Unpublished Disposition, 883 F.2d 1025 (9th Cir. 1988)

MEMORANDUM^* 

Based on false financial statements and false tax returns prepared by defendant Mansour, a certified public accountant (CPA), for defendant McCuin, a licensed medical doctor specializing in anesthesiology, Home Savings made a $2.346 million loan to McCuin for the purchase of the Dauphine Condominiums located in New Orleans.

On August 17, 1984, defendants McCuin and Mansour traveled to New Orleans to tour the Dauphine Condominiums and to complete the purchase sale transaction. Because the condominiums were not completed, the deal was not closed and defendants McCuin and Mansour negotiated for an additional incentive to complete the deal--a $340,000 "furniture allowance." Attended by Mansour and McCuin, the deal closed in New Orleans on September 25, 1984 and McCuin returned to Los Angeles with a check for $340,000, of which he paid $110,000 to Mansour. On September 27, 1984, prior to wiring the $2.346 million loan proceeds to Alliance Federal, Mr. Shepherd, president of Home Savings, called McCuin and Mansour regarding a poor credit report he had received on McCuin. Mansour told Mr. Shepherd that McCuin had refused to pay certain old bills on the advice of an attorney, which resulted in derogatory credit information. Home Savings had 1982 and 1983 tax returns, prepared by Mansour, falsely showing McCuin's adjusted gross income to be in excess of $1.4 million each year. Home Savings also had McCuin's financial statements dated January 1, 1984, also prepared by Mansour, falsely showing McCuin's net worth to be in excess of $2.4 million. Based on these reports, Home Savings funded the $2.346 million loan to McCuin for the purchase of the condominium.

Defendants Mansour and McCuin were charged with conspiracy, 18 U.S.C. § 371 (Count X), wire fraud, 18 U.S.C. § 1343 (Count XI), interstate transportation of stolen money, 18 U.S.C. § 2314 (Count XII), making false statements to federally insured financial institutions, 18 U.S.C. § 1014 (Counts XIII, XIV, XVII), and with falsely representing McCuin's social security account number on tax returns submitted to a federally insured financial institution, 42 U.S.C. § 408(g) (2) (Counts XV and XVI). Both defendants were convicted on the conspiracy charge and the substantive charges (except one of the false statement charges (Count XVII)). On September 25, 1987, defendant Mansour was sentenced to serve a six year term of imprisonment, ordered to make full restitution to Home Savings, jointly and severally with McCuin, and placed on probation for a period of 5 years after his release.

DISCUSSION

* Sufficiency of the evidence

Defendant Mansour argues there was insufficient evidence to support any of his convictions. In considering a challenge to the sufficiency of the evidence, the appellate court must determine, after viewing the evidence in the light most favorable to the prosecution, whether any rational juror could have found the essential elements of the crime beyond a reasonable doubt. United States v. Becker, 720 F.2d 1033, 1035 (9th Cir. 1983).

First, we address the false statement conviction under section 1014 which prohibits "knowingly mak [ing] any false statements ... for the purpose of influencing in any way the action of any [federally insured financial institution]." 18 U.S.C. § 1014. The elements of a section 1014 violation are that the defendant made false statements to the bank, that he did so to influence the bank's action, and that the defendant knowingly made the false statement as to a material fact. Theron v. U.S. Marshal, 832 F.2d 492, 496 (9th Cir. 1987), cert. denied, 108 S. Ct. 2830 (1988); United States v. Erskine, 588 F.2d 721, 722 (9th Cir. 1978).

It is sufficient to establish the mens rea "if the proof shows that the defendant received notice sufficient to create a reasonable expectation that the statement would reach an institution of the type included in the statute." United States v. Lentz, 524 F.2d 69, 71 (5th Cir. 1975). See United States v. Sabatino, 485 F.2d 540, 544 (2d Cir. 1973), cert. denied, 415 U.S. 948 (1974) (holding government to proof that the defendant must at least have known that the statement was made to a bank as distinguished from a bank insured by F.D.I.C.).

