United States v. Craig Shults

• Court: Court of Appeals for the Ninth Circuit
• Decided: April 6, 2018
• Docket: 14-50515
• Status: Unpublished

Opinion

FILED APR 06 2018 NOT FOR PUBLICATION MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA, Nos. 14-50515, 14-50536, 14-50545 & 15-50540 Plaintiff-Appellee, D.C. No. 8:12-cr-00090-AG-1 v. 8:12-cr-00090-AG-2 8:12-cr-00090-AG-3 CRAIG MARTIN SHULTS, 8:12-cr-00090-AG-6 JOSEPH HAYMORE, PAUL LICAUSI, MEMORANDUM* SYLVIA MELKONIAN, AKA Sylvia Ibarra,

Defendants-Appellants.

Appeals from the United States District Court for the Central District of California Andrew J. Guilford, District Judge, Presiding

Argued and Submitted December 4, 2017 Pasadena, California

Before: TASHIMA and BERZON, Circuit Judges, and KENNELLY,** District Judge.

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Matthew F. Kennelly, United States District Judge for the Northern District of Illinois, sitting by designation. Craig Shults, Joseph Haymore, Paul Licausi, and Sylvia Melkonian appeal

their convictions for wire fraud under 18 U.S.C. § 1343. Shults and Haymore also

appeal their sentences. The convictions involved a scheme to sell investors

distressed residential properties without disclosing known issues with the title and

physical quality of the homes.

The defendants raise six issues on appeal. First, all defendants claim the

trial court erroneously denied their motion to sever their joint trial. Second,

Haymore and Licausi argue the trial court wrongly admitted two exhibits. Third,

Haymore, Licausi, and Melkonian contend their convictions were supported by

insufficient evidence. Fourth, all defendants argue the prosecution engaged in

misconduct. Fifth, Shults challenges the role enhancement the trial court applied to

his sentence. Sixth, Haymore argues the district court erroneously calculated the

loss amount and restitution order when determining the sentence to impose.

First, the defendants waived review of the district court’s denial of their

motion to sever by failing to renew the motion at the close of evidence. A

severance motion must be renewed at the close of evidence or it is waived, unless

the movant “can show either that he diligently pursued severance or that renewing

the motion would have been an unnecessary formality.” United States v. Decoud,

2 456 F.3d 996, 1008 (9th Cir. 2006) (citation omitted). Neither exception applies.

When the trial court denied a pretrial motion to sever, it stated that its ruling was

accompanied by “a very, very, strong statement of that being without prejudice to

the presentation of additional facts along the way.” The defendants allege that, as

the trial progressed, additional facts supporting severance emerged—yet they did

not renew the motion when those facts were introduced. Thus the renewal of the

motion at the close of evidence would not have been an unnecessary formality.1

Second, we uphold the trial court’s admission of Exhibits 173 and 175-A.

“We review a district court’s finding that evidence is supported by a proper

foundation for an abuse of discretion.” United States v. Tank, 200 F.3d 627, 630

(9th Cir. 2000). Federal Rule of Evidence 901(a) requires that the proponent

“make only a prima facie showing of authenticity so that a reasonable juror could

find in favor of authenticity.” United States v. Chu Kong Yin, 935 F.2d 990, 996

(9th Cir. 1991) (internal quotation marks and citation omitted). At issue is the

admission of Exhibit 173, an e-mail from Haymore to Shults with an attached

PowerPoint, and Exhibit 175-A, an e-mail from Licausi to Shults with an attached

1 To the extent the defendants challenge the denial of the timely pretrial motion to sever, the district court did not abuse its discretion in refusing severance at the time it was requested without prejudice to the issue being renewed at trial. See United States v. Kaplan, 554 F.2d 958, 966 (9th Cir. 1977). 3 real estate agreement. The foundation for both exhibits was provided by Norman

Southerby, to whom Shults forwarded both e-mails, who authenticated each exhibit

through the “testimony of a witness with knowledge.” Fed. R. Evid. 901(b)(1).

