United States v. Phillips, No. 11-30195 (9th Cir. 2012)
Annotate this CaseDefendant, the former CEO of MOD, appealed from his conviction on four counts of wire fraud, one count of mail fraud, and two counts of money laundering. The court held that defendant's mail fraud conviction must be reversed where the success of defendant's fraudulent scheme did not depend in any way on the use of the mails; convictions on Counts 6 and 7, money laundering, were affirmed where the convictions did not raise a Santos merger problem, and thus proceeds should be defined as "gross receipts" for the purposes of defendant's crime; defendant's claim that there was error in the jury instructions failed because proceeds did not mean profits in this case; the prosecutor's comments during closing were proper; and defendant failed to show that the district court committed plain error in imposing a standard condition of supervised release. As for the Government's cross-appeal regarding forfeiture, the court remanded to determine the amount that defendant derived from the wire frauds charged in Counts 1, 2, and 3, and to enter a forfeiture judgment against defendant in that amount.
Court Description: Criminal Law. The panel reversed a mail fraud conviction and the district court’s decision to deny the government’s forfeiture application, but affirmed the district court in all other respects in a case arising from the defendant’s fraudulent scheme to obtain, for personal use, funds from a high-tech startup company of which he was CEO. The panel reversed the mail fraud conviction because the success of the fraudulent scheme did not depend in any way on the use of the mails. The panel affirmed the defendant’s money laundering convictions because they do not raise a Santos merger problem, and “proceeds” should thus be defined as “gross receipts” rather than “profits” in the context of this case. The panel held that the prosecutor’s references during closing argument to the defendant’s lies during the course of the fraudulent scheme and on the stand did not constitute misconduct. Reviewing for plain error, the panel rejected the defendant’s vagueness/overbreadth challenge to a supervised release condition prohibiting the defendant from “frequent[ing] places where controlled substances are illegally sold, used, distributed, or administered.” The panel held that a reasonable person would understand that the condition prohibits the defendants from knowingly going to a specific place where drugs are illegally used or sold, but that it does not prohibit him from living in Seattle or going to a given neighborhood simply because a person is selling drugs somewhere within that neighborhood. On the government’s cross-appeal, the panel held that the district court erred by refusing to enter an in personam forfeiture judgment. The panel wrote that the rule in Libretti v. United States, 516 U.S. 29 (1995) – that there is no constitutional right to a jury verdict on forfeitability” in a criminal forfeiture proceeding – has not been abrogated by subsequent Supreme Court decisions; and that there is no statutory requirement for a jury determination where the government seeks only a money forfeiture.
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