Unpublished Disposition, 936 F.2d 580 (9th Cir. 1991)

MEMORANDUM^* 

Daljit Gill appeals his conviction, following a jury trial, for mail and wire fraud, in violation of 18 U.S.C. § 1341. We affirm the conviction, but strike jury costs from the order to pay costs of prosecution.

Mail fraud has two elements: "(1) the formation of a scheme or artifice to defraud, and (2) use of the mails in furtherance of the scheme." United States v. Mitchell, 744 F.2d 701, 703 (9th Cir. 1984). Gill asserts that the government failed to provide sufficient evidence to prove the second element. We disagree.

A conviction is supported by sufficient evidence if, viewing the evidence in the light most favorable to the government, "any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt." Jackson v. Virginia, 443 U.S. 307, 319 (1979) (emphasis in original). Gill mailed four weekly reports all but one of which authorized the withdrawal of hundreds of thousands of dollars that were absent from his bank account. Understanding that there was often a three-week delay from the time of dishonored drafts to their discovery by ATC, a rational trier of fact could have concluded that Gill intended the mailings to give "the appearance of legitimacy" to the transactions for as long as ATC's monitoring system allowed, thereby enabling him to defraud the airlines of $1.2 million in ticket sales. United States v. Feldman, 853 F.2d 648, 655 (9th Cir. 1988), cert. denied, 489 U.S. 1030 (1989).

We reject Gill's argument that the scheme was completed with the sale of the tickets and that the mailings, instead of furthering the scheme, merely placed ATC on notice of it. Gill fails to refute the government's contention that GIT's failure to submit weekly sales reports and the accompanying documents would have triggered default proceedings much sooner than they actually occurred in this case. Gill's argument thus obscures the fact that he was able to make four weeks' worth of massive ticket sales only because he continued to submit the weekly sales reports.

Gill claims that the district court committed reversible errors by admitting testimonial and documentary evidence regarding previous fraudulent transactions engaged in by Gill and by admitting evidence regarding statements he made during a deposition taken in a related civil litigation.

A. Cross-Examination Regarding Previous Fraudulent Transactions

During cross-examination, Gill admitted to falsifying a residential loan application. Afterwards, Gill moved to strike the cross-examination on the ground that the government's purpose was to impeach Gill on a collateral matter. The district court denied the motion. The government also cross-examined Gill and obtained admissions about falsified financial statements he submitted in connection with a credit application for GIT and a loan application to purchase a mini-mart. Gill did not make specific, contemporaneous objections to these last two lines of questioning. Instead, at the close of the entire cross-examination, he made one general objection that the government's exercise had been "irrelevant, immaterial and incompetent" as well as "an attempt to impeach on collateral matters." The court overruled the objection.

"A ruling on the admissibility of evidence cannot be raised on appeal if no contemporaneous [and specific] objection was made at trial unless plain error is shown." United States v. Houser, 804 F.2d 565, 570 (9th Cir. 1986); United States v. Gomez-Norena, 908 F.2d 497, 500 (9th Cir.), 111 S. Ct. 363 (1990). Because Gill--by his own admission--failed to make specific, contemporaneous objections with regard to each proffer of evidence, the threshold issue is whether admission of Gill's testimony regarding the false statements constituted plain error. "Plain error is shown if the evidence was inadmissible and its admission affected the outcome and [defendant's] right to a fair trial." Houser, 804 F.2d at 570.

In light of the fact that Gill's fraudulent scheme was firmly established by the evidence of the mailed weekly sales reports, authorization forms and deficient GIT bank account, it is highly unlikely that Gill would have been acquitted had the evidence of the falsified statements been excluded. At any rate, Gill's testimony regarding the statements is admissible. "The trial court may permit a party to cross-examine a witness about specific instances of misconduct if they are probative of truthfulness or untruthfulness" and "evidence of a witness' participation in fraudulent transactions is probative of truthfulness." United States v. Jackson, 882 F.2d 1444, 1446 (9th Cir. 1989). Houser, therefore, bars review of Gill's claim.

