Unpublished Disposition, 874 F.2d 817 (9th Cir. 1989)

Annotate this Case
U.S. Court of Appeals for the Ninth Circuit - 874 F.2d 817 (9th Cir. 1989)

UNITED STATES of America, Plaintiff-Appellee,v.Mark Philip SABATINI, Defendant-Appellant.

No. 87-1379.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted April 11, 1989.Decided May 2, 1989.

Before WILLIAM A. NORRIS, BEEZER and BRUNETTI, Circuit Judges.


MEMORANDUM* 

Mark P. Sabatini appeals his conviction in federal district court on twenty-two counts of mail fraud (18 U.S.C.A. Sec. 1341) and five counts of wire fraud (18 U.S.C.A. Sec. 1343). On appeal Sabatini argues that the district court erred in failing to issue sua sponte a specific unanimity jury instruction, in denying his motion to suppress evidence, and in failing to dismiss the indictments against him. Sabatini also raises an ineffective assistance of counsel claim and argues his actions did not constitute mail and wire fraud in a supplemental pro se brief. All of Sabatini's contentions are meritless. We affirm.

BACKGROUND

Sabatini's conviction resulted from an indictment charging that he organized and operated a multi-office corporate enterprise known as American Coin and Gold Exchange ("ACGE"), which solicited investments in metals, in a scheme to defraud its investors. ACGE was located in Larkspur, California, with ten nationwide satellite offices. The Larkspur office acted as the administrative center for the satellite offices and housed customers' files and records. During the two years of ACGE's existence, Sabatini acted as chief executive officer and chief financial officer.

ACGE employed salesmen who recruited investors by telephone for precious metal investments. The metal contracts were to act as forward contracts. Investors would sign a contract and send in thirty percent of the total purchase price for a specified quantity of metal. Two-thirds of the thirty percent down payment went to cover administrative fees; the other ten percent went to the purchase price of the metal. The balance was due from the customer within two years.

ACGE telephone salesmen promised potential investors that ACGE would hedge their accounts according to the movement of the market, in order to insure their investments. According to the indictment, Sabatini failed to hedge and instead spent his customers' money on personal items for himself.

After a jury trial, Sabatini was convicted of mail and wire fraud for defrauding his customers. Sabatini now appeals.

ANALYSIS

A. Unanimity Jury Instructions.

Sabatini argues that the district court violated his sixth amendment right to a unanimous jury verdict by failing to adequately instruct the jury that, in order to reach a guilty verdict, it had to agree unanimously on the existence of the same single scheme to defraud.

Sabatini's trial counsel did not request a specific unanimity instruction and failed to object to the jury instructions as given. Therefore, we review the district court's action under the plain error standard. United States v. Payseno, 782 F.2d 832, 834 (9th Cir. 1986). A criminal conviction is reversed on plain error only in exceptional cases "when it appears necessary to prevent a miscarriage of justice or to preserve the integrity and reputation of the judicial process." United States v. Bustillo, 789 F.2d 1364, 1367 (9th Cir. 1986).

Normally, general unanimity instructions suffice. However, when there is a genuine possibility of jury confusion because of "the complex nature of the evidence or a discrepancy between the evidence and the indictment", the trial judge must augment the instructions to ensure that the jury unanimously agrees on a particular set of facts. United States v. Bryan, No. 87-3059, slip op. 427, 441 (9th Cir. Jan. 18, 1989).

Sabatini argues that a specific unanimity instruction was necessary in this case because while the indictment alleged only one scheme of fraud, the evidence at trial showed the existence of two or more distinct schemes of fraud. Sabatini contends that the jury could have reached this conclusion because the prosecutor distinguished between Sabatini's activities before and after the government searched his premises, the trial judge referred to Sabatini's scheme as "a scheme" rather than "the scheme" in his jury instructions, the case involved complex evidence, and because the jury demonstrated its confusion by requesting a read back of Sabatini's testimony during their deliberation.

Sabatini relies on United States v. Mastelotto, 717 F.2d 1238 (9th Cir. 1983), which reversed the defendants' conviction for mail and wire fraud because the district court failed to require the jury to agree on the same single scheme to defraud.

