United States v. Delano Lopez
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United States v. Delano Lopez, (1st Cir. 1995).
Opinion
USCA1 Opinion
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________
No. 94-2277
UNITED STATES OF AMERICA,
Appellee,
v.
FRANKLIN DELANO LOPEZ,
Defendant, Appellant.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Jose Antonio Fuste, U.S. District Judge] ___________________
____________________
Before
Selya and Boudin, Circuit Judges, ______________
and Lisi,* District Judge. ______________
____________________
Nathan Z. Dershowitz with whom Amy Adelson, Alan M. Dershowitz _____________________ ____________ ___________________
and Dershowitz & Eiger, P.C. were on briefs for defendant. __________________ ____
William C. Brown, Appellate Section, Criminal Division, ___________________
Department of Justice, with whom Guillermo Gil, United States ______________
Attorney, was on brief for the United States.
____________________
December 14, 1995
____________________
____________________
*Of the District of Rhode Island, sitting by designation.
BOUDIN, Circuit Judge. Franklin Delano Lopez was ______________
convicted on seven counts charging him with white collar
criminal offenses under federal law. In this appeal, able
counsel on both sides have briefed a host of issues, several
of which pose difficult and important questions. We conclude
by affirming on two counts and vacating on five others. The
case is remanded for resentencing on the two affirmed counts
and for retrial on the five vacated counts, if sought by the
government.
I. BACKGROUND
Lopez was tried under a superseding indictment returned
on February 18, 1994. Counts 1 through 5 charged him with
making false representations to federally insured banks, 18
U.S.C. 1014, to influence loans to Lopez and his
businesses, Four Winds Rental, Inc., and Multi-Media
Television, Inc. Counts 6 and 7 charged Lopez with wire
fraud, 18 U.S.C. 1343, based on Lopez' withdrawal of over
$300,000 from the reserve accounts of certain limited
partnerships managed by Lopez through Four Winds Rental, Inc.
The jury trial began on June 6, 1994.
The government's evidence on the first five counts aimed
to show that Lopez made false statements or submitted false
documents to obtain loans, or extensions of loans, on five
occasions. Three involved substantial sums borrowed from
First Federal Savings Bank; another, a loan extension from
-2- -2-
Chase Manhattan; and the last, a loan from Banco Central. In
each instance the alleged misinformation concerned the value
or existence of collateral to secure the loan, and the facts
differed in each instance. No description of the events is
necessary to our disposition of these false statement counts.
The two wire fraud charges, reflected in counts 6 and 7,
related to a different matter, namely, Lopez' withdrawal of
over $300,000 from reserve accounts of certain limited
partnerships that owned multi-unit, federally subsidized
housing projects in Puerto Rico. Four Winds managed and had
a very small ownership interest in each partnership, the
balance being held by other limited partners represented by
Capital Management Strategies, Inc., a Rockville, Maryland,
real estate syndicator. The properties were financed by the
Farmers' Home Administration, which restricted the use of the
funds in the accounts to specific purposes, primarily repairs
and improvements.
The gist of the government's charge was that in 1988
Lopez had withdrawn the sums in question from these accounts
without the required permission and had created false
invoices on the letterhead of a construction company to
account for the withdrawals. The government offered evidence
that Lopez had created the invoices in amounts matching the
withdrawals, that no such construction work had ever been
performed, and that the invoices were nevertheless supplied
-3- -3-
to auditors to explain the withdrawals. The wire element
related to two faxes, allegedly sent by Lopez to Capital
Management Strategies in late 1990 and early 1991, responding
to its inquiry as to the purpose of the withdrawals and the
existence of the required approvals by Farmers' Home
Administration.
About two weeks into the trial, on the evening of June
22, 1994, Lopez was rushed to a hospital emergency room with
serious symptoms. Within a day, the trial judge took
testimony from the emergency room internist and, shortly
thereafter, heard from a court-appointed cardiologist. Later
tests revealed that Lopez was suffering a small brain lesion
or tumor which was serious but, if properly treated, was not
likely to be life threatening. The doctors agreed that the
tumor had to be removed but not on an emergency basis, and
surgery was scheduled for August.
These events caused a recess of the trial from June 22
until July 6, at which time a hearing was held to consider
motions by Lopez' counsel for a mistrial based on the lack of
competency or for a continuance for purposes of treatment.
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USCA1 Opinion
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________
No. 94-2277
UNITED STATES OF AMERICA,
Appellee,
v.
FRANKLIN DELANO LOPEZ,
Defendant, Appellant.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Jose Antonio Fuste, U.S. District Judge] ___________________
____________________
Before
Selya and Boudin, Circuit Judges, ______________
and Lisi,* District Judge. ______________
____________________
Nathan Z. Dershowitz with whom Amy Adelson, Alan M. Dershowitz _____________________ ____________ ___________________
and Dershowitz & Eiger, P.C. were on briefs for defendant. __________________ ____
William C. Brown, Appellate Section, Criminal Division, ___________________
Department of Justice, with whom Guillermo Gil, United States ______________
Attorney, was on brief for the United States.
____________________
December 14, 1995
____________________
____________________
*Of the District of Rhode Island, sitting by designation.
BOUDIN, Circuit Judge. Franklin Delano Lopez was ______________
convicted on seven counts charging him with white collar
criminal offenses under federal law. In this appeal, able
counsel on both sides have briefed a host of issues, several
of which pose difficult and important questions. We conclude
by affirming on two counts and vacating on five others. The
case is remanded for resentencing on the two affirmed counts
and for retrial on the five vacated counts, if sought by the
government.