The following evidence, construed in a light most favorable to the prosecution, supports a finding that defendant Mansour knew that the false reports were to be considered by a financial institution: The telephone message slips reflecting calls on August 21, September 26, and September 27, 1984 to defendant Mansour from "Cyndy" at Home Savings "re: Dr. McCuin"; proof that defendants Mansour and McCuin conducted negotiations for McCuin to get a $340,000 "furniture allowance" at closing; proof that defendant Mansour accompanied McCuin from Los Angeles to New Orleans for an initial inspection of the condominium unit and also attended the closing on September 24, 1984; the notes signed were made payable to bearer and some of the loan documents suggest that Home Savings is the lender; defendant Mansour received at least $100,000 of the furniture allowance; Mr. Shepherd testified that on September 26, 1984, in his capacity as president of Home Savings, he spoke with defendants McCuin and Mansour about derogatory credit information he had received with respect to McCuin, and defendant Mansour provided a plausible explanation for the credit information. The evidence supports the false statement conviction.

We next address whether the evidence is sufficient to support the convictions for wire fraud, conspiracy and interstate transportation of stolen money. Section 1343 provides: "Whoever, having devised or intending to devise ... any scheme ... to defraud, or for obtaining money or property by means of ... fraudulent pretenses ... transmits or causes to be transmitted ... any writings ... for purposes of executing such scheme ... shall be fined ... or imprisoned." 18 U.S.C. § 1343. Elements of wire fraud are a scheme to defraud, use of interstate commerce, and specific intent to deceive or defraud. United States v. Bonallo, 858 F.2d 1427, 1433 (9th Cir. 1988); see United States v. Mitchell, 744 F.2d 701, 703 (9th Cir. 1984). "Critical to a showing of a scheme to defraud is proof that defendant possessed a fraudulent intent." United States v. Starr, 816 F.2d 94, 98 (2d Cir. 1987). In other words, the government must prove actual injury or it must prove, at a minimum, that defendants contemplated some actual harm to its victim. Id. Section 2314 prohibits the interstate transportation of money knowing the same has been stolen, converted or taken by fraud. 18 U.S.C. § 2314; United States v. Weinstein, 834 F.2d 1454, 1463 (9th Cir. 1987). Section 371 prohibits "two ... persons [from] conspir [ing] ... to commit any offense against the United States, or to defraud ... an [United States] agency." 18 U.S.C. § 371. The government's proof, as previously set forth, and all reasonable inferences drawn in favor of the government, support a rational juror's finding that defendants McCuin and Mansour schemed to defraud various lenders of money by the use of false financial statements and tax returns and caused--at least in part--Home Savings to transfer funds to Alliance Federal. Thus, the evidence supports a finding that Mansour conspired and willingly participated in wire fraud and interstate transportation of money obtained by fraud.

Finally, we address the conviction under Section 408(g) (2) which prohibits any person, with the intent to deceive, from falsely representing numbers to be social security account numbers. 42 U.S.C. § 408(g) (2).

At trial, Defendant Mansour claimed that he prepared the tax returns based on information given to him by McCuin and that he had no knowledge of its falsity. According to the government's proof, defendant Mansour repeatedly employed false financial data and tax returns when applying for credit on his own behalf and on the behalf of others. A rational jury could find that Mansour knowingly misrepresented McCuin's social security number on these reports.

There was sufficient evidence to support all of Mansour's convictions.

II

Ineffective Assistance of Counsel

Defendant Mansour claims he received ineffective assistance of counsel at trial because: (1) his counsel failed to request a trial severance from McCuin, despite knowledge that evidence of McCuin's cocaine use and McCuin's admission that he knew a federally insured lender was involved in the Dauphine deal would be introduced at trial; (2) his counsel failed to challenge the voluntariness of Mansour's statement to Agent Harman at the time he was served with a Grand Jury subpoena; and (3) his counsel failed to ask for a limiting instruction when evidence of McCuin's cocaine use and Mansour's gambling debts were introduced.

A defendant's claim that he received ineffective assistance of counsel is reviewed de novo. Strickland v. Washington, 466 U.S. 668 (1984) (Strickland) .

