent scheme which is alleged in the indictment." Needham contends, however, that this instruction did not suffice to remove the possibility of a nonunanimous verdict.

When there is a "genuine possibility of jury confusion," a general instruction on unanimity must be augmented "to ensure the jury understands its duty to unanimously agree to a particular set of facts." United States v. Payseno, 782 F.2d 832, 836 (9th Cir. 1986) (quoting United States v. Echeverry, 719 F.2d 974, 975 (9th Cir. 1983)). The "genuine possibility" may arise from the complex nature of the evidence, a variance between the evidence and the indictment, or some other factor. Frazin, 780 F.2d at 1468. A general unanimity instruction is usually sufficient. United States v. Ferris, 719 F.2d 1405, 1407 (9th Cir. 1983). Nevertheless, Needham argues that he was entitled to a supplementary instruction that the jurors had to agree to a particular set of facts.

The Feldman court rejected a requirement of an augmented instruction based upon complexity alone, when the basic purpose of the scheme was not especially convoluted. Feldman, 853 F.2d at 653. This case resembles Feldman. The basic nature of the fraudulent scheme--the obtaining of stock investments by misrepresentation and the misuse of the funds--was not obscured by the volume of the evidence or by the financial complexity of some of it. There was no genuine possibility of confusion.

Furthermore, a supplementary instruction was in fact given. The judge told the jury that each and every misrepresentation in the indictment need not be proven, but that "the government must prove a sufficient number of them to convince you beyond a reasonable doubt that the scheme as alleged was actually devised." There was no abuse of discretion.

Needham raises the possibility that a variance between the scheme described in the indictment and the scheme, or schemes, proved at trial deprived him of his right under the fifth amendment to be tried and convicted only on the charges for which he was indicted. Stirone v. United States, 361 U.S. 212, 217 (1960). No discrepancy approaching those rejected by Stirone and its progeny may be discerned from the record. See United States v. Morse, 785 F.2d 771, 774-75 (9th Cir.), cert. denied, 476 U.S. 1186 (1986). The scheme alleged in the indictment was broad, and the evidence supported a conviction for that scheme.

IV

Needham argues that admitted evidence on his past activities was unfairly prejudicial evidence of bad acts and uncharged crimes that should have been rejected under Fed.R.Evid. 403 and 404, or at least have been limited by a specific instruction. A trial judge has wide discretion to determine whether evidence is probative or unfairly prejudicial, and to issue proper instructions based on his rulings. United States v. Long, 706 F.2d 1044, 1054-55 (9th Cir. 1983).

Rule 403 provides that relevant evidence "may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice...." Fed.R.Evid. 403. Rule 404 prohibits the admission of evidence of "other crimes, wrongs, or acts" to "prove the character of a person in order to show action in conformity therewith." Fed.R.Evid. 404(b). Needham offered a limiting instruction pursuant to Rule 404(b). The court instead instructed the jury that it should "consider other acts of Mr. Needham only if they relate to the charges against Mr. Needham here in this case."

The government correctly notes that Rule 404(b) does not apply. The acts of Needham were admitted to show a key aspect of the fraud--the fact that his representations as to his past success in business were false. They were probative as to the admittedly broad nature of the charged scheme. See United States v. Van Cauwenberghe, 827 F.2d 424, 432 (9th Cir. 1987), cert. denied, 108 S. Ct. 773 (1988); United States v. Vaccaro, 816 F.2d 443, 452-53 (9th Cir.), cert. denied, 108 S. Ct. 262 (1987). The evidence of past acts and the evidence of the crime charged were "inextricably intertwined." United States v. Soliman, 813 F.2d 277, 279 (9th Cir. 1987) (quoting United States v. Aleman, 592 F.2d 881, 885 (5th Cir. 1979)). Furthermore, a limiting instruction was given, even if it was not in the specific language Needham suggested.

Nor did the judge abuse his discretion under Rule 403 by admitting the evidence. Needham argues that it is not apparent from the record that the judge performed a balancing of the probative against the prejudicial effect of the evidence under Rule 403. See United States v. Back, 588 F.2d 1283, 1285 (9th Cir. 1979). By considering and rejecting Needham's objection under Rule 403, however, he did so, and he did not abuse his discretion. The evidence was probative, and did not have the unmistakable prejudicial effect required to be inadmissible under Rule 403. See id. (evidence proved only "criminal disposition").

V

Needham's next objection is to the judge's evidentiary ruling regarding a tape of a conversation made by one of the investors, Barbara Hodgdon, in which she allegedly admitted that her payment to Needham was a personal loan, not a stock investment. The judge ruled that the excerpt desired by Needham could be heard, but that the government had the right to play the remainder of the tape under Fed.R.Evid. 106. The remainder of the tape was primarily composed of Hodgdon's very unflattering comments regarding her lawsuit against Needham and her belief that she had been defrauded. Needham's counsel decided not to introduce any part of the tape.

Needham did not properly preserve this issue on appeal. Needham's counsel stated that he had no objection to the remainder of the tape being played. He raised the Rule 106 concern only in his motion for a new trial. We review the ruling for plain error. See Whitten, 706 F.2d at 1012; Fed.R.Evid. 103(a), (d). Reversal for plain error is appropriate only when "a miscarriage of justice would otherwise result." United States v. Young, 470 U.S. 1, 15 (1985) (internal quotation omitted). Given the wealth of evidence against Needham, the limited persuasive power of the evidence at issue, and the fact trial counsel decided not to press the point, there was no miscarriage of justice.

VI

Needham's final argument is that the government knowingly used perjured testimony. His only evidence of perjury is the fact that, in the case of three witnesses, documents existed that at least in part refuted the trial testimony. One witness, Skyles, made a minor error of fact in response to a cross-examination question. As the government points out, such inconsistencies were merely part of the give-and-take of a trial, and the defense had full opportunity to attack, rebut, and impeach prosecution testimony. As in any case, some of the facts, and inferences to be drawn from the facts, were in dispute. Substantial evidence supported the prosecution's version.

CONCLUSION

None of the grounds for this appeal constitute reversible error. Needham's conviction is affirmed.

AFFIRMED.