I. BACKGROUND
Lopez was tried under a superseding indictment returned
on February 18, 1994. Counts 1 through 5 charged him with
making false representations to federally insured banks, 18
U.S.C. 1014, to influence loans to Lopez and his
businesses, Four Winds Rental, Inc., and Multi-Media
Television, Inc. Counts 6 and 7 charged Lopez with wire
fraud, 18 U.S.C. 1343, based on Lopez' withdrawal of over
$300,000 from the reserve accounts of certain limited
partnerships managed by Lopez through Four Winds Rental, Inc.
The jury trial began on June 6, 1994.
The government's evidence on the first five counts aimed
to show that Lopez made false statements or submitted false
documents to obtain loans, or extensions of loans, on five
occasions. Three involved substantial sums borrowed from
First Federal Savings Bank; another, a loan extension from
-2- -2-
Chase Manhattan; and the last, a loan from Banco Central. In
each instance the alleged misinformation concerned the value
or existence of collateral to secure the loan, and the facts
differed in each instance. No description of the events is
necessary to our disposition of these false statement counts.
The two wire fraud charges, reflected in counts 6 and 7,
related to a different matter, namely, Lopez' withdrawal of
over $300,000 from reserve accounts of certain limited
partnerships that owned multi-unit, federally subsidized
housing projects in Puerto Rico. Four Winds managed and had
a very small ownership interest in each partnership, the
balance being held by other limited partners represented by
Capital Management Strategies, Inc., a Rockville, Maryland,
real estate syndicator. The properties were financed by the
Farmers' Home Administration, which restricted the use of the
funds in the accounts to specific purposes, primarily repairs
and improvements.
The gist of the government's charge was that in 1988
Lopez had withdrawn the sums in question from these accounts
without the required permission and had created false
invoices on the letterhead of a construction company to
account for the withdrawals. The government offered evidence
that Lopez had created the invoices in amounts matching the
withdrawals, that no such construction work had ever been
performed, and that the invoices were nevertheless supplied
-3- -3-
to auditors to explain the withdrawals. The wire element
related to two faxes, allegedly sent by Lopez to Capital
Management Strategies in late 1990 and early 1991, responding
to its inquiry as to the purpose of the withdrawals and the
existence of the required approvals by Farmers' Home
Administration.
About two weeks into the trial, on the evening of June
22, 1994, Lopez was rushed to a hospital emergency room with
serious symptoms. Within a day, the trial judge took
testimony from the emergency room internist and, shortly
thereafter, heard from a court-appointed cardiologist. Later
tests revealed that Lopez was suffering a small brain lesion
or tumor which was serious but, if properly treated, was not
likely to be life threatening. The doctors agreed that the
tumor had to be removed but not on an emergency basis, and
surgery was scheduled for August.
These events caused a recess of the trial from June 22
until July 6, at which time a hearing was held to consider
motions by Lopez' counsel for a mistrial based on the lack of
competency or for a continuance for purposes of treatment.
The thrust of Lopez' objections was that medications
prescribed for him caused side effects that interfered with
his ability to proceed. Relying partly on the advice of the
court-designated neurologist, Dr. Charles Payne, the court
-4- -4-
denied the motions, and Dr. Payne was ultimately placed in
charge of prescribing medications.
The same objections were thereafter renewed several
times but denied. There were further examinations by Dr.
Payne and testimony by him that Lopez was alert, could
understand the charges and assist his lawyers, and was not
being compromised by the prescribed medications. From July
11 through July 13, Lopez testified in his own defense. On
July 18, the jury convicted Lopez on all seven counts.
Thereafter, the district court rejected a post-trial motion
directed to competency. It had earlier refused to order an
investigation into alleged prosecutorial misconduct in the
initiating of the prosection.
Following the trial, Lopez remained on bail and
underwent surgery for the removal of the tumor. On November
17, 1994, Lopez was sentenced to a prison term of 63 months,
based primarily on loss calculations that are challenged by
Lopez on appeal. Motions for continuation of bail pending
appeal were denied by the district court and by this court.
See 18 U.S.C. 3143(b)(1)(B). Lopez is currently serving ___
his sentence.
II. MEDICAL ISSUES
On this appeal, Lopez' first and most dramatic claim is
that he was forced to continue his trial while afflicted with
a life-threatening brain tumor and while requiring a whole
-5- -5-
battery of medications to cope with various symptoms. These
medications, Lopez suggests, interfered with his ability to
remember, concentrate and present himself credibly, and
undermined his trial testimony. He further asserts that the
trial judge effectively compelled him to accept such
medications and, without basis, charged him with malingering
or attempting to over-medicate in order to frustrate the
trial.
Although these are the core factual allegations, the
legal claim presented has an unusual twist. Lopez does not _____
claim that he was "incompetent" to stand trial under the
ordinary rubric, see Godinez v. Moran, 113 S. Ct. 2680, 2685 ___ _______ _____
(1993), or that his health would be so damaged by the trial
that it would be inhumane to continue. Instead, relying
primarily on Riggins v. Nevada, 504 U.S. 127 (1992), Lopez _______ ______
says that the trial court "instead of choosing a less
intrusive alternative--a halt in the proceedings so that
Lopez could have surgery--violated Lopez' constitutional
rights by imposing a `regime' of medication that so impaired
Lopez' abilities that he was unable to testify coherently on
his own behalf."
Riggins, which the government says was not relied upon _______
in the district court, contains language colorably pertinent
to this case, but involved a fundamentally different issue.
