F I L E D United States Court of Appeals Tenth Circuit UNITED STATES COURT OF APPEALS OCT 21 1997 TENTH CIRCUIT PATRICK FISHER Clerk
UNITED STATES OF AMERICA,
Plaintiff-Appellee, No. 96-5144 v. No. 96-5176 (D.C. No. 95-CR-54-K) JAMES T. KALYVAS, (Northern District of Oklahoma) MULK RAJ DASS,
Defendants-Appellants.
ORDER AND JUDGMENT*
Before LUCERO, Circuit Judge, MURPHY, Circuit Judge, and MCWILLIAMS, Senior Circuit Judge.
No. 96-5144, United States v. Kalyvas, was orally argued before this panel on May
12, 1997. In 96-5176, United States v. Dass, counsel waived oral argument.
Accordingly, the two cases have been companioned for purposes of appeal.
By superseding indictment, James T. Kalyvas (“Kalyvas”) and Mulk Raj Dass
(“Dass”) were charged in the first count with conspiracy to defraud (18 U.S.C. § 371) and
* This order and judgment is not binding precedent, except under the doctrines of law of the case, res judicata, and collateral estoppel. The court generally disfavors the citation of orders and judgments; nevertheless, an order and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3 in four succeeding counts with wire fraud (18 U.S.C. §§ 1343 and 2(b)). A jury acquitted
Kalyvas on the first four counts of the indictment, but convicted him on Count 5 of the
indictment. He was sentenced to 18 months imprisonment. Dass was convicted on all
five counts of the indictment and was sentenced to 37 months imprisonment, three years
of supervised release, restitution in the amount of $25,000 and a special assessment of
$250. Both appealed their respective convictions.
Count 1 of the superseding indictment charged Kalyvas and Dass with conspiring
from June 1, 1993, to June 1, 1994, to commit offenses against the United States in
violation of 18 U.S.C. § 371. Specifically, they were charged with conspiring to transmit
by means of wire communications in interstate commerce certain writings for the purpose
of executing a scheme to defraud Ronald Kirkpatrick (“Kirkpatrick”), and others doing
business as Oklahoma Feldspar Corporation (“Feldspar”), in violation of 18 U.S.C. §§
1343 and 2(b). The “Means and Methods” used by the two defendants were set forth in
the superceding indictment in detail, and the “Overt Acts” of the two were also spelled
out in detail.
In Count 2 of the superseding indictment, the scheme to defraud was set forth with
even greater particularity and concluded by charging Kalyvas and Dass with transmitting,
in furtherance of their scheme to defraud, on August 17, 1993, by wire from Sarasota,
Florida, to Tulsa, Oklahoma, a document entitled “Contingent Consulting Agreement” for
the signature of Kirkpatrick, in violation of 18 U.S.C. §§ 1343 and 2(b). Paragraph J of
-2- Count 2 in the superseding indictment stated that a part of the scheme to defraud was that
the defendants would conceal from Kirkpatrick “Dass’ involvement in similar schemes in
the past.”1
Count 3 of the superseding indictment charged the defendants with transmitting by
wire on August 17, 1993, from the First City Bank in Tulsa, Oklahoma, to the trust
account of Kalyvas at Barnett Bank of Southwest Florida, Sarasota, Florida, a $100,000
wire money transfer in furtherance of their scheme to defraud and in violation of 18
U.S.C. §§ 1343 and 2(b).
Count 4 of the superseding indictment charged the defendants with transmitting by
wire on September 16, 1993, from Sarasota, Florida, to Tulsa, Oklahoma, an “extension
agreement” to the aforesaid “Contingent Consulting Agreement,” dated August 17, 1993,
extending the defendants’ time for performance until September 27, 1993, in furtherance
of their scheme to defraud and in violation of 18 U.S.C. §§ 1343 and 2(b).
Count 5 of the superseding indictment charged the defendants with transmitting by
wire on December 1, 1993, from Sarasota, Florida, to Tulsa, Oklahoma, a “Further
Amendment to Contingent Consulting Agreement,” increasing the amount of the
1 Paragraph J of the second count in the original indictment charged that a part of the scheme to defraud was that the defendants would conceal from Kirkpatrick the fact that Dass had been convicted of fraud in a federal district court in Camden, New Jersey, and had only been released from prison in Texas a short time prior to Dass’ first contact with Kirkpatrick. As indicated, this particular allegation was not in the superseding indictment.
-3- “guarantee bond” and extending the defendants’ time for performance to January 6, 1994,
in furtherance of their scheme to defraud and in violation of 18 U.S.C. §§ 1343 and 2(b).
