FILED NOT FOR PUBLICATION AUG 07 2013
MOLLY C. DWYER, CLERK UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 11-10649
Plaintiff - Appellee, D.C. No. 3:08-cr-00120-LRH- VPC-2 v.
RICHARD YOUNG, Attorney, AKA MEMORANDUM* Ricky Young,
Defendant - Appellant.
Appeal from the United States District Court for the District of Nevada Larry R. Hicks, District Judge, Presiding
Argued and Submitted July 10, 2013 San Francisco, California
Before: FERNANDEZ, PAEZ, and BERZON, Circuit Judges.
Defendant-Appellant Richard Young (“Young”) appeals his convictions on
several counts. He also challenges five sentencing enhancements applied by the
district court. We affirm Young’s convictions and sentence.
* This disposition is not appropriate for publication and is not precedent except as provided by 9th Cir. R. 36-3. 1. The government’s evidence at trial did not constructively amend Young’s
Second Superseding Indictment. The challenged evidence regarding Global One’s
loan agreement repayments was not “distinctly different” from the facts alleged in
the indictment, nor did it “substantially alter[]” the offense charged in the
indictment. United States v. Adamson, 291 F.3d 606, 615 (9th Cir. 2002) (internal
quotation marks omitted); see also United States v. Wilbur, 674 F.3d 1160,
1177–78 (9th Cir. 2012). Quite the opposite: the challenged evidence was offered
to prove precisely what was alleged in the indictment, that the representations
regarding the repayment of the “loans” were not true. Therefore “[t]here was only
‘one complex of facts’ alleged in the indictment and proved at trial.” United States
v. Shipsey, 363 F.3d 962, 974 (9th Cir. 2004).
2. To the extent the admission of Martin Mechling’s testimony was
erroneous, the error was harmless. GCB Commc’ns, Inc. v. U.S. S. Commc’ns,
Inc., 650 F.3d 1257, 1262 (9th Cir. 2011). Mechling was one of several Global
One member-investors who testified against Young; it is not “more probable than
not” that the district court’s decision to admit Mechling’s testimony affected the
outcome of Young’s trial. Id.
3. We have recognized two circumstances in which a court’s exclusion of
evidence may implicate constitutional concerns. See United States v. Stever, 603
2 F.3d 747, 755–56 (9th Cir. 2010). First, while “not every [evidentiary] error
amounts to a constitutional violation,” United States v. Lopez-Alvarez, 970 F.2d
583, 588 (9th Cir. 1992), “the erroneous exclusion of important evidence will
often rise to the level of a constitutional violation.” Stever, 603 F.3d at 755
(emphasis added). Second, “the exclusion of relevant evidence pursuant to the
correct application of an evidentiary rule” may implicate constitutional concerns in
certain cases. Id. at 756. “[T]hose cases consider the so-called Miller factors,”
which assess, inter alia, the evidence’s probative value, reliability, significance,
and whether the evidence is capable of evaluation by the trier of fact. Id.
Here, Young’s software demonstration had little, if any, probative value. It
used new technology that Young admits did not exist at the time relevant to his
charges. Furthermore, the district court correctly concluded that the proposed
demonstration lacked any indicia of reliability, and was not capable of independent
evaluation by the jury. Accordingly, the district court did not violate Young’s
Sixth Amendment rights in holding his software demonstration inadmissible.
4. The district court did not abuse its discretion in excluding under Federal
Rule of Evidence 403 testimony by Timothy Cory (“Cory”) regarding the trade
aggregation software Global Edge. See United States v. Wiggan, 700 F.3d 1204,
1210 (9th Cir. 2012). Cory’s brief testimony about what he had heard about
3 Global Edge had little to do with Young’s fraudulent scheme and was cumulative
of other testimony regarding the aggregation program. In any event, it is doubtful
that Cory’s testimony could have affected the outcome of Young’s trial, so any
error in excluding the testimony was harmless. See GCB Commc’ns, Inc., 650 F.3d
at 1262.
5. The admission of a Nevada state-court judge’s out-of-court statement that
Global One’s loan agreements were “securities” was not an abuse of discretion.
