Unpublished Disposition, 914 F.2d 264 (9th Cir. 1988)

MEMORANDUM^* 

Robert L. Ferrara and Phyllis M. Ferrara appeal their convictions for wire fraud in violation of 18 U.S.C. § 1343. Robert Ferrara alleges that the prosecution failed to prove essential elements of his conviction for wire fraud and that the district court improperly admitted prejudicial evidence and failed to give a proposed jury instruction. Phyllis Ferrara contends that the district court erred by denying her motion for severance, a proposed jury instruction, and motion for a new trial. Both Robert and Phyllis Ferrara contest their sentences imposed pursuant to the Sentencing Guidelines. We have jurisdiction over their timely appeals pursuant to 28 U.S.C. § 1291 (1982). We affirm.

Robert Ferrara did business as Missouri-Nebraska Vending of Kansas City (MNV). He employed Anthony Biondo as vice-president, Phyllis Ferrara, his ex-wife, as a salesperson, and Janice Creswell as a reference. MNV advertised in a Montana newspaper to sell vending machines. Kenneth Luchsinger responded to that advertisement from Montana and spoke with Phyllis Ferrara on the phone.

After negotiating with Phyllis Ferrara, Luchsinger paid $39,800.00 to Phyllis Ferrara for vending machines. On March 24, 1988, Luchsinger made phone calls to Phyllis Ferrara regarding the delivery of his machines. She told him that the machines would be shipped around March 29, 1988. Despite repeated phone calls, a trip to Kansas City, and a meeting with Robert Ferrara, Luchsinger received nothing for his money. Following a grand jury's indicting both Robert and Phyllis Ferrara for wire fraud, Phyllis Ferrara moved for a separate trial pursuant to Fed. R. Crim. P. 14. The district court denied severance.

At trial Biondo testified that Robert Ferrara was in charge of MNV and the advertising scheme. Creswell testified that Robert Ferrara paid her $100.00 per sale to state falsely that she was a satisfied customer of MNV. John Lewis Huber testified he was a customer of MNV and had used Creswell as a reference. The district court then refused to give circumstantial evidence instructions submitted by Robert and Phyllis Ferrara. After trial, Phyllis Ferrara moved for a new trial pursuant to Fed. R. Crim. P. 33 alleging that she did not receive effective counsel. The district court denied her motion for a new trial.

A jury found Robert Ferrara and Phyllis Ferrara guilty of one count of wire fraud each in violation of 18 U.S.C. § 1343. The court sentenced Robert Ferrara to five years imprisonment and Phyllis Ferrara to two years imprisonment.

A. ISSUES RAISED BY ROBERT FERRARA'S CONVICTION

We review de novo whether the district court admitted evidence such that any rational trier of fact could have found the essential elements of wire fraud beyond a reasonable doubt. See United States v. Power, 881 F.2d 733, 736-37 (9th Cir. 1989).

To obtain a conviction for wire fraud, the prosecution must prove Robert Ferrara:

... having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire ... communication in interstate ... commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice....

18 U.S.C. § 1343 (1984) (emphasis added).

Robert Ferrara contends that the prosecution failed to present sufficient evidence that he participated in a scheme to defraud Luchsinger. The record indicates otherwise. At trial, the prosecution elicited testimony that: 1) Robert Ferrara determined whether Luchsinger would receive a refund, 2) Robert Ferrara was the "boss" of MNV, and 3) Robert Ferrara paid Creswell for her false references. This evidence would permit a reasonable jury to infer that Robert Ferrara participated in a scheme to defraud Luchsinger.

Robert Ferrara also contends that the prosecution failed to prove his use of interstate communications in furtherance of the scheme to defraud Luchsinger. The testimony elicited at trial, argues Robert Ferrara, only indicates that Phyllis Ferrara and Biondo had telephone contact with Luchsinger. This argument ignores applicable law. A conviction for wire fraud requires only that Robert Ferrara "caused" the phone calls to be made. 18 U.S.C. § 1343. To prove that Robert Ferrara "caused" phone calls to be made, the prosecution satisfies its burden of proof if it introduces evidence which indicates Robert Ferrara participated in devising a scheme to defraud in which use of interstate phone calls would foreseeably follow. See United States v. Puckett, 692 F.2d 663, 669 (10th Cir.), cert. denied, 459 U.S. 109 (1982). The prosecution established Robert Ferrara's role as a leader of the vending machine scheme. The fact that Robert Ferrara chose to run his operation by placing advertisements in other states would foreseeably lead to the use of interstate phone calls. Sufficient evidence supports Robert Ferrara's conviction for wire fraud.