The exhibits were also adequately authenticated by supporting circumstantial

evidence. See Fed. R. Evid. 901(b)(4). First, Justin Hannah testified that he

introduced Shults and Haymore around the time the e-mails were exchanged.

Next, Manuel Ramirez, an associate of Shults, testified that Shults was e-mailed a

PowerPoint presentation and that Shults discussed with Haymore and Licausi how

the PowerPoint presentation would be used. Finally, Cory Cooper, an employee at

Haymore’s company, testified that the PowerPoint attached to Shults’s e-mail to

Haymore included contents that were also included in other PowerPoints compiled

by Haymore’s company. Moreover, the e-mails bore the e-mail addresses used by

Haymore, Licausi, and Shults. See United States v. Fluker, 698 F.3d 988, 999 (7th

Cir. 2012) (use of the defendant’s e-mail address was circumstantial evidence that

the proffered e-mail from the defendant was authentic).

Once a party has introduced enough evidence to allow a reasonable juror to

find that an exhibit is what it is claimed to be—as the recipient of an e-mail may

do, based upon knowledge through receipt of the item—further arguments about

the reliability of the exhibit go to the weight the jury should give it, not its

4 admissibility. Given Southerby’s testimony and the supporting circumstantial

evidence, the trial court did not abuse its discretion by admitting the exhibits.

Finally, we have considered the defendants’ Confrontation Clause and Best

Evidence Rule arguments and conclude they lack merit.

Third, we affirm the convictions of Haymore, Licausi, and Melkonian, each

of whom contests the sufficiency of evidence underlying his or her conviction.

We review the evidence in the light most favorable to the prosecution and

determine whether a rational trier of fact could have found the elements of the

offense beyond a reasonable doubt. United States v. Nevils, 598 F.3d 1158, 1163-

64 (9th Cir. 2010) (en banc). The elements of wire fraud are (1) the existence of a

scheme to defraud, (2) the use of wire, radio, or television to further the scheme,

and (3) a specific intent to defraud. 18 U.S.C. § 1343; United States v. Sullivan,

522 F.3d 967, 974 (9th Cir. 2008).

The Government introduced sufficient evidence to convince a rational trier

of fact that Haymore and Licausi engaged in a scheme of fraudulent conduct with

specific intent to defraud. This included evidence that Haymore and Licausi

continued to provide real estate for Shults to sell after learning of title issues with

the properties. The Government also offered evidence showing that Haymore and

Licausi, at the onset of the scheme, shared with Shults a PowerPoint and contract

5 that contained promises, including prompt delivery of title, that were never

fulfilled for many buyers. Likewise, the Government presented sufficient evidence

to convince a rational trier of fact that Melkonian also had the requisite intent.

Melkonian was apprised of the significant title issues with the properties being

sold, but continued to aid Shults in the sales of the property long after these issues

arose. Finally, the Government also introduced sufficient evidence of the use of

the wires for Haymore, Licausi, and Melkonian. Each conviction was supported

by sufficient evidence.

Fourth, the prosecution did not engage in misconduct that warrants reversal.

We review the record de novo to determine if prosecutorial misconduct occurred,

and for plain error to determine whether reversal is warranted where, as here, the

defendants did not object contemporaneously to the misconduct. United States v.

Flores, 802 F.3d 1028, 1034 (9th Cir. 2015).

The defendants challenge certain statements as impermissible “vouching,”

which is misconduct. Vouching occurs when a prosecutor’s statement “improperly

introduce[s] . . . the prosecutor’s experience with similar cases . . . as a means of

commenting on the defense’s case.” United States v. Wright, 625 F.3d 583, 611

(9th Cir. 2010). The Court agrees that the prosecutor, when he twice analogized

the defendants’ cases to conduct in “every fraud case” he had worked on, engaged

6 in improper vouching. But because the statement was partially invited by the

defense’s argument, isolated, and of limited severity, the Court concludes that the

statements do not warrant reversal. United States v. Koon, 34 F.3d 1416, 1445-46

(9th Cir. 1994), rev’d on other grounds, 518 U.S. 81 (1996).

