United States v. Anthony Millan

• Court: Court of Appeals for the Ninth Circuit
• Decided: July 12, 2018
• Docket: 15-50445
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS JUL 12 2018 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA, No. 15-50445

Plaintiff-Appellee, D.C. No. 2:13-cr-00885-GW-2

v. MEMORANDUM* ANTHONY DAVID MILLAN,

Defendant-Appellant.

UNITED STATES OF AMERICA, No. 15-50446

Plaintiff-Appellee, D.C. No. 2:13-cr-00885-GW-1

v.

MACK MACHEN, AKA Machen, Dr., AKA Henry Machen Patrick,

Appeal from the United States District Court for the Central District of California George H. Wu, District Judge, Presiding

Argued and Submitted February 6, 2018 Pasadena, California

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Before: W. FLETCHER, BERZON,** and OWENS, Circuit Judges.

Defendants-Appellants Anthony Millan and Mack Machen appeal from jury

convictions for mail and wire fraud. They also challenge the district court’s

restitution orders. As the parties are familiar with the facts, we do not recount

them here. We have jurisdiction under 28 U.S.C. § 1291, and we reverse

appellants’ convictions.

1. For two reasons, the district court erred in permitting the government’s

fraud examiner to offer lay opinions under Fed. R. Evid. 701, rather than

subjecting the examiner and her methodology to expert-witness scrutiny under Fed.

R. Evid. 702. First, the examiner conceded that in interpreting and categorizing

Catch 22’s financial transactions, she relied on representations of fact made to her

by the government’s investigating agents. Each of these out-of-court

representations was hearsay. See Fed. R. Evid. 801(c). The examiner’s opinions

about the proper classification of C22’s expenditures were therefore not based

wholly on her “firsthand knowledge or observation,” United States v. Lopez, 762

F.3d 852, 864 (9th Cir. 2014), and thus failed to satisfy Rule 701(a). Second, the

examiner’s financial classifications were based on technical or specialized

knowledge acquired through her education and experience as a fraud examiner.

** Judge Berzon was drawn to replace Judge Reinhardt following his death. Ninth Circuit General Order 3.2h. Judge Berzon has read the briefs, reviewed the record, and listened to oral argument.

2 They therefore failed to satisfy Rule 701(c).

Moreover, because the examiner’s charts summarized her inadmissible lay

opinions, the district court erred in admitting those charts. See Fed. R. Evid. 1006;

see also United States v. Rizk, 660 F.3d 1125, 1130 (9th Cir. 2011).

2. These errors were not harmless. The fraud examiner’s testimony and

charts were essential to the government’s case at trial: No other witness offered

testimony in support of the government’s allegations that “virtually none of the

money provided by victims to invest in C22 was used to provide bridge loans or

for any of the other purposes represented to the victims”; that appellants “provided

their telemarketers with commissions of approximately 20 percent of all the

victims’ money they brought in”; and that appellants “used the remainder of the

victims’ money to fund their own lavish lifestyles.” We are not persuaded that the

jury would have convicted appellants absent the fraud examiner’s erroneously

admitted testimony and charts. See United States v. Cardenas-Mendoza, 579 F.3d

1024, 1033 (9th Cir. 2009); see also United States v. Christian, 749 F.3d 806, 813-

14 (9th Cir. 2014) (citing Estate of Barabin v. AstenJohnson, Inc., 740 F.3d 457,

460, 466-67 (9th Cir. 2014) (en banc)). Moreover, the evidence in the record is

insufficient to show that the testimony offered at trial would have been admitted as

expert evidence under Rule 702, given the serious and valid concerns that the

defendants raised about the fraud examiner’s methods. See United States v. Lloyd,

3 807 F.3d 1128, 1156 (9th Cir. 2015).

3. Because we reverse appellants’ convictions on other grounds, we need

not address their constructive-amendment and variance arguments or their

challenge to the district court’s restitution orders. See, e.g., Shafer v. Cty. of Santa

Barbara, 868 F.3d 1110, 1114 n.2 (9th Cir. 2017).

REVERSED AND REMANDED.

4 FILED United States v. Millan, Nos. 15-50445; United States v. Machen, 15-50446 JUL 12 2018 OWENS, Circuit Judge, dissenting: MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS

I respectfully dissent. In my view, any error in allowing the government’s

fraud examiner to testify under Fed. R. Evid. 701 and in admitting the examiner’s

charts was harmless. See United States v. Figueroa-Lopez, 125 F.3d 1241, 1246-

47 (9th Cir. 1997); United States v. Maher, 645 F.2d 780, 784 (9th Cir. 1981) (per

curiam) (“Since the testimony was admissible expert opinion, any alleged error

committed by the trial judge in admitting the evidence under the lay opinion rule

was harmless.”). I would also reject appellants’ constructive-amendment and

variance arguments, which rest on a strawman misreading of the indictment.

Finally, I would affirm the district court’s restitution orders as amply supported by

the jury’s verdicts. See United States v. Gamma Tech Indus., Inc., 265 F.3d 917,

927 n.10 (9th Cir. 2001).