We review a district court's decision to admit evidence for an abuse of discretion. United States v. Spillone, 879 F.2d 514, 518 (9th Cir. 1989). Robert Ferrara contends that the district court erred by admitting Huber's testimony in violation of Fed.R.Evid. 404(b). However, before testimony may be admitted as evidence of prior misconduct barred by Rule 404(b), that testimony must be sufficient to support a jury's finding that the defendant was responsible for the prior misconduct. Spillone, 897 F.2d at 518.

Here, however, Huber only testified that he had called Creswell as a reference in connection with buying vending machines from MNV. Huber did not testify that he was defrauded or misled by Robert or Phyllis Ferrara. The possibility that a jury might have inferred that Huber had suffered a fate similar to Luchsinger's is insufficient to qualify Huber's testimony as evidence of Robert or Phyllis Ferrara's prior misconduct barred by Rule 404(b).

B. ISSUES RAISED BY PHYLLIS FERRARA'S CONVICTION

Phyllis Ferrara contends that the district court erred by refusing to sever her trial from Robert Ferrara's trial. We review a district court's ruling on a motion for severance for abuse of the district court's "wide discretion." United States v. Vaccaro, 816 F.2d 443, 449 (9th Cir. 1987). The district court abuses its discretion in denying severance when "a joint trial would be so prejudicial that the trial judge could exercise his discretion in only one way." United States v. Escalante, 637 F.2d 1197, 1201 (9th Cir. 1980).

Phyllis Ferrara asserts that she required severance in order to elicit testimony from Robert Ferrara that would disprove the existence of a scheme to defraud Luchsinger, and, that if such a scheme existed, she was unaware of it.

The government jointly charged Phyllis and Robert Ferrara. Defendants who are jointly charged should generally be jointly tried. See id. In order to obtain a severance to enable a codefendant to provide favorable testimony, Ferrara must have shown that: 1) she would have called Robert Ferrara at a severed trial; 2) he would testify; and 3) his testimony would have been favorable to her. See United States v. Jenkins, 785 F.2d 1387, 1393 (9th Cir.), cert. denied, 479 U.S. 855 (1986).

Although the district court denied Phyllis Ferrara the opportunity to present the information she claims would have established those factors, we find that even if the district court abused its discretion in denying her motion to sever, that error was harmless and therefore does not require reversal. See Herd v. Kincheloe, 800 F.2d 1526, 1529 (9th Cir. 1986) (if denial of severance was harmless error, no reversal is required). Here no harm resulted from the failure to grant a severance because the evidence of Phyllis Ferrara's guilt was overwhelming. See id. The prosecution submitted evidence which indicated that Phyllis Ferrara was the "customer relations" contact for MNV and that she was aware of the payments to Janice Creswell for false references. Moreover, Luchsinger testified that: 1) Phyllis Ferrara was one of his two main contacts, 2) Phyllis Ferrara proposed the business deal and explained the operation of the vending machine business, 3) Phyllis Ferrara gave him Creswell's name as a reference, 4) Phyllis Ferrara met him personally with the vending machine contract, and 5) Phyllis Ferrara promised delivery and lied about the shipment of vending machines. Phyllis Ferrara does not contest the truth of any of this evidence which flatly contradicts her contention that she had no knowledge of any scheme to defraud. Furthermore, little likelihood exists that Robert Ferrara would have testified that no scheme to defraud existed--on appeal he contends that the prosecution failed to prove his participation in a scheme to defraud Luchsinger. Because the denial of severance was harmless error, reversal is not required.

Phyllis Ferrara contends that the district court erred in refusing to grant her motion for a new trial. We review the denial of such a motion for an abuse of discretion. United States v. Steel, 759 F.2d 706, 713 (9th Cir. 1985).

Ten days prior to trial, Phyllis Ferrara met with attorneys for Robert Ferrara and Anthony Biondo. These attorneys advised her not to testify and made disparaging remarks about Phyllis Ferrara's appointed counsel. Phyllis Ferrara then met with her appointed counsel prior to trial. She eventually decided not to testify. After the trial Phyllis Ferrara moved for a new trial because she says, she felt that she should have testified and would have testified if not for the advice of the attorneys for Robert Ferrara and Anthony Biondo.

In order to have obtained a new trial, Phyllis Ferrara must have shown, among other factors, that: 1) her motion relied on evidence discovered after trial, and 2) her motion alleged facts which indicated diligence on her part to discover that evidence. United States v. Lopez, 803 F.2d 969, 977 (9th Cir. 1986). Phyllis Ferrara has done neither. Indeed, the district court found, and Phyllis Ferrara does not now dispute, that her own counsel had adequately informed her of the advantages and disadvantages of testifying, and that she had made the choice not to testify of her own free will. The district court correctly denied Phyllis Ferrara's motion for a new trial.