Although we previously have “indicated our disquiet” with “‘the likely impact on
the jury of a sitting state court judge pronouncing the existence of an essential
element of a crime,’” any “impact” here was minimal. Wiggan, 700 F.3d at 1211
(quoting Chein v. Shumsky, 373 F.3d 978, 989 n.6 (9th Cir. 2004) (en banc)). The
challenged statement could not have prejudiced the jury on the question whether
the loan agreements were securities, as the district court never submitted that
question to the jury in the first place.1 Nor did the statement have a broader
unfairly prejudicial effect on Young, given the relatively benign nature of the
judge’s comments and the district court’s repeated limiting instructions to the jury.
See United States v. Sine, 493 F.3d 1021, 1034 (9th Cir. 2007).
1 As noted in point 6, infra, the district court erred in keeping this question from the jury.
4 6. The district court erred in failing to submit the question whether the
Global One loan agreements were “securities” to the jury. See United States v.
Morse, 785 F.2d 771, 775–76 (9th Cir. 1986). By instructing the jury that the loan
agreements were securities as a matter of law, the district court effectively relieved
the jury from determining an “element of [the] offense” of securities fraud. Medley
v. Runnels, 506 F.3d 857, 864 (9th Cir. 2007) (en banc).
That error, however, was harmless. See Neder v. United States, 527 U.S. 1,
8–10 (1999); see also United States v. Jimenez-Borja, 378 F.3d 853, 858 (9th Cir.
2004). Applying the test set forth in Reves v. Ernst & Young, 494 U.S. 56 (1990),
for determining whether a particular financial instrument is a “security” under the
Securities Acts, no reasonable jury could have concluded that the loan agreements
were anything other than securities. See Reves, 494 U.S. at 66–67; see also
McNabb v. S.E.C., 298 F.3d 1126, 1131–33 (9th Cir. 2002).
7.
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FILED NOT FOR PUBLICATION AUG 07 2013
MOLLY C. DWYER, CLERK UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 11-10649
Plaintiff - Appellee, D.C. No. 3:08-cr-00120-LRH- VPC-2 v.
RICHARD YOUNG, Attorney, AKA MEMORANDUM* Ricky Young,
Defendant - Appellant.
Appeal from the United States District Court for the District of Nevada Larry R. Hicks, District Judge, Presiding
Argued and Submitted July 10, 2013 San Francisco, California
Before: FERNANDEZ, PAEZ, and BERZON, Circuit Judges.
Defendant-Appellant Richard Young (“Young”) appeals his convictions on
several counts. He also challenges five sentencing enhancements applied by the
district court. We affirm Young’s convictions and sentence.
* This disposition is not appropriate for publication and is not precedent except as provided by 9th Cir. R. 36-3. 1. The government’s evidence at trial did not constructively amend Young’s
Second Superseding Indictment. The challenged evidence regarding Global One’s
loan agreement repayments was not “distinctly different” from the facts alleged in
the indictment, nor did it “substantially alter[]” the offense charged in the
indictment. United States v. Adamson, 291 F.3d 606, 615 (9th Cir. 2002) (internal
quotation marks omitted); see also United States v. Wilbur, 674 F.3d 1160,
1177–78 (9th Cir. 2012). Quite the opposite: the challenged evidence was offered
to prove precisely what was alleged in the indictment, that the representations
regarding the repayment of the “loans” were not true. Therefore “[t]here was only
‘one complex of facts’ alleged in the indictment and proved at trial.” United States
v. Shipsey, 363 F.3d 962, 974 (9th Cir. 2004).
2. To the extent the admission of Martin Mechling’s testimony was
erroneous, the error was harmless. GCB Commc’ns, Inc. v. U.S. S. Commc’ns,
Inc., 650 F.3d 1257, 1262 (9th Cir. 2011). Mechling was one of several Global
One member-investors who testified against Young; it is not “more probable than
not” that the district court’s decision to admit Mechling’s testimony affected the
outcome of Young’s trial. Id.