B. Admission of Loan Application, Request for Verification of Employment, and Financial Statements

After cross-examining Gill about these documents, the government offered them into evidence. Gill made no objection, and the documents were admitted. Gill contends that their admission was plain error because the documents were highly prejudicial.

Gill's credibility could hardly have suffered more after his admissions during cross-examination of prior frauds. The documentary evidence was, as the government states, "merely cumulative" and hence harmless.

C. Cross-Examination about Prior Testimony Given During a Civil Deposition

In a deposition for a related civil litigation, Gill stated that he did not have money to satisfy any part of a judgment that might be entered against him in favor of Lufthansa German Airlines. At trial, he stated that he in fact had money from real estate proceeds at the time of the deposition. Confronted with the contradiction, he admitted that his deposition testimony had not been accurate.

Because Gill failed to object to the cross-examination about his prior inconsistent statement, we are precluded from reviewing Gill's claim absent plain error. There was no plain error here because the deposition statement is an admissible statement by a party-opponent under Fed.R.Evid. 801(d) (2).

The district court refused to give the instruction on the good faith defense proposed by Gill. Because Gill failed to object to the instructions actually given by the court, we review the refusal for plain error. There was no error.

The district court explained to the jury that the burden was on the government to prove "that the defendant acted with the intent to defraud" and that intent to defraud "means to act knowingly and with the specific intent to deceive." The court further defined "specific intent" as used in the mail and wire fraud statutes: "To establish specific intent the government must prove beyond a reasonable doubt that the defendant knowingly did an act that the law forbids." As Gill himself notes, specific intent turns on the actor's subjective state of mind, see Untied States v. Twine, 853 F.2d 676, 679 (9th Cir. 1988); and the court adequately conveyed that fact to the jury. Cf. United States v. Green, 745 F.2d 1205, 1209 (9th Cir. 1984) (upholding as adequate a specific intent instruction that read "that the government was required to prove beyond a reasonable doubt 'that the defendant acted with the specific intention to defraud, that is, to deceive or mislead Bechtel in its selection or use of coatings, rather than as a result of ignorance, mistake, or accident.' "), cert. denied, 474 U.S. 925 (1985). "A defendant is not entitled to a separate good faith instruction when the court adequately instructs on specific intent." United States v. Bonanno, 852 F.2d 434, 440 (9th Cir. 1988) (mail fraud, wire fraud, and conspiracy case), cert. denied, 488 U.S. 1016 (1989).

The district court ordered Gill to pay the defrauded airlines the following amounts in restitution: $443,928.66 to Pan Am; $128,409.60 to Saudi Arabian Airlines; $75,000 to Lufthansa; and $6,261.15 to Air Canada. Gill asserts that the district court's restitution order was improper for three reasons: the district court had no authority to order restitution, the existence of his prior civil settlements with the airlines precludes the order, and the amounts were excessive.

Gill argues that the court made the order pursuant to the Victim and Witness Protection Act, 18 U.S.C. §§ 3663, 3664 (VWPA), which he claims was not in effect at the time of his crime. In its judgment, the district court did not state whether the restitution order was entered pursuant to the VWPA or the Federal Probation Act, 18 U.S.C. § 3651. The government contends that, under United States v. Barany, 884 F.2d 1255, 1259 (9th Cir. 1989), cert. denied, 110 S. Ct. 755 (1990), this ambiguity forces this court to examine the legality of the restitution order under both statutes. The record indicates, however, that the district court's order was pursuant to the VWPA. At the sentencing hearings, the district court heard arguments from the government that the VWPA authorized restitution even where the parties had already settled in related civil proceedings. In addition, in a separate order fixing restitution for two of the airlines, the district court cited the VWPA as the governing statute.

Ordering restitution pursuant to the VWPA was a mistake. Gill was convicted of offenses committed prior to January 1, 1983, the effective date of that statute. The mail fraud counts were based on the four mailings made in November and December of 1982, and ATC had rescinded the agreement with GIT on December 7, 1982. The restitution order will not be vacated, however, because the Probation Act gave the district court jurisdiction to issue the order.