The prosecutor’s other statements challenged by the defendants do not

constitute misconduct. First, the prosecutor’s mention of his “next gang case,”

made while describing the consequences of the defense’s line of reasoning in a

hypothetical future case, was not misconduct, as the prosecutor did not reference

gangs in a way that would encourage the jury to convict the defendants for

“reasons wholly irrelevant to [their] own guilt or innocence.” Id. at 1443 (internal

quotation marks and citations omitted). Second, the prosecutor’s characterization

of the reasonable doubt standard was not misconduct, as it fairly characterized the

burden placed upon the jury. Third, the prosecution’s objection to the introduction

of certain evidence as hearsay was not misconduct. A prosecutor who objects to

the defense’s exhibit as hearsay, whose objection is ultimately denied, and against

whom the exhibit is used in closing has not committed misconduct. Finally, the

cumulative effect of the prosecution’s conduct does not warrant reversal. Unlike in

United States v. Wallace, 848 F.2d 1464, 1475-76 (9th Cir. 1988), in which the

7 defendant’s conviction relied on limited evidence, the defendants’ convictions in

the present case were premised on ample evidence establishing their guilt.

Fifth, we affirm the district court’s application of a four-level role

enhancement to Shults’s sentence. The Court reviews Shults’s first argument, that

the trial court misapplied the Sentencing Guidelines, for abuse of discretion.

United States v. Rodriguez-Castro, 641 F.3d 1189, 1192 (9th Cir. 2011). The trial

court did not abuse its discretion by failing to make specific factual findings when

determining the proper role enhancement. United States v. Ponce, 51 F.3d 820,

826 (9th Cir. 1995) (“The district court need not make specific findings of fact in

support of an upward role adjustment.”) (citation omitted).

We review Shults’s second argument, that the facts do not support his

“leader” enhancement, for clear error. Rodriguez-Castro, 641 F.3d at 1192. The

trial court did not clearly err. Not only did Shults facilitate and lead the seminars

at which the investors were deceived, he exercised authority over Melkonian

during the fraudulent scheme, which is sufficient to warrant the enhancement.

United States v. Barnes, 993 F.2d 680, 685 (9th Cir. 1993) (affirming leadership

enhancement applied to defendant who exercised authority over one other

individual).

8 Finally, we affirm the district court’s calculation of $1.4 million as the

amount of loss attributable to Haymore. We apply de novo review to Haymore’s

first argument, that the trial court wrongly found the amount of loss by a

preponderance of evidence, rather than clear and convincing evidence. United

States v. Berger, 587 F.3d 1038, 1042 (9th Cir. 2009). The trial court did not err

by using the preponderance standard to find the amount of loss. The

preponderance standard is appropriate to find the facts relating to the extent of a

conspiracy or a fraudulent scheme, such as wire fraud. Id. at 1048-49.

We review Haymore’s second argument, that the trial court miscalculated

the amount of loss, for clear error. United States v. Kimbrew, 406 F.3d 1149, 1151

(9th Cir. 2005). The trial court “need only make a reasonable estimate,” which is

“entitled to appropriate deference,” as “[t]he sentencing judge is in a unique

position to assess the evidence.” U.S.S.G. § 2B1.1 cmt. 3(C). The total losses

associated with the scheme were approximately $6 million: $4 million in 2009

and, after Haymore departed the scheme, $2 million in 2010. Haymore contends

that the trial court clearly erred by using losses incurred in 2009 and 2010 to

calculate his amount of loss. We disagree; the trial court did not use losses from

2010. The court based its estimate of loss for Haymore on its estimate for Shults.

During Shults’s sentencing, the Government repeatedly stated it was attempting to

9 prove that he was responsible for $4 million in losses—the amount of loss

attributable to the 2009 conduct. During Haymore’s sentencing, the trial court

interrupted his counsel twice to suggest it had based Shults’s sentence on $4

million of losses (the 2009 losses), not $6 million (the sum of 2009 and 2010

losses). The trial court ultimately discounted Haymore’s losses by $600,000 from

its finding for Shults. Thus the loss amount and restitution order were not clearly

erroneous.

AFFIRMED.