Riggins was tried for murder and, as eight Justices viewed
-6- -6-
the facts, the trial court required Riggins to continue
taking a powerful antipsychotic drug generically known as
thioridazine. Riggins' claim to the Supreme Court, after his
conviction and death sentence, was that he had been compelled
unconstitutionally to take this medication and that the drug
concealed his true mental state from the jury and impaired
his ability to present his insanity defense.
The Supreme Court held that Riggins had a substantial
interest under the Due Process Clause of the Fourteenth
Amendment in "avoiding involuntary administration of
antipsychotic drugs . . . ." Id. at 134. Although the Court ___
said that forced medication could sometimes be justified
(e.g., to protect the defendant's health or protect others ____
from danger), the trial judge in Riggins had made no such _______
findings. For this reason, and given the "strong
possibility" or "substantial probability" that Riggins'
defense had been impaired, id. at 137-38, the Court declined ___
to require a showing of actual prejudice and overturned the
conviction.
The concern in Riggins with forced medication is not _______
present in this case. Although Lopez points to the trial
court's threat to revoke bail and imprison him so that a
doctor could supervise his medication, the incident had
nothing to do with forcing on Lopez any medication that he
did not want. The trial court thought that some of the
-7- -7-
symptoms of which Lopez was complaining (e.g., grogginess) ____
had been induced by over-medication; at the outset a number
of doctors were prescribing different drugs, and testimony
showed that over-medication might be the cause of such
problems. The record shows that Lopez himself wanted proper
medicationandwascontent tohaveDr.Payneprescribe andsupervise.
This does not mean that Lopez is without a potential
claim. That claim, made below and adequately presented here
in the course of the Riggins argument, is that the _______
medications, necessary even if voluntarily taken, impaired
Lopez' ability to present his defense. Even assuming Lopez'
"competency," that being a fairly easy test to satisfy,
Godinez, 113 S. Ct. at 2685, the threat of impairment _______
permitted a request for a continuance. Here, Lopez argues,
the district court had a reasonable alternative that should
have been adopted, namely, to postpone the trial until the
operation had occurred and removed or diminished the need for
drugs.
A defendant, especially one proposing to testify at
trial about complex financial transactions, is entitled to be
concerned about his fitness. For good medical reasons, Lopez
was taking a number of medications, some capable of
producing side effects that could impair clarity of mind.
The drugs were designed to prevent seizures, control blood
pressure, relieve pain, induce sleep, reduce agitation and
-8- -8-
prevent depression; and they included Darvocet, ProSom,
Dilantin, Vasotec, Valium, Esgic Plus and Sinequan. At
various times Lopez reported that he had severe headaches,
was unable to sleep, and was suffering from memory lapses.
His lawyers protested that Lopez had problems communicating
with them.
Lopez' health obviously warranted an inquiry by the
trial judge. Far from ignoring the issue, the trial court
deferred trial for a substantial period, summoned medical
experts one after another, took an active role in securing
diagnoses for Lopez, had him re-examined repeatedly, and took
testimony and made findings in abundance, including a
detailed post-trial order summarizing the court's findings
and reasons for proceeding with trial. There is no need to
describe the procedural steps in detail because Lopez himself
does not seriously suggest that the investigation was flawed
or inadequate.
The substantive issue is more difficult. The testimony
of the various doctors confirms that a number of the drugs
Lopez took have the potential to cause side effects such as
grogginess that could interfere with defendant's ability to
present his case. Yet the main thrust of the doctors'
testimony, fairly read, was that the doctors thought that
proper prescription and careful monitoring would meet these
threats. Such a monitoring regime was in place when Lopez
-9- -9-
testified. The doctors who gave testimony raising the most
doubts did so at the outset (while several doctors were
prescribing drugs for Lopez, apparently without much
coordination).
Lopez' main trial counsel did protest at times that his
client was not able to cooperate fully; but these complaints
of Lopez' conduct during trial are balanced, if not
outweighed, by the district court's findings that Lopez
appeared to be well oriented and was cooperating with
counsel. In all events, a reputable expert unaffiliated with
the prosecution or defense--Dr. Payne--gave firm testimony
that Lopez was fit to testify. His testimony was based on
examinations of Lopez close in time and on the monitoring of
his medicine. Even on a cold record, Dr. Payne's testimony
carries conviction.
As for Lopez' own testimony, which he claims suffered
because of his medical condition, the evidence is
inconclusive. It is not the most organized and responsive
testimony we have ever read; but Lopez was confined by
evidentiary rulings that limited him in presenting
information that he and his counsel thought helpful but the
trial judge thought irrelevant (e.g., such as whether the ____
banks had sustained actual losses). Much of the disarray in
his testimony appears to be caused by such struggles between
Lopez and the court.
-10- -10-
We have no doubt that Lopez in addition was under great
stress. This is true for many criminal defendants, but
surely it was augmented here by the tumor. In a few
instances Lopez' initial medication caused some adverse side
effects while it was being adjusted. On the other hand, the
trial had already progressed for several weeks before Lopez'
emergency room visit, and much of the medication was directed
to medical symptoms--difficulty in sleeping, high blood
pressure, anxiety--that could easily have continued even if
the trial had been delayed and the tumor removed. The
medical advice itself largely supported the course followed
by the district court.
This is a classic instance in which the district court
had to exercise its informed judgment. In such cases, so
long as sound procedures are followed, the court's ultimate
judgment is reviewed under an abuse of discretion standard.
United States v. Zannino, 895 F.2d 1, 13 (1st Cir.), cert. ______________ _______ _____
denied, 494 U.S. 1082 (1990). Whether to proceed with the ______
trial or await the operation may well have been a hard
question. But on appeal, we think it easy to conclude that
the trial judge acted within his discretion in deciding, with
expert medical support and after careful investigation, to
proceed.