3. We have recognized two circumstances in which a court’s exclusion of
evidence may implicate constitutional concerns. See United States v. Stever, 603
2 F.3d 747, 755–56 (9th Cir. 2010). First, while “not every [evidentiary] error
amounts to a constitutional violation,” United States v. Lopez-Alvarez, 970 F.2d
583, 588 (9th Cir. 1992), “the erroneous exclusion of important evidence will
often rise to the level of a constitutional violation.” Stever, 603 F.3d at 755
(emphasis added). Second, “the exclusion of relevant evidence pursuant to the
correct application of an evidentiary rule” may implicate constitutional concerns in
certain cases. Id. at 756. “[T]hose cases consider the so-called Miller factors,”
which assess, inter alia, the evidence’s probative value, reliability, significance,
and whether the evidence is capable of evaluation by the trier of fact. Id.
Here, Young’s software demonstration had little, if any, probative value. It
used new technology that Young admits did not exist at the time relevant to his
charges. Furthermore, the district court correctly concluded that the proposed
demonstration lacked any indicia of reliability, and was not capable of independent
evaluation by the jury. Accordingly, the district court did not violate Young’s
Sixth Amendment rights in holding his software demonstration inadmissible.
4. The district court did not abuse its discretion in excluding under Federal
Rule of Evidence 403 testimony by Timothy Cory (“Cory”) regarding the trade
aggregation software Global Edge. See United States v. Wiggan, 700 F.3d 1204,
1210 (9th Cir. 2012). Cory’s brief testimony about what he had heard about
3 Global Edge had little to do with Young’s fraudulent scheme and was cumulative
of other testimony regarding the aggregation program. In any event, it is doubtful
that Cory’s testimony could have affected the outcome of Young’s trial, so any
error in excluding the testimony was harmless. See GCB Commc’ns, Inc., 650 F.3d
at 1262.
5. The admission of a Nevada state-court judge’s out-of-court statement that
Global One’s loan agreements were “securities” was not an abuse of discretion.
Although we previously have “indicated our disquiet” with “‘the likely impact on
the jury of a sitting state court judge pronouncing the existence of an essential
element of a crime,’” any “impact” here was minimal. Wiggan, 700 F.3d at 1211
(quoting Chein v. Shumsky, 373 F.3d 978, 989 n.6 (9th Cir. 2004) (en banc)). The
challenged statement could not have prejudiced the jury on the question whether
the loan agreements were securities, as the district court never submitted that
question to the jury in the first place.1 Nor did the statement have a broader
unfairly prejudicial effect on Young, given the relatively benign nature of the
judge’s comments and the district court’s repeated limiting instructions to the jury.
See United States v. Sine, 493 F.3d 1021, 1034 (9th Cir. 2007).
1 As noted in point 6, infra, the district court erred in keeping this question from the jury.
4 6. The district court erred in failing to submit the question whether the
Global One loan agreements were “securities” to the jury. See United States v.
Morse, 785 F.2d 771, 775–76 (9th Cir. 1986). By instructing the jury that the loan
agreements were securities as a matter of law, the district court effectively relieved
the jury from determining an “element of [the] offense” of securities fraud. Medley
v. Runnels, 506 F.3d 857, 864 (9th Cir. 2007) (en banc).
That error, however, was harmless. See Neder v. United States, 527 U.S. 1,
8–10 (1999); see also United States v. Jimenez-Borja, 378 F.3d 853, 858 (9th Cir.
2004). Applying the test set forth in Reves v. Ernst & Young, 494 U.S. 56 (1990),
for determining whether a particular financial instrument is a “security” under the
Securities Acts, no reasonable jury could have concluded that the loan agreements
were anything other than securities. See Reves, 494 U.S. at 66–67; see also
McNabb v. S.E.C., 298 F.3d 1126, 1131–33 (9th Cir. 2002).
7. The district court did not err in rejecting Young’s proposed jury
instruction regarding his transactional money laundering charge under 18 U.S.C. §
1957. The relevant wire transfer underlying Young’s conviction under § 1957 was
not “central” to Young’s fraudulent scheme; it was merely a transfer between two
Global One accounts used interchangeably, and so was not necessary to the
unlawful scheme. See United States v. Santos, 553 U.S. 507, 511–15 (2008);
5 United States v. Van Alstyne, 584 F.3d 803, 814–16 (9th Cir. 2009); United States
v. Bush, 626 F.3d 527, 536 (9th Cir. 2010). For the same reason, Young’s
sufficiency of evidence challenge to the money laundering count fails.