The Probation Act was in effect at the time of Gill's crime. Further, the Act "authorized the imposition of restitution as a condition of probation," Barany, 884 F.2d at 1259. See 18 U.S.C. 3651. This is essentially what the district court did when sentencing the defendant for the three wire fraud convictions. In imposing the sentence, the judge stated: "You will be placed on five years probation to follow upon your release from custody, with the special condition that you make restitution . . ." Section 3651 gave the judge authority to make such an order.

Prior civil litigation between GIT and the defrauded airlines led to settlements in which GIT was required to pay the following sums: $350,000.00 to Pan Am; $143,800.00 to Saudi Arabian Airlines; and $125,000.00 to Lufthansa. All three settlements released Gill of personal liability.

Gill argues that the contractual releases preclude the airlines' recovery of restitution under either the Probation Act or the VWPA. That argument was rejected by this court in United States v. Cloud, 872 F.2d 846, 853-54 (9th Cir.), cert. denied, 110 S. Ct. 561 (1989) with regard to restitution under the VWPA. The court reasoned that releases under prior settlement agreements are irrelevant to VWPA restitution, because a party has no enforceable right to receive it. Id. at 854. Criminal restitution "is not ordered because victims have an independent legal entitlement to it but, rather, as a means of achieving penal objectives such as deterrence, rehabilitation, or retribution." Id. Because the rationale addresses criminal restitution generally, it is equally strong with regard to restitution under the Probation Act.

Gill argues, in the alternative, that restitution under either the Probation Act or the VWPA is objectionable because it amounts to double recovery for the airlines. Gill's contention is groundless because GIT has yet to fulfill the settlement agreements.

Under the Probation Act, the defendant " [m]ay be required to make restitution or reparation to aggrieved parties for actual damages or loss caused by the offense for which convition was had." 18 U.S.C. § 3651. "The amount of the loss must be established by proof at trial, some other judicial determination, or some consensual means." United States v. Signori, 844 F.2d 635, 640 (9th Cir. 1988) (emphasis added).

Representatives from Pan Am and Lufthansa testified at trial regarding their actual losses and submitted documentary evidence in support of their testimony. These witnesses were subject to cross-examination by Gill. The district court based the amount of restitution with respect to these airlines upon this evidence. The amount imposed was not excessive. the issue of restitution with regard to the other airlines was fully addressed at subsequent hearings. Again, the amounts awarded were not excessive.

The fact that different processes were used for different airlines in no way calls into question the validity of the district court's findings. Both methods were acceptable.

"Whenever any conviction for any offense not capital is obtained in a district court, the court may order that the defendant pay the costs of prosecution." 28 U.S.C. § 1918(b) (1988). The trial court thus had discretion to order Gill to pay the costs of prosecution. Nevertheless, Gill objects to the "assessment of any costs in this case" because of what he considers "the trial court's failure seriously to consider whether the instant case was one in which court costs should be ordered." Apparently, the district court ordered costs without allowing Gill's trial counsel to finish his objection to it. Having presided over this lengthy and complex trial, the district court "was in a better position than we are to determine whether costs should fairly be charged against [Gill]." United States v. Patel, 762 F.2d 784, 796 (9th Cir. 1985). Interrupting counsel did not amount to an abuse of discretion.

The government concedes that the trial court abused its discretion by including jury costs in the order. We strike the jury costs from the order.

A convicted defendant was denied effective assistance of counsel in derogation of the sixth amendment if his counsel's performance was so deficient that it prejudiced his defense. Strickland v. Washington, 466 U.S. 668, 687 (1984). The defendant must show "that there is a reasonable probability that, but for counsel's unprofessional errors, the result of the proceeding would have been different." Id. at 694.

This court usually declines to hear claims of ineffective assistance of counsel on direct appeal. United States v. Pope, 841 F.2d 954, 958 (9th Cir. 1988). We hold, however, that Gill has failed to rebut the presumption of his counsel's competence "by proving that his attorney's representation was unreasonable under prevailing professional norms and that the challenged action was not sound strategy." Kimmelman v. Morrison, 477 U.S. 365, 384 (1986).