We reject the suggestion that the district court was
hostile to the defendant. Most judges are suspicious of a
-11- -11-
mid-trial request for a continuance or mistrial, and the
record confirms that Lopez' initial symptoms may have been
caused in part by over-medication, even if inadvertent or the
product of too many doctors. Paragons may exist among trial
judges who can maintain perfect discipline with perfect tact;
but for most, a certain sternness in manner and an abiding
skepticism about delay are a necessary part of the arsenal.
III. THE MERITS
Counts 1-5. The first five counts of the indictment __________
charged Lopez under a statute that punishes anyone who
"knowingly makes any false statement" to influence federally
insured financial institutions. 18 U.S.C. 1014. The
indictment charged, and the district court assumed, that
materiality was an element of the offense. But, as was
commonly done in most circuits at the time, the trial judge
resolved the materiality issue himself and did not submit it
to the jury. The defense objected to this procedure.
Following Lopez' conviction, the Supreme Court decided
United States v. Gaudin, 115 S. Ct. 2310 (1995). There, the _____________ ______
Court held that where materiality is an element of an
offense, it must under the Sixth Amendment be submitted to
the jury. The government's main response to Gaudin is that ______
materiality is not an element under section 1014.
Alternatively, the government says that any error was
-12- -12-
harmless because the evidence overwhelmingly proved
materiality and no rational jury could have found otherwise.
This court has already held that section 1014 requires
"that the false statement concern[] a material fact. United ______
States v. Concemi, 957 F.2d 942, 951 (1st Cir. 1992). This ______ _______
view is consistent with that of several other circuits. E.g. ____
United States v. Wells, 63 F.3d 745, 750 (8th Cir. 1995); _____________ _____
United States v. Staniforth, 971 F.2d 1355, 1358 (7th Cir. ______________ __________
1992). Although the statute does not contain an explicit
materiality requirement and the Second Circuit has held that
no such requirement is to be inferred, United States v. ______________
Cleary, 565 F.2d 43, 46 (2d Cir. 1977), cert. denied, 435 ______ _____ ______
U.S. 915 (1978), we are not disposed to regard the issue as
an open one in this circuit.
The government's alternative position is that any error
that occurred in failing to submit the issue to the jury was
harmless. Most errors, including constitutional ones, are
subject to harmless error analysis, Sullivan v. Louisiana, ________ _________
113 S. Ct. 2078, 2081 (1993), simply because it makes no
sense to retry a case if the result will assuredly be the
same. But for various reasons, some errors are deemed fatal
without proof of prejudice. No one, for example, would think
it was harmless error--no matter how conclusive the evidence
of guilt--if the defendant were tried by a jury of five year
olds or in a courtroom dominated by a lynch-mob.
-13- -13-
The Supreme Court has gone somewhat beyond such extreme
cases, holding (for example) that a defective reasonable
doubt instruction objected to at trial cannot be harmless
error. Id. at 2082-83. The precedents make clear that it ___
could not be harmless error for the trial judge to direct a
verdict on the case as a whole, United States v. Martin Linen _____________ ____________
Supply, Co., 430 U.S. 564, 572-73 (1977); and we think that ___________
the Court would apply the same analysis to a directed verdict
on a single element of the offense. Rose v. Clark, 478 U.S. ____ _____
570, 581 n. 8 (1986); Hoover v. Garfield Heights Municipal ______ ___________________________
Court, 802 F.2d 168, 177-78 (6th Cir. 1986), cert. denied, _____ _____ ______
480 U.S. 949 (1987).
We stress that it is of crucial importance to us that
Lopez made a timely objection at trial to the judge's refusal
to submit this issue to the jury. This court has already
indicated that where there is no timely objection, the "plain
error" doctrine (see United States v. Olano, 13 S. Ct. 1770, ___ _____________ _____
1777-78 (1993)), governs in deciding whether failure to
submit an element to the jury calls for reversal. United ______
States v. Romero, 32 F.3d 641, 652 (1st Cir. 1994). See also ______ ______ ________
Gaudin, 115 S. Ct. at 2322 (Rehnquist, C.J., concurring). ______
The mix of considerations is very different where the trial
judge has not been alerted by an objection. Indeed, the
element may be one that the defendant has chosen not to
contest.
-14- -14-
Even where a timely objection has been made, as in our
own case, one might ask why the failure to submit an element
to the jury should automatically be fatal, given that the
harmless error doctrine can be invoked (not always
successfully) in kindred cases, say, to remedy a
misinstruction as to an element, Pope v. Illinois, 481 U.S. ____ ________
497, 502 (1987), or a faulty presumption, Rose, 478 U.S. at ____
579-80. But labels like "fundamental," id. at 577, and ___
"structural," Sullivan, 113 S. Ct. at 2083, tend to be ________
surrogates for matters of degree and for multiple concerns.
In all events, our best guess is that the Supreme Court would
regard an omitted element reversible error per se if there ______
were a timely objection--although not automatically "plain
error" if no objection occurred--and this conclusion almost
disposes of the government's fallback position.
We say "almost" because the government could argue that
the jury, although instructed not to, actually did decide the
materiality issue when it found that Lopez did intend to
influence the bank loans by false statements. In theory, the
question of purpose (the defendant's specific intent) differs
from the question of materiality (whether an objective lender
would be likely to be influenced by the statement). Purpose
could exist without materiality, and vice versa. But in most
cases no independent proof exists of a defendant's specific
-15- -15-
intent; rather, the jury infers such purpose from the fact
that the statement would so influence an ordinary lender.