Some background information will help to place the issues raised on appeal in
focus. In 1992, Kalyvas, an Oklahoma attorney, received a telephone call from a Dr.
Dass, described by some as an international businessman and banker. Several years prior
to this call, Kalyvas apparently had a “chance meeting” with Dass in London, England.
Dass’ call to Kalyvas in 1992 was made from a jail in New Jersey, Dass then having been
recently convicted in a federal court in New Jersey of fraud. The purpose of the call was
to enlist Kalyvas’ aid in perfecting Dass’ appeal. Kalyvas explained that he did not,
himself, practice criminal law, but Kalyvas agreed to help Dass obtain an attorney to
represent him on appeal. Kalyvas apparently did, however, review parts of Dass’ trial
record and formed the opinion that the conviction might be “suspect.”
In ensuing telephone conversations with Kalyvas, Dass told him that he had
numerous pending business transactions with which he needed the legal and business
assistance of Kalyvas. After making a limited background check, Kalyvas agreed to work
for Dass as his “trustee and attorney.”
Shifting gears, Feldspar was formed by Kirkpatrick for the purpose of mining
feldspar for making glass. The company was in dire financial straights, having spent
hundreds of thousands of dollars of its investors’ money with no return thereon. The
-4- investors were threatening litigation, and Kirkpatrick thought he needed at least
$2,000,000 to get the business on its feet.
One of the investors in Feldspar was a Ms. Leah Rich, who was apparently well
acquainted with a Ms. Pat Runyon, the city manager for Waurika, Oklahoma. Runyon
had contact with Dass at about this time, or shortly prior thereto, when Dass was assisting
the city in raising capital to construct a private jail facility. Because both Rich and
Runyon were impressed with Dass’ business acumen and his apparent access to “big
money,” they suggested to Kirkpatrick that he contact Dass to see if the latter could help
Feldspar obtain adequate financing, which Kirkpatrick proceeded to do.
Thereafter, negotiations between Kirkpatrick and Dass occurred, with the latter
being represented at all times by Kalyvas. These negotiations culminated in an agreement
between Feldspar and Dass whereby Dass agreed to assist Feldspar in obtaining “a
financial guarantee bond” from an insurance company which would serve as collateral for
Feldspar’s prospective investors. Dass, acting through his “trustee and attorney,”
Kalyvas, had also represented that he knew many potential investors for Feldspar. The
“Contingent Consulting Agreement” to that general effect was sent by Kalyvas from
Florida to Kirkpatrick in Oklahoma on August 17, 1993. Pursuant to the agreement,
Kirkpatrick then sent the sum of $100,000 from Oklahoma by wire to Kalyvas’ trustee
account in Florida. It was the understanding that $90,000 would be used to purchase the
“guarantee bond,” and the remaining $10,000 was a “non-refundable” fee for Dass and,
-5- or, Kalyvas. It was further agreed that, if a “guarantee bond” could not be obtained, the
$90,000 would be promptly returned to Feldspar.
Within days after Kirkpatrick deposited the $100,000 into Kalyvas’ trustee account
in Florida, Kalyvas caused virtually the entire $100,000 to be withdrawn from the
account, most of which was then spent by Kalyvas for his personal expenses, with a small
part thereof going to Dass. Needless to say, no “guarantee bond” was ever obtained, nor
was the $90,000 ever returned to Feldspar, even though several requests for extension of
time within which to obtain the “guarantee bond” or return the $90,000 were made. So
much for the background facts.
KALYVAS
In his initial conversation with Kirkpatrick, Kalyvas “vouched” for Dass in only
general terms, stating, in effect, that Dass was a well known and respected international
businessman and banker and that he had engaged in several deals similar to the one
eventually entered into between Feldspar and Dass. Kalyvas did not tell Kirkpatrick that
Dass had been convicted for wire fraud in New Jersey and had been only recently
released from prison. Kalyvas’ initial and perhaps principal argument in this court is that
since he was under no legal duty to tell Kirkpatrick that Dass had a prior criminal
conviction, any omission on his part to so tell cannot be the predicate upon which a
scheme to defraud could be based. In thus arguing, counsel relies on Chiarella v. United
-6- States, 445 U.S. 222 (1980) and United States v. Irwin, 654 F.2d 671 (10th Cir. 1981),
cert. denied, 455 U.S. 1016 (1982), neither of which, in our view, dictates a reversal in
the present case.