Sabatini also relies on United States v. Gilley, 836 F.2d 1206 (9th Cir. 1988), in which we reversed the defendant's conviction for conducting an illegal gambling business and various acts of extortion and conspiracy because the jury was not instructed that it must unanimously agree to all of the material elements of the crimes.

We find Mastelotto inapplicable and Gilley inapposite to this case. In United States v. Bryan, we recently held that Mastelotto does not control plain error cases because it involved a defendant who requested that a specific unanimity instruction be given. Bryan, slip op. at 443. Because the present case involves plain error, we need not further discuss Mastelotto.

Sabatini cites Gilley as support for his argument that the complexity of his case required that specific unanimity instructions be given. Gilley, 836 F.2d at 1206. We do not agree. Gilley, unlike the present case, involved multiple defendants and time frames. The facts were complex because the defendants were charged with multiple crimes which had numerous elements. Additionally, the crimes allegedly took place over different time periods. The present case, however, involves only one defendant, who was the chief executive of the same corporation at one location and had exclusive control over the investors' funds for the entire continuous three year period in question. The present case does not involve the same type of complexity present in Gilley.

Sabatini's case is more akin to United States v. Frazin, 780 F.2d 1461 (9th Cir.), cert. denied, 479 U.S. 839, 479 U.S. 844, (1986), which also involved wire fraud and mail fraud convictions resulting from a fraudulent investment scheme. Like this case, Frazin involved numerous investors over a period of time; unlike the present case, it also involved two defendants and numerous locations. In Frazin we found that the complexity of the case did not require specific unanimity instructions. Id.

None of the other factors Sabatini complains of required a specific unanimity instruction. Sabatini argues that the prosecutor's distinction of events which occurred before and after the defendant's premises were searched created a genuine possibility of jury confusion which might have led jurors to believe that two separate schemes occurred: one before the investigation began, and one after. We do not agree. The acts that Sabatini was tried for all took place over a continuous time period, in the same location and manner, and under the auspice of the same company. The prosecutor's distinction of Sabatini's actions before and after the investigation into Sabatini's actions began would not have led a reasonable jury to believe that two separate schemes of fraud had been committed.

Sabatini next contends that the judge's reference to his scheme to defraud his customers as "a scheme" instead of "the scheme", could have lead the jury to believe that more than one scheme occurred. We disagree. In his instructions, the judge referred to Sabatini's actions both as "a scheme" and "the scheme", not as "some scheme" or "any scheme", which caused confusion among jurors in other cases. See United States v. Feldman, 853 F.2d 648, 653 (9th Cir. 1988) (use of term "the scheme", as opposed to "any scheme" or "some scheme", did not lead to jury confusion), cert. denied, 109 S. Ct. 1164 (1989); see also Bryan, slip op. at 442-43 (repeated reference to "a scheme" and "the scheme" did not cause jury confusion).

Finally, the jury's request for a reading of Sabatini's testimony did not demonstrate that it was confused by complex evidence or by the possibility of multiple schemes. Nothing in the jury's note to the court indicated any confusion of this type. See Frazin, 780 F.2d at 1468 (jury's note suggesting deadlock did not demonstrate its confusion over lack of specific unanimity requirement.) The jury later withdrew its request and shortly afterwards reached its verdict.

Because the judge repeatedly reminded the jury of the general requirement of unanimity and because this case was not unduly confusing or complex, the district court's failure to give specific unanimity instructions did not result in plain error.

B. Suppression of Evidence.

Sabatini next argues that the district court erred in denying his pretrial motion to suppress evidence seized pursuant to a search warrant. Sabatini argues that the affidavit that the warrant was based on did not demonstrate probable cause that he was perpetrating a federal crime. Additionally, Sabatini argues that the warrant failed to particularly describe the things to be seized.

We review a magistrate's finding of probable cause for clear error in light of the "totality of circumstances." Illinois v. Gates, 462 U.S. 213 (1983); United States v. Dozier, 844 F.2d 701, 706 (9th Cir.), cert. denied, 109 S. Ct. 312 (1988).