The government hints at this argument in its brief but
makes no effort to show that in this case the jury must have
so reasoned, a conclusion that might require a showing both
that the evidence of materiality was overwhelming and that
other evidence of purpose was thin or absent. If an adequate
showing were made, we would have to decide whether it would
satisfy the Supreme Court. There is some reason to think
that it might, see Sullivan, 113 S. Ct. at 2082, but it will ___ ________
be time enough to consider this question in a case where the
factual predicate is adequately developed.
Counts 6 and 7. Lopez' attacks on the wire fraud ________________
convictions remain to be considered. In his opening brief,
Lopez challenged the wire fraud convictions on three grounds:
that the evidence did not show a scheme to defraud; that the
use of the wires was not in furtherance of such a scheme;
that in any event there was no proof that Lopez was
responsible for any such use of the wires. We address the
points in the same order.
First, Lopez says that the evidence does not show that
there was a scheme to defraud. He argues that the government
did not show that the withdrawals from the reserve accounts
were diverted to his personal use or that they were directly
linked to the false invoices; and he says that the
-16- -16-
partnerships owed him money in excess of anything withdrawn
and that as a general partner he had authority to withdraw
funds. These arguments peel apart into distinct factual and
legal issues.
Starting with the facts, the government apparently did
not prove at trial where the withdrawn money went. But it
did show that Lopez' withdrawals matched false construction-
company invoices in the same amounts and that Lopez had
prepared the invoices, together with false checks on the
accounts purporting to pay the invoices. Absent other
evidence, the jury was entitled to infer that Lopez had
employed the false documents to disguise the withdrawals and
divert them to his own use. This is enough for a scheme to
defraud without proof as to where he concealed the proceeds
or how he spent the money. Cf. United States v. Yefsky, 994 ___ _____________ ______
F.2d 885, 892 (1st Cir. 1993).
As for the legal defenses, Lopez as manager apparently
could withdraw funds for proper purposes, but the jury
reasonably concluded that the purpose here was illicit. Nor
is it pertinent that the partnerships may have owed Lopez
money. The accounts in question here were restricted to
repairs and other narrow uses; and, more important, the
records Lopez created gave the impression that the money had
been used for repairs. The scheme, if successful, would have
-17- -17-
enriched Lopez without reducing the ventures' apparent _______
obligations to Lopez.
Second, Lopez says that the evidence did not show that
the wires--the basis for federal jurisdiction--were used in
furtherance of the scheme. The money, he notes, was
withdrawn in 1988; and the faxes, responding to inquiries
about the withdrawals, occurred in late 1990 and early 1991.
Lopez concludes that if any fraud occurred, it was completed
long before the faxes were ever sent. No other use of wires
was alleged.
The case law requires that the use of the wires must be
"incident to an essential part of the scheme," Pereira v. _______
United States 347 U.S. 1, 8 (1954), but the cases have ______________
stretched that concept to include use of the wires in
attempts "`to lull the victims into a sense of false
security, postpone their ultimate complaint to the
authorities, and therefore make the apprehension of the
defendants less likely.'" United States v. Lane, 474 U.S. ______________ ____
438, 451-52 (1986) (quoting an earlier decision). It is hard
to see why the jury could not find that the faxes in this
case do not fit that description.
Lopez says that the faxes do not explicitly refer to the
withdrawals and that they refer to events after 1988 and so
could not justify the withdrawals. But the faxes were sent
in response to inquiries that did refer to the withdrawals ___
-18- -18-
and it is not a complete answer to say that the faxes were
not directly responsive to the inquiries. Rather, the
responses could be read as attempts to talk around the issue,
to confuse matters, and ultimately to delay or avoid
detection. This permissible inference satisfies the Lane ____
criterion.
Third, Lopez says that the government failed to prove
that he sent the December 1990 fax (count 6) or that the
January 1991 document (count 7) was transmitted by wire. The
former was sent from the accounting firm used by Four Winds
Rental and an accountant testified that he faxed the letter
as a "courtesy for . . . Mr. Lopez" because "either he or
someone from his office was in--in our office that day." The
letter is not signed but the accompanying cover sheet,
prepared by the accounting firm, says that the letter is from
Lopez.
Quite apart from the cover sheet, the content of the
letter reveals that it is a response to the earlier letter of
inquiry to Lopez. The wording of the letter is substantially
the same as the subsequent letter of January 14, 1991, which
was signed by Lopez. It was a fair inference that Lopez had
also composed the earlier letter and either directed the
accountant to fax it or sent someone in his employ to do so.
All that is required is that Lopez caused the letter to be
faxed and the jury could find that he did.
-19- -19-
As for the January 1991 letter, Lopez does not deny
authorship but questions the proof that it had been faxed.
The letter was found in the files of Capital Management
Strategies together with a page bearing the phrases "Telefax
Communication" and "Fax Cover Sheet" as well as the Four
Winds logo; and the page describes Lopez as the sender and
bears the same date as the letter. This is adequate
circumstantial evidence that the document was faxed and
serves to distinguish United States v. Srulowitz, 785 F.2d ______________ _________
382 (2d Cir. 1986), where no circumstantial evidence showed
that a letter found in a file had been mailed to a third
party.
Lopez contends in his reply brief that the Gaudin ______
decision also requires reversal of his convictions for wire
fraud. The government charged that Lopez had used interstate
wires in furtherance of a scheme to obtain money by means of
false representations, thereby violating 18 U.S.C. 1343.