Kalyvas was not charged with willfully concealing from Kirkpatrick the fact that
Dass had a prior felony conviction. As indicated in Count 1, Kalyvas and Dass were
charged with conspiring to use interstate wire communications in executing and
furthering a scheme to defraud Kirkpatrick and Feldspar, and in Counts, 2, 3, 4, and 5
they were charged as principals, and as aiders and abettors, with using interstate wire
communications to carry out and execute their scheme to defraud Kirkpatrick and
Feldspar..
Specifically, in Count 5, the only count Kalyvas was convicted of by the jury, he
was charged with transmitting, or aiding and abetting in the transmission, by wire on
December 1, 1993, from Florida to Oklahoma a proposed extension of time for Dass to
perform, all of which was allegedly in furtherance of their original scheme to defraud.
The instructions did not instruct the jury that an essential element of the crime charged in
Count 5 was that Kalyvas intentionally concealed from Kirkpatrick the fact that Dass had
a prior felony conviction. Such, of course, was not an essential element of the crime
charged in Count 5.
In this regard, the jury was instructed that as to Counts 2, 3, 4, and 5, the essential
elements were as follows:
-7- Three essential elements are required to be proved in order to establish the offense charged in Counts 2 through 5 of the indictment:
First: That there was a scheme or artifice to defraud or to obtain money or property by false and fraudulent pretenses, representations or promises, as alleged in the indictment; Second: That the defendant knowingly and willfully participated in the scheme or artifice to defraud, with knowledge of its fraudulent nature and with specific intent to defraud; and Third: That in execution or in furtherance of that scheme, the use of the interstate wires occurred as specified in the indictment.
The unlawful offense is complete when the three separate elements, just stated, are proved beyond a reasonable doubt. Unless the government proves beyond a reasonable doubt that every element of an offense with which a defendant has been charged has been committed, you must find that defendant not guilty.
Certainly the evidence showed, prima facie, that Kalyvas and Dass, knowingly and
willfully, participated in a scheme to defraud Kirkpatrick and Feldspar of $100,000 and
that, in so doing, they used interstate wire communication. Kalyvas, acting for Dass,
received $100,000 from Kirkpatrick in return for which Dass was to obtain a so-called
“guarantee bond,” for Kirkpatrick and Feldspar. In obtaining such bond, Dass would use
$90,000, with the remaining $10,000 to be a non-refundable fee for Kalyvas and Dass.
The agreement went on to provide that if no guarantee bond could be obtained, the
$90,000 would be promptly returned to Kirkpatrick. Within days after the $100,000 was
placed by Kirkpatrick in Kalyvas’ trustee account in Florida, virtually the entire $100,000
-8- was withdrawn by Kalyvas and used for personal purposes by himself and Dass. No
guarantee bond was ever obtained and no part of the $100,000 was ever returned. Such,
to us, is a classic case of a scheme to defraud.
We do not need to be here concerned with whether Kalyvas had any “duty” to
disclose to Kirkpatrick the criminal history of Dass. A failure to thus disclose was not an
essential element of Count 5, and the fact that he may have had no duty to thus disclose
does not preclude his conviction on Count 5. Testimony as to what Kalyvas told
Kirkpatrick in their conversations leading up to Kirkpatrick’s giving Kalyvas $100,000
for delivery to Kalyvas’ trustee account for Dass was of course admissible evidence. And
what Kalyvas did not tell Kirkpatrick about Dass’ background is arguably evidence of an
intent to defraud, even though such was not an essential element of any count of the
indictment.
Counsel next argues that the evidence is legally insufficient to sustain Kalyvas’
conviction on Count 5, stating that “well established judicial precedent removes routine
communications of attorneys from the scope of mail and wire fraud statutes when the
attorney is not a principal to the transaction in question, the communication is sent within
the scope of the representation and the communication contains no inherent falsehoods or
misstatements of fact.” This argument misses the mark.
The government’s evidence established, prima facie, that Kalyvas used an
interstate wire communication on August 17, 1993 to effectuate a “Contingent Consulting
-9- Agreement” between Kirkpatrick and Dass. Pursuant to that agreement, it is agreed that
Kirkpatrick transmitted by wire $100,000 from Oklahoma to Kalyvas’ trustee account in
Florida on August 17, 1993. And the very damning fact is that within days thereafter,
Kalyvas withdrew virtually the entire $100,000 which was spent for personal use by
Kalyvas and Dass, and not for the purposes contemplated by the “Contingent Consulting
Agreement.” Kalyvas’ use of the interstate wire communication alleged in Counts 4 and
5 seeking extensions of time within which to obtain a “guarantee bond” or return the
$90,000 were obviously for the purpose of concealing the fact that not only had they
failed to obtain a “guarantee bond,” but, more importantly, there no longer was $90,000
with which to obtain such a bond. The purpose of these extension requests was to further
the fraud by concealing the fact that the $100,000 had long ago been converted to the
defendants’ personal use. In sum, the evidence supports Kalyvas’ conviction on Count 5.