The warrant at issue here was granted for a search of all ACGE business records and precious metals located in Sabatini's home, office and safety deposit box. The warrant incorporated by reference an affidavit that was prepared by U.S. Postal Inspector Richard L. Schlueter and two attached exhibits: a pitch sheet for ACGE salesmen, and a customer brochure. The affidavit describes Sabatini's operation of his metal investment company in a single-spaced, eight-page declaration. The affidavit related information given to Inspector Schlueter by two of Sabatini's former employees. Both of the former employees believed that Sabatini was spending clients' funds on personal items rather than properly protecting his clients' investments. Another individual, who went through ACGE's training program but declined to work there, also believed ACGE was perpetuating fraud. Additional information was provided by a felon who informed the inspector that Sabatini was employing several salesmen that the felon had previously employed in his illegal venture.

The statements were further corroborated by the inspector's investigation which showed that Sabatini's company bank account had insufficient funds to cover its customer's obligations and that ACGE's banking records indicated a pattern contrary to legitimate business norms. Additionally, the two attached exhibits demonstrated that Sabatini had made numerous false representations about his personal background, such as his age, education and past employment history; about ACGE's background, such has how long it had been in business and how many employees it had; and about ACGE's operation, in requiring phone salesmen to assure customers that their investments would be protected by hedging.

Sabatini argues that the district court erred because the warrant's supporting affidavit stated only conclusionary and conjectural inferences which did not indicate that he was committing wire and mail fraud. We do not agree. A magistrate's task in issuing a search warrant is to make a practical, common-sense decision whether, given all the circumstances set forth in the affidavit, there is a fair probability that evidence of a federal crime will be found in a particular place. Gates, 462 U.S. at 238.

The affidavit in question is not conclusionary. The underlying circumstances are provided: Knowledgeable informants described Sabatini's operation, which was further corroborated by Inspector Schlueter's investigation. The warrant's affidavit and attached exhibits demonstrate an adequate factual basis on which the magistrate could determine that Sabatini was defrauding customers in violation of federal wire and mail fraud laws. Based on these facts we agree with the district court that the magistrate had a substantial basis for concluding that a federal crime was being committed by Sabatini. See Gates, 462 U.S. at 239; United States v. Fannin, 817 F.2d 1379, 1382 (9th Cir. 1987); United States v. Federbush, 625 F.2d 246, 252 (9th Cir. 1980).

Sabatini next complains that the search warrant failed to particularly describe the items to be seized from his house. We find this issue was not raised to the district court below and cannot be raised for the first time on appeal. United States v. Whitten, 706 F.2d 1000, 1012 (9th Cir. 1983), cert. denied, 465 U.S. 1000 (1984).

Sabatini argues that the particularity claim was raised below in his pretrial motion to suppress evidence. Sabatini's motion contained eight pages of facts and cited cases arguing that no probable cause existed for the search. The last paragraph also stated:

[T]here is no basis at all stated in the search warrant for concluding what records or property to be seized would be available if a search warrant were issued or any basis to conclude that such property would located in any particular location. The generalized statement that all of the defendant's business records must be seized to determine if any of them support criminal charges is simply without need of citation the worst kind of generalized search warrant....

This general statement does not state how the particularity requirement was violated. Nor is any distinction drawn to the documents seized from Sabatini's house as opposed to his place of business or safety deposit box. Additionally, no cases are cited which discuss the particularity requirement or demonstrate why this warrant fails based on this requirement.

During oral argument on the pretrial motion the district court judge said " [A]s I understand it ... you are saying that given what's there is not sufficient to show the commission of an offense [sic]." Sabatini's counsel replied: "That is correct, your honor." In response to the judge's inquiry as to whether he had anything else to contribute, Sabatini's counsel argued why the good faith exception did not apply to warrants which lack probable cause. He failed to bring up the issue of whether the warrant failed to particularly describe items to be seized from his home or any location. In ruling on the pretrial motion the judge stated that after reading the motions and hearing the argument he believed that the Gates test (for probable cause) was met and denied the motion. Sabatini's counsel again failed to raise the particularity issue.