C. ISSUES RAISED IN BOTH ROBERT AND PHYLLIS FERRARA'S CONVICTIONS

Both Robert and Phyllis Ferrara contend that the district court erred by refusing to give their proposed circumstantial evidence instructions. A trial court's refusal to deliver a requested instruction constitutes reversible error only if the requested instruction: 1) was correct; 2) was not substantially covered by others delivered; and 3) concerned a point in the trial so important that the failure to give the requested instruction seriously impaired the defendant's ability to defend himself. United States v. Sans, 731 F.2d 1521, 1529-30 (11th Cir. 1984), cert. denied, 469 U.S. 111 (1985).

Robert Ferrara proposed the following instruction:

To convict a defendant on circumstantial evidence, the evidence must be so unequivocal and incriminating as to exclude every hypothesis of innocence.

Robert Ferrara's proposed instruction requires the jury to apply a more stringent standard of persuasion--absolute certainty as opposed to beyond a reasonable doubt--in order to convict using circumstantial evidence. However, contrary to his instruction, no distinction exists between circumstantial and direct evidence for purposes of obtaining a conviction. See United States v. James, 576 F.2d 223, 227 n. 2 (9th Cir. 1978) (approving of a jury instruction directing the jury not to differentiate between direct and circumstantial evidence). His proposed instruction is therefore not correct, see, e.g., United States v. Sukumolachan, 610 F.2d 685, 688 (9th Cir. 1980); United States v. Bradley, 421 F.2d 924, 926 (6th Cir. 1970), and the district court did not err in refusing it.

Phyllis Ferrara proposed a different instruction:

You are not permitted to find the defendant guilty of the crime charged against him based on circumstantial evidence unless the proved circumstances ... cannot be reconciled with any other rational conclusion.

Each fact which is essential to complete a set of circumstances necessary to establish a defendant's guilt must be proved beyond a reasonable doubt.

Also, if the circumstantial evidence can be interpreted in two reasonable ways, one of which points to a defendant's guilt and the other to his innocence, it is your duty to adopt that interpretation which points to a defendant's innocence, and reject that interpretation which points to his guilt.

If, on the other hand, one interpretation of such evidence appears to you be reasonable and the other unreasonable, it would be your duty to accept the reasonable interpretation and to reject the unreasonable.

The language in is incorrect for the same reason that Robert Ferrara's was incorrect--it imposes a higher standard of proof in order to convict using circumstantial evidence. Sentence merely repeats the jury instruction actually given. The district court instructed that "before convicting a defendant the jury [must be] convinced from all the evidence of a defendant's guilt beyond a reasonable doubt." Sentence and are merely variations on sentence and are similarly incorrect. See Sukumolachan, 610 F.2d at 688.

Because the proposed instructions were either incorrect or cumulative, and because the instruction actually given apprised the jury of the reasonable doubt standard, the district court did not err in denying Phyllis Ferrara's proposed instruction. See United States v. Miller, 688 F.2d 652, 662 (9th Cir. 1982).

a. Phyllis Ferrara

i. Increase of Offense Level

Phyllis Ferrara contends that the district court erred in computing her offense level pursuant to Sec. 2F1.1(b). Guideline Sec. 2F1.1(b) provides for a graduated increase in the base offense level depending on how much loss a defendant inflicted upon his or her victim. U.S.S.G. Sec. 2F1.1(b).

The district court increased Phyllis Ferrara's offense level pursuant to Sec. 2F1.1(b) by combining: 1) the loss inflicted upon Luchsinger, and 2) the amount she allegedly obtained by defrauding two other victims of a similar vending machine scheme run by MNV. Phyllis Ferrara contends that Sec. 2F1.1(b) only permits consideration of the loss incurred by the charged offense. The interpretation of "loss" pursuant to Sec. 2F1.1 is a question of law, United States v. Burns, 894 F.2d 334, 335 (9th Cir. 1990), which we review de novo.