As indicated, Kalyvas was convicted on Count 5 only, and was acquitted on
Counts 1, 2, 3, and 4. Counsel suggests that the jury’s verdicts are legally inconsistent to
the end that Kalyvas’ conviction on Count 5 must be vacated and set aside. In thus
arguing, counsel states that he is not “unmindful” of the Supreme Court’s
pronouncements in United States v. Powell, 469 U.S. 57 (1984) and Dunn v. United
States, 284 U.S. 390 (1932), but argues that the instant case is distinguishable from those
cases. We think not.
- 10 - In Dunn, the defendant was charged on a first count with maintaining a common
nuisance by keeping for sale at a specified place intoxicating liquor, in a second count
with the unlawful possession of intoxicating liquor, and in a third count with the unlawful
sale of such liquor. The Supreme Court characterized the evidence adduced at trial as
being “the same for all the counts.” Dunn, 284 U.S. at 392. A jury convicted Dunn on
Count 1 but acquitted him on Counts 2 and 3. In rejecting Dunn’s argument that the three
verdicts were legally inconsistent, the Supreme Court, speaking through Justice Holmes,
held that “[c]onsistency in the verdict is not necessary” and noted that the “verdict may
have been the result of compromise, or of a mistake on the part of the jury. . .,” and then
added that “verdicts cannot be upset by speculation or inquiry into such matters.” Dunn,
284 U.S. at 393-94.
In Powell, the defendant was acquitted of conspiring to possess cocaine with intent
to distribute and possession with intent to distribute cocaine but convicted on three counts
charging her with using an interstate telephone call to facilitate the conspiracy to possess
with intent to distribute and possession with intent to distribute cocaine. The Supreme
Court in Powell followed Dunn and refused to create an exception thereto where the jury
acquitted a defendant on a predicate felony, but convicts on the compound felony. In so
doing, the Court spoke as follows:
The rule that the defendant may not upset such a verdict embodies a prudent acknowledgment of a number of factors. First, as the above quote suggests, inconsistent verdicts-even verdicts that acquit on a predicate offense while convicting on
- 11 - the compound offense-should not necessarily be interpreted as a windfall to the Government at the defendant’s expense. It is equally possible that the jury, convinced of guilt, properly reached its conclusion on the compound offense, and then through mistake, compromise, or lenity, arrived at an inconsistent conclusion on the lesser offense. But in such situations the Government has no recourse if it wishes to correct the jury’s error; the Government is precluded from appealing or otherwise upsetting such an acquittal by the Constitution’s Double Jeopardy Clause.2 (Citations omitted).
Powell, 469 U.S. at 65.
In this general regard we note that Kalyvas is wheelchair bound because of
multiple sclerosis, and in acquitting him on Counts 1 through 4, the jury could
understandably have been influenced by lenity.
Counsel also asserts that the district court erred in denying Kalyvas’ motion to
sever his trial from Dass’ trial. This is particularly true, says counsel, because of the
extensive evidence of “other transactions” which, under Fed. R. Evid. 404(b) was
admissible, even though Kalyvas himself was not involved in all the “other transactions.”
In this latter regard, Kalyvas was involved in many of the “other transactions,” though
admittedly, not all.
Be that as it may, we find no abuse of discretion by the district court in denying the
motion for a severance. Persons jointly indicted are generally to be tried together and a
2 In United States v. Morehead, 959 F.2d 1489, 1503 (10th Cir. 1992), we recognized the Supreme Court’s holding in Powell “that an inconsistent verdict is not a basis for reversal.”
- 12 - defendant has a considerable burden to demonstrate prejudice stemming from a joint trial.
See Zafiro v. United States, 506 U.S. 534 (1993) and United States v. Edwards, 69 F.3d
419, 434 (10th Cir. 1995), cert. denied, 116 S.Ct. 2497 (1996). Here, Kalyvas and Dass
were operating “hand in glove,” so to speak, in their dealings with Kirkpatrick, all of
which suggests a joint trial. In sum, we find no abuse of discretion on the part of the trial
court in denying Kalyvas’ motion for a severance.
The remaining matters urged by counsel in his brief as grounds for reversal,
though not pursued at oral argument, have been considered and in our view none warrants
a reversal. Accordingly, Kalyvas’ conviction and sentence are affirmed.