To demonstrate ineffective assistance of counsel, a defendant must show "(1) that counsel failed to exercise the skill, judgment, and diligence of a reasonably competent attorney; and (2) that his failure resulted in prejudice to the defense so that it was reasonably likely to have altered the outcome." United States v. Vaccaro, 816 F.2d 443, 445 (9th Cir.), cert. denied, 108 S. Ct. 295 (1987) (Vaccaro) . "A court must indulge a strong presumption that counsel's conduct falls within the wide range of reasonable professional assistance; that is, the defendant must overcome the presumption that ... the challenged action [is] sound trial strategy." Strickland, 446 U.S. at 689.

Defendant first claims it was unreasonable for defense counsel not to renew his motion for severance as counsel knew McCuin's cocaine addiction was to be introduced at trial. We disagree. Evidence of McCuin's cocaine addiction was utilized by defense counsel to convince the jury that McCuin, not Mansour, was engaged in the deceit. Since Mansour's defense was that he was ignorant of the fraudulent nature of the financial data given to him by McCuin, it was reasonable for defense counsel to want the jury to hear the evidence regarding McCuin's cocaine addiction. Accordingly, counsel's decision falls within "what might be considered sound trial strategy."

Next, defendant Mansour argues it was unreasonable for counsel not to challenge the voluntariness of his statements made during an interview with Agent Harman; defendant Mansour was asked whether he had any knowledge of the Dauphine Condominium deal and Mansour denied any involvement in the transaction. There is no evidence in the record suggesting the statements were not made voluntarily, therefore counsel's decision not to challenge the voluntariness of this statement was reasonable.

Defense counsel did not request a limiting instruction with respect to the evidence of McCuin's cocaine use and Mansour's gambling debts. The briefs and the record do not develop how Mansour was prejudiced and why this strategy falls outside the realm of a reasonable professional trial decision. A limiting instruction may call needless attention to both Mansour's gambling debts and Mansour's association with a cocaine addict, therefore, it may be sound strategy not to request one.

The more difficult question is whether Mansour was deprived of effective assistance of counsel when counsel failed to renew the request for a severance after counsel became aware that McCuin's admission that he knew a federally insured lender was involved in the Dauphine deal was to be admitted at the joint trial. Mansour argues that the inference from McCuin's admission is that Mansour also knew that a federal insured financial institution was involved in the deal. Mansour contends that he had no knowledge that the false reports would be used by a federally insured lender, and therefore, even though a limiting instruction was given, defense counsel's conduct may be unreasonable. Even if unreasonable, failure to request a severance did not alter the outcome of Mansour's trial because of the strength of the government's case and did not result in prejudice to Mansour. Accordingly, Mansour was not deprived of effective assistance of counsel.

III

Defendant Mansour contends the district court was without jurisdiction to enter its January 19, 1988 order amending the judgment to specify the amount of restitution. Mansour filed his notice of appeal to this court on October 8, 1987 and contends this action divested the district court of jurisdiction to enter its January 19th order. This presents a pure question of law and is reviewed de novo. Peter Starr Production Co. v. Twin Continental Films, Inc., 783 F.2d 1440, 1442 (9th Cir. 1986).

The general rule is that an appeal to the circuit court divests a district court of jurisdiction as to any matters involved in the appeal. Griggs v. Provident Consumer Discount Co., 459 U.S. 56, 58 (1982); McClatchy Newspapers v. Central Valley Typo., Etc., 686 F.2d 731, 734 (9th Cir.), cert. denied, 459 U.S. 1017 (1982). The rule is a "judge-made doctrine designed to avoid the confusion and waste of time that might flow from putting the same issues before two courts at the same time. It should not be employed to defeat its purpose nor to induce needless paper shuffling." Kern Oil & Refining Co. v. Tenneco Oil Co., 840 F.2d 730, 734 (9th Cir. 1988) (citing 9 J. Moore, B. Ward & J. Lucas, Moore's Federal Practice p 203.11, at 3-45 n. 1 (2d ed. 1987)). Our acceptance of Mansour's position would lead to a decision on the merits of the case except as to the restitution order. We could remand for the district court to enter its findings and conclusions regarding the restitution amount and " [a]nother appeal would be taken by Mansour and next year, perhaps, we would get the case back. A better case of 'needless paper shuffling' would be hard to imagine." Kern Oil, 840 F.2d at 734. We conclude, therefore, that the district court had jurisdiction over the restitution order to quantify the amount of the restitution figure.