The relevant conduct a district court may use to compute a defendant's offense level is defined in Sec. 1B1.3(a). A plain reading of Sec. 1B1.3(a) (2) permits consideration of losses a defendant has inflicted while committing similar offenses for which she was not convicted in order to compute the amount of loss pursuant to Sec. 2F1.1(b) (2). Guideline Sec. 1B1.3(a) (2) directs the district court to consider:

(2) solely with respect to offenses of a character for which Sec. 3D1.2(d) would require grouping of multiple counts, all such acts and omissions that were part of the same course of conduct or common scheme or plan as the offense of conviction;

Guideline Sec. 3D1.2(d) specifically applies to crimes of fraud governed by Sec. 2F1.1. Here, the sentencing court found that she defrauded two other victims of $25,800 and $21,400 using the same vending machine scheme in the same course of conduct as she used to defraud Luchsinger. We therefore find no error with the district court's computation of Phyllis Ferrara's offense level pursuant to Sec. 2F1.1(b).

ii. Minimal or Minor Participation

Phyllis Ferrara further contends that she was a minimal or minor participant pursuant to Sec. 3B1.2 and thereby entitled to, respectively, a decrease in her offense score of four or two levels. "A finding that a defendant did not play a minimal or minor role depends heavily on the facts of the case." United States v. Williams, 898 F.2d 1400, 1403 (9th Cir. 1990). We will not disturb such a finding unless it is clearly erroneous. Id.

Downward adjustments for minor or minimal participation are to be used infrequently. United States v. Gillock, 886 F.2d 220, 222 (9th Cir. 1989); Commentary to U.S.S.G. Sec. 3B1.2. Application Notes # 1 and # 3 for Sec. 3B1.2 state in pertinent part:

[A minimal participant] ... plays a minimal role in concerted activity. [This category] is intended to cover defendants who are plainly among the least culpable of those involved in the conduct of a group....

a minor participant means any participant who is less culpable than most other participants, but whose role could not be described as minimal.

Phyllis Ferrara argues that no evidence indicates that she was more than a minimal or minor participant. The same evidence of guilt which renders harmless the district court's denial of her motion to sever is equally applicable here to refute her claim that she was the least culpable of, or less culpable than most other participants of, the vending machine scheme. See supra, at 5-7. Evidence that Phyllis Ferrara had a leading role as Luchsinger's contact at MNV and that she had a position as customer relations manager requires we find that the district court did not clearly err in refusing to find her a minimal or minor participant.

iii. Upward Departure

The district court upwardly departed by six months from the applicable Guideline range and imposed a 24 month sentence pursuant to Sec. 4A1.3. Phyllis Ferrara challenges the propriety of that upward departure. We review upward departures according to a five step process. United States v. Pearson, 900 F.2d 1357, 1360 (9th Cir. 1990).¹ 

The first step requires us to review de novo whether the district court adequately identified the aggravating circumstances it relied upon to depart upwardly. Id. The district court properly did so by identifying three circumstances: 1) the underpresentation of Phyllis Ferrara's criminal history due to a deletion of prison time for a 1977 conviction for fraud; 2) Phyllis Ferrara's violation of a 1977 consent decree prohibiting her from engaging in fraudulent activity; and 3) Phyllis Ferrara's two prior charges for writing two bad checks for $156.42 and $32.00. Phyllis Ferrara does not contest the existence of those circumstances, thus the second step, which requires determining whether the identified circumstances actually existed, is met. Id.

The third step requires that we determine de novo whether the Commission adequately accounted for the identified circumstances the district court used to depart upwardly in setting the offense level. Id. Nowhere in Sec. 2F1.1 do the Guidelines account for the factors used by the district court to depart upwardly. Phyllis Ferrara received a criminal history category of one. She introduced no evidence which indicates that the district court clearly erred in determining that her criminal history does not adequately reflect her propensity for recidivism for crimes of fraud. See U.S.S.G. Sec. 4A1.3. Moreover, Sec. 4A1.3, which delineates a policy of allowing upward departures under specific circumstances, explicitly mentions the factors the district court used to depart upwardly. See Sec. 4A1.3(a) (prior sentence not used in computing the criminal history category); Sec. 4A1.3(c) (prior similar misconduct established by a failure to comply with an administrative order); Sec. 4A1.3(e) (prior similar adult criminal conduct not resulting in a criminal conviction).

Step four requires that we review for an abuse of discretion whether the circumstance justifies departure. Pearson, 900 F.2d at 1361. Because the Guidelines account for a defendant's criminal history, a defendant's criminal history only justifies departure "where the defendant's record is 'significantly more serious' than that of other defendants in the same criminal history category." United States v. Cervantes Lucatero, 889 F.2d 916, 918 (9th Cir. 1989) (quoting United States v. Hernandez-Vasquez, 884 F.2d 1314, 1316 (9th Cir. 1989)). To the extent that the facts the district court cites indicate Phyllis Ferrara's propensity for recidivism for crimes of fraud, the district court did not abuse its discretion in finding her criminal history more serious than other defendants with a similarly minimal criminal history category.