DASS3
Not surprisingly, Dass’ statement of the facts differs from Kalyvas’ statement of
the facts. All of which, however, is of little consequence, since on appeal Dass does not
in any way challenge the sufficiency of the evidence to support his five convictions.
In this court, Dass’ initial argument is that the district court erred in admitting into
evidence at trial tape recordings of telephone conversations he had with Kalyvas when he,
Dass, was incarcerated at a penal institution in Texas. Counsel argues that Title III of the
3 On this appeal, Dass is represented by the Federal Public Defender’s office for the State of Colorado. After briefing, Dass filed a motion to be allowed to file a supplemental pro se brief. That motion is denied, without prejudice to his being permitted to file a pro se petition for rehearing, if he be so inclined.
- 13 - Omnibus Crime Control and Safe Streets Act of 1968, 18 U.S.C. §§ 2510-21 generally
forbids recording of wire, oral or electronic communications, including telephone
conversations, without a warrant. However, counsel concedes that Title III does not
apply to prisoners’ conversations on institutional telephones when the inmate has
knowledge and consents, impliedly or expressly, that his calls may be monitored, or when
such monitoring constitutes “law enforcement acting in the ‘ordinary course of duties’.”
In the instant case, after hearing, the district court denied Dass’ motion to suppress the
use at trial of the recordings of his telephone conversations with Kalyvas, holding that
Dass had at least impliedly consented to having his telephone conversations monitored
and recorded, and, alternatively, that such fell within the “law enforcement” exception to
Title III. We are not inclined to disturb that ruling.
The penal institution wherein Dass was then confined gave all inmates notice that
personal calls of this sort could be monitored and recorded. On appeal, counsel does not
really challenge the district court’s holding that Dass consented to the monitoring of his
calls, and argues only that the consent exception to Title III should not apply because the
monitoring was not “random.” With this we do not agree. Indeed, it would appear that
the initial monitoring of Dass’ calls was random, but that, when suspicions were aroused
by the frequency and nature of the calls, the monitoring understandably escalated. The
district court did not err in denying Dass’ motion to suppress the use at trial of his
telephone conversations with Kalyvas. See United States v. Feekes, 879 F.2d 1562, 1565
- 14 - (7th Cir. 1989), United States v. Amen, 831 F.2d 373, 379 (2nd Cir. 1987), cert. denied,
485 U.S. 1021 (1988), and United States v. Paul, 614 F.2d 115 (6th Cir. 1980), cert.
denied, 446 U.S. 941 (1980).4
Dass next argues that the district court erred in admitting into evidence testimony
concerning “other transactions” under Fed. R. Evid. 404(b). We find no error in this
regard. The other transactions were similar to the transaction here involved, i.e., an
“advance fee” to purchase a “guarantee bond.” Certainly the “other transactions” tended
to show intent, and state of mind, and the jury was so instructed.
Counsel next argues that the sentence imposed by the district court should be
vacated because Dass was not given his right of allocution prior to sentencing, as required
by Fed. R. Crim. P. 32(c)(3)(C), nor did the district court make any finding as to Dass’
ability to make restitution, and for the further reason that Dass was orally ordered to make
restitution in the amount of $25,000, whereas the formal written judgment provided for
restitution in the amount of $75,000.
It is apparently agreed that Dass was not afforded an opportunity to allocute before
being sentenced. In United States v. Gardner, 480 F.2d 929 (10th Cir. 1973), cert.
denied, 414 U.S. 977 (1973), we held that the failure of a district court to follow Rule 32
can be raised on direct appeal, and that “such failure” is error. See also, United States v.
We are not here concerned with the monitoring of telephone conversations 4
between a prison inmate and his attorney in a true attorney-client relationship.
- 15 - Archer, 70 F.3d 1149, 1151 (10th Cir. 1995) and United States v. Muniz, 1 F.3d 1018,
1025 (10th Cir. 1993), cert. denied, 510 U.S. 1002 (1993). In our case, the district court
simply did not comply with Fed. R. Civ. P. 32(c)(3)(C) before imposing sentence. The
fact that after sentencing Dass may have indicated to counsel that he did not wish to make
any statement to the district court before being sentenced does not excuse the district
court’s non-compliance with the rule. Dass’ motion to strike counsel’s affidavit in
appellee’s appendix is, however, denied. Therefore the entire sentence imposed by the
district court is vacated and the case is remanded for resentencing. Dass’ other challenges
to his sentence may be urged at resentencing. Dass’ convictions, however, are hereby
affirmed.
ENTERED FOR THE COURT
Robert H. McWilliams Senior Circuit Judge
- 16 -