In order for an issue to be preserved upon appeal it must be "pressed" below in more than "vague references ... lacking specificity." McCabe v. General Foods Corp., 811 F.2d 1336, 1340 (9th Cir. 1987).

Because counsel for Sabatini made only one "perfunctory" reference to a complicated fourth amendment claim and never pressed the issue when orally arguing his pretrial motion or after the judge ruled on the motion, he cannot now raise it. See id.; Gates, 462 U.S. at 222-223; National Metalcrafters Div. of Keystone v. McNeil, 784 F.2d 817, 825 (7th Cir. 1986).

An exception to the above rule is recognized when a new theory or issue arises while an appeal is pending because of a change in the law, when the issue is purely one of law, or when review is necessary to prevent a miscarriage of justice or to preserve the integrity of the judicial system. Whitten, 706 F.2d at 1012.

None of these exceptions apply here. Sabatini's argument is not based on new law, nor does the issue present a pure question of law. Finally, because the warrant does not appear to be grossly inadequate in its description of items to be seized, and given the strength of the evidence against Sabatini, no fundamental injustice will result from our declining to decide this issue not raised in the district court. Id.

C. The government did not engage in outrageous behavior by seizing Sabatini's business records and metal.

In Sabatini's next argument he contends that his conviction should be dismissed because the government engaged in outrageous behavior by executing an invalid search warrant and seizing all of his business records and metals, which destroyed Sabatini's business and forced him to default on his contracts with investors.

The outrageous government conduct defense is available only where the government's conduct is so outrageous that it "shocks our sense of justice." United States v. Stenberg, 803 F.2d 422, 429 (9th Cir. 1986). Whether the government's conduct violated Sabatini's due process rights is a question of law which we review de novo. Id. at 428 n. 6.

Sabatini again failed to raise this issue below. Because none of the exceptions in Whitten apply in this instance we need not reach this issue. Whitten, 706 F.2d at 1012. Nevertheless, we note that the records were seized pursuant to a valid search warrant and deposited at a place convenient to the appellant, and made available to copy. Additionally, while the government refused to release metals to Sabatini, it did agree to release them to ACGE customers. Therefore, we find that the government's conduct was not outrageous nor did the government cause ACGE's destruction by seizing Sabatini's business records and metals.

In a supplemental pro se brief Sabatini also argues that he was denied effective assistance of counsel. Sabatini argues that his counsel erred by not requesting an evidentiary hearing to challenge the validity of testimony offered by witnesses in the search warrant's underlying affidavit, and by failing to call an accountant to testify in Sabatini's behalf.

To establish an ineffective assistance of counsel claim, a defendant must show that, considering all of the circumstances, counsel's performance fell below an objective standard of reasonableness. Strickland v. Washington, 466 U.S. 668, 687 (1984). Additionally, the defendant must show that he was prejudiced by the counsel's errors. Id.

Generally, claims of ineffective assistance of counsel should be raised for the first time in collateral proceedings under 28 U.S.C. § 2255. U.S. v. Birges, 723 F.2d 666, 670 (9th Cir.), cert. denied, 466 U.S. 943 and 469 U.S. 863 (1984). "This is so because usually such a claim cannot be advanced without the development of facts outside the original record." Id.

In the present case, the record is not sufficient for us to analyze whether counsel's failure to move for an evidentiary hearing or call an accountant constituted deficient performance and whether, if it did, the actions prejudiced Sabatini. Creation of a factual record is necessary before this issue can be resolved. This claim cannot, therefore, be resolved on appeal.

E. Whether Sabatini Committed Wire and Mail Fraud

In a final argument Sabatini contends that he did not commit wire and mail fraud because none of his customers paid the balance due as required under the terms of their contracts. Again, it appears that Sabatini failed to raise this issue below. It is not clear what legal claim Sabatini is trying to make here. We therefore decline to reach this issue on appeal. (See Rule 28(a) (4) of Federal Rules of Appellate Procedure which requires the appellant's brief to contain "the contentions of the appellant with respect to the issues presented, and the reasons therefor, with citations to the authorities, statutes and parts of the record relied on.")

AFFIRMED.

 *

This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by Circuit Rule 36-3

Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.