The district court also properly rejected Young’s other proposed jury
instruction concerning his § 1957 charge, which would have required the
government to prove that Young transferred funds with the “intent to conceal” the
location of the funds involved. Intent to conceal funds is not an element of § 1957.
See United States v. Rutgard, 116 F.3d 1270, 1291 (9th Cir. 1997); see also Bush,
626 F.3d at 536.
8. The district court did not err in applying a two-level sentencing
enhancement for Young’s role as an “investment advisor” at the time of the
offense. See U.S.S.G. § 2B1.1(b)(17)(A)(iii) (2010); United States v. Williams,
693 F.3d 1067, 1072 (9th Cir. 2012).2 Young qualifies as an “investment advisor”
because his offense “involved . . . a violation of securities law” and, “at the time of
[that] offense,” he offered advice to Global One members regarding foreign
currency exchange trading. U.S.S.G. § 2B1.1(b)(17)(A)(iii) (2010); see id. cmt.
2 The current Guidelines Manual recodifies this provision at § 2B1.1(b)(18)(A)(iii).
6 n.14(A) (defining “investment advisor”); 15 U.S.C. § 80b-2(a)(11). It was not an
abuse of discretion for the district court to so hold.
9. Similarly, the district court did not err in applying a two-level
enhancement for “offense[s] . . . involv[ing] sophisticated means.”3 U.S.S.G §
2B1.1(b)(9)(C) (2010). “Conduct need not involve highly complex schemes or
exhibit exceptional brilliance to justify a sophisticated means enhancement.”
United States v. Jennings, 711 F.3d 1144, 1145 (9th Cir. 2013). Here, the
government offered considerable evidence that Young used multiple accounts and
corporations as part of his fraudulent scheme. The district court therefore did not
abuse its discretion in applying this enhancement. Williams, 693 F.3d at 1072.
10. The district court applied a four-level sentencing enhancement for
Young’s role as the “organizer or leader of a criminal activity that involved five or
more participants or was otherwise extensive.” U.S.S.G. § 3B1.1(a). A
“participant,” for purposes of this enhancement, “is a person who is criminally
responsible for the commission of the offense, but need not have been convicted.”
Id. § 3B1.1 cmt. n.1. The evidence at Young’s trial established—and Young
concedes—that the fraudulent scheme involved at least three participants. The
3 The current Guidelines Manual recodifies this provision at § 2B1.1(b)(10)(C).
7 evidence also demonstrated that Young “used the unknowing services of many
outsiders,” including computer programmers, trade brokers, and an accountant.
See id. cmt. n.3. The district court properly applied the enhancement.
11. The parties agree that the district court should not have applied a two-
level “abuse of trust” enhancement to Young’s sentence under U.S.S.G. § 3B1.3,
albeit for different reasons. We do not reach the precise nature of the district
court’s error, because any such error was harmless. See United States v. Franco-
Flores, 558 F.3d 978, 980–81 (9th Cir. 2009).
The maximum offense level under the Guidelines is 43. See U.S.S.G. Ch. 5,
Pt. A (2010). Even without the two-level abuse-of-trust enhancement, Young’s
adjusted total offense level would have been 45, which still would have been
treated as an offense level of 43 under the Guidelines. See id. cmt. n. 2.
12. The district court applied the two-level obstruction of justice
enhancement primarily because it found that Young committed perjury at trial.
U.S.S.G. § 3C1.1 & cmt. n.4(B). Again, even discounting the abuse-of-trust
enhancement and the obstruction-of-justice enhancement, Young’s adjusted
offense level would have been 43, the maximum level under the Guidelines and the
one imposed by the district court. See id. Ch. 5, Pt. A cmt. n.2. Any error
8 regarding the § 3C1.1 enhancement was therefore harmless. See Franco-Flores,
558 F.3d at 980–81.
AFFIRMED.