Lopez says that such false representations must be material
and that it was error not to so instruct the jury and require
it to find materiality. The government says that this issue
was not preserved, but Gaudin is a recent and not entirely ______
predictable decision.
On the merits, Lopez' argument confronts an initial
difficulty. In United States v. Faulhaber, 929 F.2d 16, 18 ______________ _________
(1st Cir. 1991), this court found no materiality requirement
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in the substantially identical federal mail fraud statute, 18
U.S.C. 1341, stating that the jury was not required to find
that the scheme would have defrauded a person of "ordinary
prudence and comprehension." Faulhaber's position is at odds _________
with some circuits and with both of the standard instruction
treatises. E.g., United States v. Dunn, 961 F.2d 648, 651 ____ _____________ ____
(7th Cir. 1992); 1A L. Sand, J. Siffert, W. Loughlin & S.
Reiss, Modern Federal Jury Instructions 44.01 (1995). But ________________________________
whether Faulhaber warrants re-examination is a subject for _________
another occasion.
In our case, the district court did instruct the jury ___
that a "scheme to defraud" required that the "plan [be one]
reasonably calculated to deceive persons of ordinary prudence
and comprehension by means of false or fraudulent pretenses,
representations, or promises." This language embodies the
materiality standard. The only deceptive conduct charged
under counts 6 and 7 involved false or fraudulent documents,
so it hardly matters that the "reasonably calculated" and
"ordinary prudence" language referred to the word "plan"
rather than the false statements. In short, assuming that
materiality is an element in wire fraud, the issue was
effectively submitted to the jury in this case.
IV. GOVERNMENT MISCONDUCT
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Before trial, Lopez filed a motion alleging government
misconduct and seeking to have the indictment dismissed, or
at least to obtain additional discovery and an evidentiary
hearing. He claimed that he was a victim of vindictive and
selective prosecution and that the indictment had been
tainted by a conflict of interest on the part of a former
Assistant United States Attorney who had played a minor role
in the investigation of Lopez and later served for a period
as Lopez' defense counsel prior to indictment. The district
court denied this motion. United States v. Lopez, 854 F. _____________ _____
Supp. 41 (D.P.R. 1994).
We start with the claim of improper prosecution. Lopez
told the district court that he had been prosecuted because
he refused to use his political influence in favor of the
reappointment of a former U.S. Attorney for Puerto Rico.
Further, he claimed that defendants in his position are
normally pursued civilly on false statement claims, so the
prosecution was selective as well as vindictive. His
evidence on the first point was thin; on the second, the
government offered the district court evidence that Lopez'
case did fall within its guidelines for criminal prosecutions
because of the amounts involved.
On appeal, Lopez has condensed his argument on the claim
of improper prosecution to a couple of sentences and a pair
of footnotes. The arguments are used primarily to add color
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to his other claim of government misconduct, relating to the _____
dual role of the lawyer who allegedly represented first the
government and then Lopez in the same matter. Arguments not
seriously developed on appeal are waived, Zannino, 895 F.2d _______
at 17, and in this instance we also think that a deliberate,
and reasonable, strategy choice was made.
Nevertheless, those charges of selective and vindictive
prosecution indirectly concern the integrity of the judicial
process. We have therefore reviewed with care the pertinent
filings in the district court, the district court's lengthy
discussion of the subject, what little Lopez has to say about
the matter on appeal, and the government's more extensive
rebuttal. Although the waiver relieves us of the need to set
out the facts in detail, we comment briefly on each branch of
Lopez' claim.
The district court did not ignore the serious charges of
blackmail made against certain members of the U.S. Attorney's
office, but analyzed the proffered evidence with care. This
evidence consisted primarily of hearsay and conjecture, and
the district court after scrutiny found it insufficient to
require an evidentiary hearing. Lopez, 854 F. Supp. at 45- _____
46. The district court's judgment call was not unreasonable
on its face, especially where as here the vindictive
prosecution claim falls outside the narrow area where such a
claim traditionally has been recognized, e.g. United States ____ _____________
-23- -23-
v. Garza-Juarez, 992 F.2d 896, 905 (9th Cir. 1992), cert. ____________ _____
denied, 114 S. Ct. 724 (1994), and where the prosecution ______
itself was conducted by a new U.S. Attorney not implicated by
Lopez' allegations.
As for selective prosecution, the district court asked
the government for information about its prosecution policy.
The government supplied the data and the court ruled that
Lopez had not made out a colorable claim of discriminatory
treatment. Id. at 44. Nor is it surprising to us that the ___
government would prosecute criminally a charge of multiple
false loan applications totalling a considerable sum.
The government-misconduct claim that Lopez does argue at
length on appeal concerns Luis Plaza Lopez. According to the
allegations, Plaza, while serving as an Assistant United
States Attorney, began the grand jury investigation of Lopez
in February 1992, and took a small number of steps in the
inquiry before leaving the government in November 1992.
Plaza then began representing Lopez in dealing with the
government's investigation. Lopez asserts that he did not
know of Plaza's prior role in his case. Plaza ceased
representing Lopez a year later, before Lopez was indicted,
after a new United States Attorney raised questions about
Plaza's dual role.
If after leaving the government Plaza worked on the
other side of the same matter, this would normally constitute
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a violation of federal law. See 18 U.S.C. 207. But ___
ordinarily the injured party would be the original client,
here the government, which would be entitled to fear that
confidential information might now be used against it by its
own former lawyer. The district court made this point in
declining to convene an evidentiary hearing on this matter.