Defendant Mansour contends that the restitution determination is incorrect for three reasons. First, he suggests that the proper restitution figure cannot be determined; second, that the district court did not take into consideration defendant's reduced earning ability; and third, that the interest calculation is incorrect.

The court determined its restitution amount by subtracting $751,000, the amount received for the Dauphine Condominiums at the foreclosure sale, from the $2.346 million loan from Home Savings to McCuin. The district court then added interest to this amount to reach the total restitution figure that it imposed.

Section 3663 of the Victim and Witness Protection Act (VWPA) permits a district court, as part of the sentencing process, to order that a convicted defendant "make restitution to any victim of the offense." 18 U.S.C. § 3663(a). In cases involving loss of property, the defendant may be ordered to pay an amount equal to the value of the loss less the value of any property returned, and less any amount for which the victim has otherwise been compensated. Id. Sec. 3663(b) (1).

Section 3664(a) states that in determining the amount of restitution to be ordered, the court

Shall consider the amount of loss sustained by any victim as a result of the offense, the financial resources of the defendant, the financial needs and earning ability of the defendant and the defendant's dependents, and such other factors as the court deems appropriate.

The burden of demonstrating the victim's loss is placed on the government; the defendant has the burden of demonstrating his resources and financial needs. Id. Sec. 3664(d). Factual disputes concerning the amount or type of restitution are to be resolved by the court by the preponderance of the evidence. Id.

Defendant Mansour contends that the price paid by Home Savings for the Dauphine Condominiums at the foreclosure sale does not reflect the true value of the property. The defendant argues that the district court abused its discretion in adopting the foreclosure sale price as the fair market value because Home Savings will receive a double benefit if it sells the condominiums for more than the amount it paid. We disagree.

We review the district court's findings regarding the amount of restitution for an abuse of discretion. United States v. Angelica, 859 F.2d 1390, 1394 (9th Cir. 1988); United States v. Feldman, 788 F.2d 544, 550 (9th Cir. 1986), cert. denied, 479 U.S. 1067 (1987). "While the district court has discretion in ordering restitution ... the award must be within the statutory framework." Angelica, 859 F.2d at 1394 (citations omitted).

Apparently the foreclosure sale was conducted in accordance with Louisiana Statutory procedures. The sheriff obtained two appraisals of the property which were averaged and 2/3 of the resulting figure was set as the statutory minimum bid, approximately $700,000. Two bidders in addition to Home Savings participated in the foreclosure sale; Home Savings was the successful bidder at $751,000. The court found that the foreclosure sale established the fair market value of the condominium.

It was appropriate for the district court to credit the defendant for the fair value of the condominiums to avoid a double benefit to Home Savings. See 18 U.S.C. § 3663(b) (1) (B) (ii). Using three appraisals and the foreclosure sale price, the district court's fair market value determination of the condominiums is supported by a preponderance of the evidence. Id. Sec. 3664(b).

Defendant Mansour also contends that the district court did not consider, as required by the statute, the defendant's future earning ability in determining the amount of restitution. According to the defendant as a result of his criminal conduct he will lose his professional licenses and will have reduced earnings.

The statute does require the district court in determining whether to order restitution to consider the financial resources of the defendant. 18 U.S.C. § 3664. Once the required factors are considered, the court has very broad discretion in setting the terms of the restitution order. United States v. Cannizzaro, 871 F.2d 809, 811 (9th Cir. 1989).

Here, it is clear from the record that the district judge did consider, as the statute requires, the future earning ability of the defendant, stating that the " [d]efendant is capable of making some restitution payments in the future and therefore is not indigent."

The district court, adopting the defendant's position, charged 12.125% interest on the loan ($2.346 million) for a period of 198 days, the period between the closing date of September 25, 1984 and the date of the sheriff's sale on April 11, 1985. The amount of interest charged was $104,909 ($529.85/day). Since Home Savings experienced this loss as a direct result of Mansour's criminal conduct, the district court was authorized under the VWPA to require that restitution be made for that amount. We affirm the restitution order.

