UNITED STATES of America, Plaintiff-Appellee, v. James E. KESSI, Defendant-Appellant

868 F.2d 1097, 1989 U.S. App. LEXIS 2305, 1989 WL 16322
CourtCourt of Appeals for the Ninth Circuit
DecidedMarch 1, 1989
Docket87-3148
StatusPublished
Cited by246 cases

This text of 868 F.2d 1097 (UNITED STATES of America, Plaintiff-Appellee, v. James E. KESSI, Defendant-Appellant) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
UNITED STATES of America, Plaintiff-Appellee, v. James E. KESSI, Defendant-Appellant, 868 F.2d 1097, 1989 U.S. App. LEXIS 2305, 1989 WL 16322 (9th Cir. 1989).

Opinion

WALLACE, Circuit Judge:

Kessi appeals his conviction for participating in a securities fraud scheme. Kessi, a commodities broker, executed trades' in several commodities accounts in which the investment decisions were made by Henry March, who at the time was a fugitive from justice. March and his associate, Douglas Fisher, induced investors to enter profit-sharing agreements which were guaranteed to yield returns. March then diverted part of the investors’ money for his personal use and passed the rest to Kessi for trading. For his role in this scheme, a jury convicted Kessi of aiding and abetting mail fraud (18 U.S.C. §§ 2, 1341), aiding and abetting securities fraud (15 U.S.C. §§ 77q(a), 77x; 18 U.S.C. § 2), and being an accessory after the fact (18 U.S.C. § 3). Kessi appeals his conviction, challenging the jury instructions, the sufficiency of evidence, the conduct of the prosecutor, and the admission of certain testimony by a psychiatric expert. We have jurisdiction under 28 U.S.C. § 1291. We affirm.

I

Kessi’s association with March began in July 1981, when March became a commodities client of Kessi’s at the brokerage firm of Smith Barney in the Seattle, Washington area. In February 1982, between $60,000 and $80,000 in checks issued by March to Smith Barney were rejected for payment due to lack of funds. As a result, in March 1982, Kessi left Smith Barney to work at Prudential Bache (Bache), taking March’s commodities accounts with him. Through a security check, Bache discovered that March had felony convictions for securities fraud and mail fraud for which he had served a seven-year prison sentence. In July 1982, Bache informed Kessi that it would not continue to conduct business with March due to his criminal history.

*1101 Kessi resigned and established his own business, Alpha Com, which traded through Rosenthal, a brokerage firm in Chicago. Kessi falsely told Rosenthal that he knew of no problems with March and that March had passed a credit check at Bache. Kessi opened several accounts for March at Ro-senthal. In September 1982, when March wrote checks on these accounts to cover margin calls, all checks, approximating $150,000, failed to clear the bank. Kessi was forced to obtain a bank loan for $62,-000 to cover March’s margin calls. Kessi later told his business partner that March left him with $93,000 in debt from these accounts. During this time, Kessi learned that investors’ funds approximating $50,-000 had not been turned over by March for trading. Kessi also received from March account papers for investors but not money that should have accompanied the papers.

In November 1982, March was indicted for mail fraud and a warrant was issued for his arrest. March fled to the Seattle area, becoming a fugitive for the next two years. As a result of considerable publicity in the Seattle area, Kessi knew of the indictment against March and of his fugitive status.

In 1983, March contacted Kessi to request his assistance in trading commodities. Kessi agreed to establish accounts for him and to refer to him by the alias George Wells. During the next two years, Kessi had approximately 200 contacts with March by telephone and met with him personally in Issaquah, Washington, to discuss the scheme. Kessi established accounts at Rosenthal in the name of Fisher, March’s business associate and son-in-law. At no time did Kessi notify Rosenthal that March was the true manager of the accounts, although he was required to give this information in writing. March gave Kessi’s name to investors and encouraged them to call him if they had any questions about their investments, thereby lending credibility to the scheme. When investors called, Kessi denied any knowledge of impropriety with respect to their investments.

March and Fisher persuaded investors to execute profit-sharing agreements, whereby any profits from March’s trading would be split fifty-fifty. None of the investors were aware of March’s fugitive status, pri- or felony convictions, or questionable financial history. As with the 1982 investors, March diverted for his personal use part of the investors’ money and gave the rest to Kessi for trading. Kessi was aware that investors’ money had been collected but not turned over to him. Throughout this period, Kessi repeatedly denied to federal investigators and various individuals that he had had any contact with or knowledge of March.

Much of Kessi’s defense at trial was aimed at establishing that he suffered from post-traumatic stress disorder (PTSD) as a result of his combat service in Vietnam. Kessi contended that PTSD prevented him from forming the requisite intent to commit the crimes for which he was charged.

II

Kessi was charged with aiding and abetting March and Fisher in a scheme to defraud investors in the “offer and sale of securities.” The court instructed the jury that the profit-sharing agreements March and Fisher executed with investors constituted “securities” for purposes of this charge. Kessi complains that this instruction was improper. He argues that the existence of securities is an element of the crime and thus a question of fact for the jury. By instructing the jury that the profit-sharing agreements were securities, he contends, the court invaded the province of the jury and thereby committed reversible error.

We review the district court’s jury instructions for abuse of discretion. United States v. Burgess, 791 F.2d 676, 680 (9th Cir.1986) (Burgess). We examine “ ‘whether or not the instructions taken as a whole were misleading or represented a statement inadequate to guide the jury’s deliberations.’ ” United States v. Shortt Accountancy Corp., 785 F.2d 1448, 1454 (9th Cir.) (Shortt Accountancy), cert. denied, 478 U.S. 1007, 106 S.Ct. 3301, 92 L.Ed.2d 715 (1986), quoting Stoker v. United States, 587 F.2d 438, 440 (9th Cir.1978) *1102 (per curiam). To preserve the right to appellate review of this kind, Kessi must have objected properly in the district court. Federal Rule of Criminal Procedure 30 prohibits a party from assigning error “unless that party objects thereto before the jury retires to consider the verdict, stating distinctly the matter to which that party objects and the grounds of the objection.” (Emphasis added.) The standard for a proper objection under Fed.R.Crim.P. 30 and its civil counterpart, Fed.R.Civ.P. 51, is the same. See United States v. Espinosa, 827 F.2d 604, 613 (9th Cir.1987)

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868 F.2d 1097, 1989 U.S. App. LEXIS 2305, 1989 WL 16322, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-of-america-plaintiff-appellee-v-james-e-kessi-ca9-1989.