Gill contends that his trial attorney committed several egregious and prejudicial errors. The first allegations of error seem specious. With regard to the failure to interview witnesses, Gill makes no attempt to demonstrate how that failure prejudiced his defense. Likewise, Gill criticizes counsel's failure to object to the government's use of extrinsic evidence to impeach him as well as counsel's failure to submit adequate jury instructions, but he makes no attempt to prove that the use of extrinsic evidence was improper or to explain precisely how adequate instructions would have differed from those actually given to the jury. He finds fault with counsel's failure to elicit testimony from him about refunds he paid to passengers whose tickets were not honored by the airlines, but he fails to explain how that action harmed his defense.

The remaining allegations are equally baseless. Gill claims that counsel failed to file a motion to suppress records allegedly seized in violation of the fourth amendment from GIT's office by an ATC agent. This failure does not constitute reversible error, however, because there is no evidence of a fourth amendment violation here. The record does not show that the ATC agent "acted as a government agent in an illegal search and seizure," United States v. Snowadzki, 723 F.2d 1427, 1429 (9th Cir.), cert. denied, 469 U.S. 839 (1984).

Gill takes issue with counsel's failure to introduce three letters that allegedly would have supported his defense by corroborating his testimony that the default was intended to force Pan Am to pay substantial commissions to which he, in good faith, claimed an entitlement. Gill claims that the letters, written by him and sent to an officer at Pan Am, demanded the commissions. Assuming arguendo that Gill's theory of defense is valid, this allegation of ineffective assistance of counsel should also fail because counsel's strategic decision not to introduce the letter did not likely appear unreasonable to him "at the time of the alleged error and in light of all the circumstances." Kimmelman, 477 U.S. at 384. The letters contradict Gill's claim as to the amount of money Pan Am owed him, quoting figures that are considerably smaller (by sixty to seventy thousand dollars) than those claimed by Gill on direct examination. Counsel would have risked impeaching Gill by introducing those letters.¹ 

Finally, Gill asserts that the inadequacy of counsel is demonstrated by his consistent failure to make proper objections at trial in order to preserve most of his claims on appeal. We hold that the performance of Gill's trial counsel did not prejudice Gill's defense. As explained above, none of the critical evidence of fraud was admitted in plain error and the jury was properly instructed.

AFFIRMED IN PART; VACATED IN PART.

ORDER

The memorandum filed June 19, 1991 is amended as follows:

Delete paragraph one page 8, add:

The Probation Act was in effect at the time of Gill's crime. Further, the Act authorizes "the imposition of restitution as a condition of probation," Barany, 884 F.2d at 1259. See 18 U.S.C. 3651. This is essentially what the district court did when sentencing the defendant for the three wire fraud convictions. In imposing the sentence, the judge stated: "you will be placed on five years probation to follow upon your release from custody, with the special condition that you make restitution . . ." Section 3651 gave the judge authority to make such an order.

Delete second and third paragraph page 9, add

Under the Probation Act, the defendant " [m]ay be required to make restitution or reparation to aggrieved parties for actual damages or loss caused by the offense for which convition was had." 18 U.S.C. § 3651. "The amount of the loss must be established by proof at trial, some other judicial determination, or some consensual means." United States v. Signori, 844 F.2d 635, 640 (9th Cir. 1988) (emphasis added).

Representatives from Pan Am and Lufthansa testified at trial regarding their actual losses and submitted documentary evidence in support of their testimony. These witnesses were subject to cross-examination by Gill. The district court based the amount of restitution with respect to these airlines upon this evidence. The issue of restitution with regard to the other airlines was fully addressed at subsequent hearings. Again, the amounts awarded were not excessive.

The fact that different processes were used for different airlines in no way calls into question the validity of the district court's findings. Both methods were acceptable.

With the memorandum thus amended, the panel has voted unanimously to deny the petition for rehearing. Judges Wallace and Fletcher have voted to reject the suggestion for rehearing en banc, and Judge Goodwin so recommends.

The full court has been advised of the suggestion for rehearing en banc and no active judge has requiested a vote on whether to rehear the matter en banc. Fed. R. App. P. 35(b).

The petition for rehearing is DENIED and the suggestion for rehearing en banc is REJECTED.