IV

Prior Bad Acts

The defendant contends that evidence of defendant's prior bad acts--gambling, failure to file prior tax returns, McCuin's cocaine use, Mansour's prior loans based on false financial statements, Mansour's prior assistance to others in preparing false financial statements and tax returns--resulted in "overkill" and lead the jury to convict him based on criminal disposition. The district court's decision concerning the admissibility of a defendant's past criminal wrongs, or acts should not be disturbed absent a showing that the court abused its discretion. United States v. Catabran, 836 F.2d 453, 459 (9th Cir. 1988); United States v. Bailleaux, 685 F.2d 1105, 1110 (9th Cir. 1982).

According to the government, the testimony relating to defendant Mansour's substantial gambling debts, bad checks written to cover debts and subsequent judgments against defendant for nonpayment was admitted to show Mansour's motive for his dealings with defendant McCuin. Defendant Mansour argues that he was a successful CPA, enjoyed good relations with his bank, and always repaid his obligations. The government did not argue that Mansour was without funds with which to pay the debts, but argued that, to the extent Mansour did have the funds, there were other financial demands made on him. Since the disputed evidence is relative to proof of motive and although some danger of unfair prejudice exists, it does not appear the balance struck by the district court amounted to an abuse of discretion.

Evidence was admitted from six commercial lenders that Mansour had applied for loans using false financial statements and tax returns. Two witnesses, who had been indicted for mail fraud in Kentucky, also testified that Mansour had prepared the false financial statements and tax returns for them.

The district court recognized that this "is a classic situation in which prior dealings would be coming in to show a lack of mistake, an absence of mistake, and the existence of intent or knowledge." The nonexistent assets in the false financial statements of one of the witnesses were similar, if not identical, to entries in the financial statements Mansour prepared for McCuin. This evidence is highly relevant to proof of intent and knowledge--an essential element of the crimes with which Mansour was charged. The danger of unfair prejudice does not substantially outweigh the probative value of the evidence; therefore the district court did not abuse its discretion in admitting this evidence.

The evidence also showed that during the conspiracy defendant McCuin was a cocaine addict for which at times he was hospitalized. Defendant Mansour argues that this evidence was highly prejudicial and that the district court erred not only in admitting this evidence, but also by failing to give a limiting instruction. In this case, evidence of McCuin's prior wrongs were admitted to show a motive for McCuin's use of false financial statements. Mansour argues that although probably properly admitted against McCuin nevertheless was prejudicial against him.

Evidence of McCuin's cocaine addiction was utilized by Mansour's counsel to establish that Mansour was ignorant of the fraudulent nature of the financial data and that McCuin, a cocaine addict, engaged in the deceit and fraud. The district court in its general charge instructed the jury that Mansour was not on trial for any conduct other than that alleged in the indictment. This instruction, while broad, combined with Mansour's use of McCuin's cocaine addiction minimized any possible prejudicial effect of the evidence. See United States v. Soulard, 730 F.2d 1292, 1303 (9th Cir. 1984). Accordingly, the district court did not abuse its discretion in admitting this evidence.

V

Severance Motion

Mansour contends that the district court erred in denying his pretrial motions for severance. Fed.R.Crim.Proc. 14 provides that " [i]f it appears that a defendant or the government is prejudiced by a joinder ... for trial together, the court may ... grant a severance." The review of a district court's denial of relief for severance under Rule 14 is for an abuse of discretion. United States v. Catabran, 836 F.2d 453, 459 (9th Cir. 1988).

The government contends that Mansour did not renew his motion at the close of the government's evidence, and therefore consideration of this motion on appeal is waived.

In this circuit, to preserve the issue for appellate review, a motion to sever must be renewed at the close of the evidence or it is waived. United States v. Yarbrough, 852 F.2d 1522, 1531 (9th Cir.), cert. denied, 109 S. Ct. 171 (1988). Mansour did not renew his motion to sever either during trial or at the close of evidence; accordingly, defendant is precluded from raising the severance issue on appeal.