Lastly, we review for an abuse of discretion whether the extent of departure was unreasonable. Id. at 1362. Given that the statutory maximum for crimes of wire fraud is five years, 18 U.S.C. § 1343, and the district court upwardly departed by only six months, we find that the district court did not abuse its discretion in upwardly departing.

Phyllis Ferrara next argues that even if the district court properly identified grounds which may constitute aggravating circumstances which justify departure, see Sec. 4A1.3(a), the district court erred by failing to state that the Commission inadequately considered those particular circumstances in formulating the Guidelines.

Although Phyllis Ferrara does cite to a case apparently on point, United States v. Michel, 876 F.2d 784 (9th Cir. 1989), her argument fails. Michel states the accepted proposition that the district court must articulate reasons for departure which the Commission did not adequately consider in formulating the Guidelines. Id. at 786. Phyllis Ferrara goes on to argue that Michel also requires the district court to articulate that the particular reasons it cites for upward departure were not adequately considered by the Commission in formulating the Guidelines.

Contrary to her interpretation of Michel, the language in Michel merely requires that the district court indicate implicitly that it considered whether the factors it relied upon for upward departure were adequately considered by the Commission. The requirement that the district court provide specific reasons for its upward departure exists to permit meaningful review of that decision. United States v. Wells, 878 F.2d 1232, 1233 (9th Cir. 1989). No rational reason exists to require the district court to repeat the litany that "the Commission failed to consider adequately these reasons in formulating the Guidelines," lest she face reversal. Other cases which discuss the requirement that the district court articulate its reasons for upward departure make clear that the additional litany is not required. See, e.g., United States v. Richison, 901 F.2d 778, 780 (9th Cir. 1990); United States v. Pearson, 900 F.2d at 1360; United States v. Gomez, 901 F.2d 728, 729 (9th Cir. 1990); Wells, 878 F.2d at 1233. We therefore find that Phyllis Ferrara's sentence was proper.

b. Robert Ferrara

Robert Ferrara contends that the district court erred in assessing his sentence by: 1) increasing his offense level pursuant to Sec. 2F1.1 for losses inflicted on victims of crimes other than the instant one; and 2) failing to recognize his acceptance of responsibility pursuant to Sec. 3E1.1.

i. Increase in Offense Level

Just as it did in calculating Phyllis Ferrara's sentence, the district court enhanced Robert Ferrara's offense level by augmenting the value of the loss inflicted upon Luchsinger with the amount he allegedly defrauded from other customers of MNV while operating his vending machine business. For the same reasons discussed above, see supra at 10-11, the district court did not err in doing so.

Robert Ferrara next contends that the district court erred by increasing his offense level with the loss incurred by Luchsinger and others because there was no evidence that he personally received any of their money. We find this argument meritless. The definition of loss pursuant to Sec. 2F1.1 contains no requirement that the one responsible for fraudulent conduct personally benefit from that fraud. Loss is merely the value of the property "taken, damaged or destroyed," Application Note # 2, U.S.S.G. Sec. 2B1.1, and contains no requirement that Robert Ferrara actually benefit from his misdeeds.

ii. Acceptance of Responsibility

Following his indictment, Robert Ferrara contacted the prosecution and offered to make restitution to Luchsinger. Robert Ferrara contends that the district court erred in failing to consider this proffer as an acceptance of responsibility pursuant to Sec. 3E1.1(a) which would entitle him to a downward adjustment in his offense level.

We give great deference to a sentencing court's determination that a defendant has not accepted responsibility pursuant to Sec. 3E1.1 and review only for clear error. United States v. Gonzalez, 897 F.2d 1018, 1019 (9th Cir. 1990).

Robert Ferrara indicates no facts which show that the district court clearly erred in determining that his mere proffer of restitution did not "clearly demonstrate a recognition and affirmative acceptance of personal responsibility" as required by Sec. 3E1.1 Gonzalez, 897 F.2d at 1020 (no guarantee that a defendant who pleads guilty will receive the two point reduction). Indeed, Robert Ferrara strongly argues on appeal that he was not personally responsible for defrauding Luchsinger. Furthermore, not only did Robert Ferrara fail to make restitution, but his offer came only following his indictment--apparently only in an attempt to have the prosecution drop the indictment. Robert Ferrara's proffer of restitution thus does not fall within any of the Commission's suggested considerations for acceptance of responsibility.²  The district court did not clearly err in refusing to decrease Robert Ferrara's offense level for acceptance of responsibility.

Robert Ferrara's and Phyllis Ferrara's convictions are AFFIRMED.