Lopez, 854 F. Supp. at 49. _____
Lopez responds by saying that he was himself prejudiced
because Plaza must have carried into his new employment his
prosecutor's judgment that Lopez was guilty. Lopez cites us
to case law holding that, for just this reason, a judge
cannot sit on a matter on which he worked as a prosecutor.
United States v. Arnpriester, 37 F.3d 466, 467 (9th Cir. _____________ ___________
1994). The analogy is not very persuasive. The judge, who
is supposed to be impartial, is disqualified because his
prior connection with one side renders his present
impartiality suspect. An attorney is expected to be loyal,
not impartial, and after switching sides has ample inducement
to act in the interest of the attorney's new client. ___
But--Lopez counters--in this case Plaza, while serving ____
as Lopez' attorney, told Lopez that the government
prosecutors might drop charges if Lopez supported one of them
for the then open post of U.S. Attorney. The implication is
that Plaza was working as an agent for prosecutors, thus
depriving Lopez of his constitutional right to independent
-25- -25-
counsel. Assuming that Plaza ever conveyed such a message to
Lopez, Plaza's role was that of a go-between and was apparent
to Lopez. The suggestion that Plaza therefore had divided
loyalties or was a government agent is rhetoric.
Lopez' most straightforward complaint is that the
prosecutors, when they discovered that Plaza was now
appearing on Lopez' side, should have immediately disclosed
to Lopez Plaza's prior involvement as prosecutor in the same
case. Lopez cites us to cases where the government has by
its silence improperly reaped an advantage from disloyal acts
of private defense counsel in cooperation with the
government. E.g., United States v. Marshank, 777 F. Supp. ____ ______________ ________
1507 (N.D. Cal. 1991). But there is no indication that the
government gained any advantage from delay in disclosing
Plaza's former affiliation, if undue delay there was.
The main job of the trial judge in a criminal case is to
try the defendant, and there is always a tension when the
defense seeks to shift the focus to charges of improprieties
or wrongdoing by the government. Where there are plausible
claims of government misconduct prejudicing the rights of the
defendant, the district court cannot ignore them; but how far
to pursue them, and in what manner, depends upon
circumstances, and the judge on the scene has considerable
latitude. United States v. Ortiz-Arrigiotia, 996 F.2d 436, _____________ ________________
442-43 (1st Cir. 1993), cert. denied, 114 S. Ct. 1368 (1994). _____ ______
-26- -26-
Here, the trial judge looked about for big fish, saw none,
and let the red herrings go.
V. SENTENCING
Lopez was sentenced pursuant to the November 1, 1990,
edition of the Sentencing Guidelines (all subsequent
references are to that edition). The seven counts of
conviction were grouped, U.S.S.G. 3D1.2, and Lopez'
sentence was calculated under section 2F1.1, which prescribes
a base offense level of 6 for offenses involving fraud or
deceit.
The main variable under section 2F1.1 is the amount of
"loss" inflicted or intended, and the district court
calculated the total loss for the seven counts as $6,689,051,
requiring an increase of 14 levels. U.S.S.G.
2F1.1(b)(1)(O). The district court added six additional
levels, representing two levels each for more than minimal
planning, id. 2F1.1(b)(2), abuse of a position of trust, ___
id. 3B1.3, and obstruction of justice for committing ___
perjury during trial, id. 3C1.1. ___
The resulting total base offense level was 26 (6 plus 14
plus 6). Lopez had no prior convictions and, given a
criminal history category of I, his offense level of 26
corresponds to a guideline range of 63 to 78 months'
imprisonment. The court chose to construct the 63-month
sentence by imposing concurrent sentences of 24 months on
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count 1 (the conduct underlying this count occurred when an
earlier version of section 1014 was in effect that provided
for a two-year maximum sentence), 63 months each on counts 2
through 5, and 60 months each on counts 6 and 7 (there being
a 60-month statutory maximum on those last two counts).
Lopez has not challenged the base offense level or the
six-level adjustment for planning, abuse of trust or
obstruction. He does challenge the loss calculations on
counts 1 through 5, and on certain of his claims the
government suggests a remand. Having reversed convictions on
those false statement counts, we have no reason to consider
the claims of error as to sentences on those counts. Our
concern is limited to Lopez' separate attacks on the
calculations as to counts 6 and 7.
The broader of the two challenges made by Lopez to his
sentence on counts 6 and 7 is that the government failed to
show either an actual or an intended loss to the partnerships
because Lopez was charged with having improperly withdrawn
$308,481 from the partnerships' reserve accounts in 1988 and
the same year the partnerships allegedly owed Lopez $741,000.
Lopez' brief reasons that the "withdrawal of monies that were
owed to him . . . did not cause the partnerships any `actual'
economic loss," nor can there have been any intended loss
because "here, the alleged crime was complete yet there still
was no loss." The argument is clever but unpersuasive.
-28- -28-
If a defendant had picked the pocket of a victim in a
crowded elevator, gaining $10 in the process, it would not be
a defense when the $10 loss figure was attributed to the
defendant at sentencing to say that the victim happened to
owe the defendant an even larger sum. As long as a theft or
diversion is concealed or disguised, the victim has no reason
to think that its debt has been reduced. In this sense the
loss caused by Lopez was both actual and intended.
Lopez' second argument is less ambiguous but may have
more substance. It is common ground that the amount
withdrawn by Lopez from the partnerships' reserve accounts
was $308,481. This was the amount charged in the indictment
and, interestingly, it is the figure specified by the
district court in its order requiring restitution, an order
that Lopez has not challenged. Yet in reliance on the
probation report, the district court found a loss of $436,176
attributable to the wire fraud counts; and as we shall see
the difference between the two figures may matter.