VI

Suppression Motion

Pursuant to a search warrant FBI agents searched and seized evidence in Mansour's office. Defendant Mansour argues that the warrant affidavits contain material omissions and false statements that negate its facial showing of probable cause. The district court ruled that most of defendant's allegations were irrelevant and insufficient to necessitate an evidentiary hearing.¹ 

In Franks v. Delaware, 438 U.S. 154 (1978), "the Supreme Court held that a defendant could challenge a facially valid affidavit by making a substantial preliminary showing that (1) the affidavit contains intentionally or recklessly false statements, and (2) the affidavit purged of its falsities would not be sufficient to support a finding of probable cause." United States v. Stanert, 762 F.2d 775, 780 (9th Cir.) (citation omitted), amended by 767 F.2d 1410 (9th Cir. 1985). Only when the defendant makes such a showing does the Fourth Amendment require a hearing be held at the defendant's request. Id. (citation omitted).

The question whether a defendant has made a sufficient preliminary showing to entitle him to a Franks hearing is reviewable de novo. Stanert, 767 F.2d at 1410 n. 1.

In Mansour's motion for an evidentiary hearing, he raised twenty-seven alleged misrepresentations or omissions. The district court made specific findings and correctly ruled that the misstatements had no impact on the sufficiency of the affidavit and that the alleged omissions were not misleading. The district court was correct in denying defendant's request for an evidentiary hearing.

Defendant also contends that Agent Harman's affidavit relied in part upon Agent Dooley's affidavit and as such violates Fed. R. Crim. P. 41(c) (1) which states that "a warrant ... shall be issued only on an affidavit ... sworn to or before the federal magistrate." Agent Harman's affidavit incorporated by reference information in Agent Dooley's affidavit. Since Agent Dooley's affidavit was sworn to a federal magistrate--albeit a different magistrate--the rule was not violated.

VII

Multiplicity

Defendant Mansour contends that Count XIII (relating to false tax returns for 1982, 1983), and Count XIV (relating to false financial statements); and Counts VI and VII (relating to false social security number), are multiplicitous. Multiplicity is defined as "charging the same defendant with the same offense in several different counts." United States v. Douglass, 780 F.2d 1472, 1477 n. 1 (9th Cir. 1986) (Douglass) . The government cites Ninth Circuit precedent for the proposition that the district court's decision not to consolidate counts should be reversed only for abuse of discretion. United States v. Kennedy, 726 F.2d 546, 547 (9th Cir.), cert. denied, 469 U.S. 965 (1984) (Kennedy) . This court, in Douglass, determined that the Kennedy court nevertheless conducted a de novo review. Since the defendant does rest his claim on legal grounds, a de novo review is proper. Douglass, 780 F.2d at 1477. The traditional test to be applied is to determine whether each count "requires proof of a fact which the other does not." Kennedy, 546 F.2d at 548 (quoting Blockburger v. United States, 284 U.S. 299, 304 (1932)). The proof of a fact referred to under the Blockburger test does not simply relate to whether the same evidence is used at trial to prove the two charges so long as each offense requires proof of a fact that the other does not. United States v. Gonzalez, 800 F.2d 895, 897 (9th Cir. 1986).

Count XIII charges Mansour and McCuin with violating 18 U.S.C. § 1014 by preparing false tax returns for the years 1982 and 1983. Count XIV charges the defendants with violating 18 U.S.C. § 1014 by preparing for McCuin a false financial statement dated January 1, 1984. Since Count XIV requires proof of a falsely prepared financial statement and Count XIII requires proof of two false tax returns, the counts do not charge a single offense and are not multiplicitous. See United States v. Glanton, 707 F.2d 1238, 1240 (11th Cir. 1983) (each false statement was made on separate document, therefore not multiplicitous).

Count XV charges defendants with violating 42 U.S.C. § 408(g) (2) by using a false social security number for McCuin in the 1982 tax return. Count XVI charges defendants with violating 42 U.S.C. § 408(g) (2) by using a false social security number for McCuin in the 1983 tax return. Since the government must prove that two separate tax returns had an incorrect social security number for McCuin, the counts are not multiplicitous. While it is true these transactions are related, each false statement was made on a separate document. Douglass, 780 F.2d at 1477 (distinguishing those cases where courts have refused to impose multiple punishments for several "statements" contained within a single document). We affirm the district court's denial of a motion to require election between counts.

AFFIRMED.