The probation officer originally calculated the loss on
counts 6 and 7 as $308,481 but thereafter a letter containing
a victim impact statement was received from Capital
Management Strategies claiming a loss of $632,917. The
probation officer deducted various amounts from this larger
figure concluding that they did not reflect losses imposed by
Lopez. The amount left was $436,276, which the probation
-29- -29-
officer and the district court adopted as the loss
attributable to counts 6 and 7. The victim impact statement
was not attached to the pre-sentencing report so the basis
for the claimed total loss of $632,917 is difficult to
discern.
At sentencing, the discrepancy between the original and
adjusted figures for the loss on counts 6 and 7 did not loom
large, since both figures were dwarfed by the losses on
counts 1 through 5; whether the loss of counts 6 and 7 was
$308,481 or $436,176, the total loss on all counts appeared
to be within the $5 to $10 million range for which a 14-level
increase was required. Nevertheless, at sentencing defense
counsel took a swipe at the victim impact statement, calling
it "a letter that has been alluded to in the pre-sentence
report. No live body, no documentation. . . . and to
indicate that there are $436,376 in the losses as a result of
that, I believe, is -- is improper."
On appeal, Lopez says that the letter in question was
not disclosed to him, despite a request, and argues that the
trial judge "failed to exercise independent judgment but
relied mechanically on a non-disclosed hearsay document
referred to very generally in the pre-sentence report . . .
." The government responds that in this circuit reliable
hearsay can be used at sentencing, including hearsay adopted
by a pre-sentence report. See United States v. Tardiff, 969 ___ _____________ _______
-30- -30-
F.2d 1283, 1287 (1st Cir. 1992). Lopez then says that the
victim impact statement had no indicia of reliability, a
point difficult to resolve since it is not before us.
It is not necessary to decide these issues in the
abstract because the case must in all events be remanded for
resentencing. The bulk of the losses, and thus a significant
part of Lopez' sentence on counts 6 and 7, rests on amounts
attributed to the counts that we have reversed. The
government has not given us any reason to think that the
losses for counts 1 through 5 can be attributed to Lopez in a
resentencing on counts 6 and 7. The possibility that it may
retry Lopez on counts 1 through 5 is irrelevant at present.
The base offense level for counts 6 and 7 and the six-
level increase have not been challenged on appeal, so the
only question is the amount of loss. The difference between
the two alternative figures here is significant; the $308,481
figure would seemingly produce a total offense level of 20
and a sentencing range of 33-41 months, while the larger
$436,276 figure would produce a total offense level of 21 and
a range of 37-46 months. Although one might construct a
technical argument to defend the use of the larger figure
(e.g., because Lopez did not counter the report with ____
evidence), we think that simple justice suggests that this is
the wrong course to follow, especially since resentencing is
required in any event.
-31- -31-
If on remand the government wants to rely on the larger
of the two figures, the victim impact statement should be
made available to Lopez' counsel prior to resentencing.
Whether the government wants to support the larger figure
with any other kind of evidence, and whether Lopez wants to
seek an evidentiary hearing at which the maker of the victim
impact statement can be cross-examined, are matters for the
future. What we will not do is uphold on this record the use
of the larger figure where a procedural flaw arguably exists
and we ourselves cannot discern the basis for the figure.
The convictions and sentences on counts 1 through 5 are
vacated; the government may retry the defendant on those _______
counts or not, as it chooses. The convictions on counts 6
and 7 are affirmed but the sentences imposed on those counts ________
are vacated and the case remanded for resentencing on those _______ ________
counts of conviction.
It is so ordered. _________________
-32- -32-
Related
Pereira v. United States
347 U.S. 1 (Supreme Court, 1954)
United States v. Martin Linen Supply Co.
430 U.S. 564 (Supreme Court, 1977)
Riggins v. Nevada
504 U.S. 127 (Supreme Court, 1992)
Sullivan v. Louisiana
508 U.S. 275 (Supreme Court, 1993)
Godinez v. Moran
509 U.S. 389 (Supreme Court, 1993)
United States v. Gaudin
515 U.S. 506 (Supreme Court, 1995)
United States v. Romero
32 F.3d 641 (First Circuit, 1994)
United States v. William H. Cleary and Gustavo Passarelli
565 F.2d 43 (Second Circuit, 1977)
Michael Hoover v. Garfield Heights Municipal Court
802 F.2d 168 (Sixth Circuit, 1986)
United States v. Ilario M.A. Zannino
895 F.2d 1 (First Circuit, 1990)
Fed. Sec. L. Rep. P 95,907 United States v. Thomas A. Faulhaber
929 F.2d 16 (First Circuit, 1991)
United States v. Samuel J. Concemi, United States of America v. Walter Ribeck
957 F.2d 942 (First Circuit, 1992)
United States v. Daniel K. Dunn, Sr.
961 F.2d 648 (Seventh Circuit, 1992)
United States v. Thomas Staniforth
971 F.2d 1355 (Seventh Circuit, 1992)
United States of America, Plaintiff-Appellee-Cross-Appellant v. Joe Garza-Juarez and Esteban Garza-Juarez, Defendants-Appellants-Cross-Appellees
992 F.2d 896 (Ninth Circuit, 1993)
United States v. Paul Richard Arnpriester
37 F.3d 466 (Ninth Circuit, 1994)
United States v. Wells
63 F.3d 745 (Eighth Circuit, 1995)
Cite This Page — Counsel Stack
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United States v. Delano Lopez, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-delano-lopez-ca1-1995.