Case o' The Week: Ninth Unmoved by The Miller's Tale - Wire Fraud Jury Instructions

Prosecutorial misconduct puts fraud conviction on “Thin Ice.”

The "Thin Ice" Band, with Victim-Company Owner Russ Lesser, AUSA Greg Lesser, and James Miller

 United States v. Miller, 2020 WL 1317275 (9th Cir. Mar. 20, 2020), decision available here.

Players: Decision by DJ Rakoff, joined by Judges Watford and Bennett.  

Facts: James Miller took money without authorization by writing himself checks from the business for which he worked. Id. at *2. The business was owned by Russ Lesser.

   Russ Lesser’s son, AUSA Greg Lesser, owned a stake of the company. AUSA Greg Lesser called his friend in the FBI, who connected him to FBI Special Agent Joseph Swanson. Id. at *3 & n.2. “Shortly after,” Agent Swanson informed AUSA Lesser that the feds were investigating the case. Id.

  Miller was charged with wire fraud and filing false tax returns. Id. at *2. At trial, his defense was that he had always intended to (and eventually did) repay back the full amount he took from the company. Id. at *3. He requested a jury instruction that required proof that he had the intent to both deceive and cheat the company. That instruction was denied, and it was instead given in the disjunctive. Id.

  Miller was convicted.

Issue(s): “[W]hether the jury charge misstated the law by instructing that wire fraud under 18 U.S.C. § 1343 requires the intent to ‘deceive or cheat’ rather than the intent to ‘deceive and cheat.’” Id. at *1 (emphasis in original).

Held: “We conclude that the charge was erroneous. Several other circuit courts have long held that the crime of wire fraud requires the specific intent to utilize deception to deprive the victim of money or property, i.e., to cheat the victim, and we now align the law of the Ninth Circuit with that of the other circuits and with recent Supreme Court precedent. Nevertheless, we find that the erroneous instruction was harmless in this case.” Id.

Of Note: Miller also involves a jaw-dropping example of prosecutorial misconduct. As noted above, the son of the owner of the victim company was CD Cal AUSA Greg Lesser. Id. at *3. (AUSA Lesser owned a stake in his dad’s company). Id. AUSA Lesser called friends at the FBI to report Miller at the outset of the case, and Lesser remained involved in the investigation. Id. When AUSA Lesser’s supervisors learned of this involvement (three weeks into the investigation!), the CD Cal USAO conflicted out. The San Diego USAO prosecuted the case. Id.

  AUSA Lesser still, however, continued contact with FBI Special Agent Joseph Swanson, who was investigating the case. Id.

  The District Court denied Miller’s motion to dismiss for prosecutorial misconduct, and the Ninth – while finding that the improper conduct was “clear” – nonetheless upheld the district court. Id. at *7-*8.

  A disappointing holding, in a case involving shocking conduct by a self-interested federal prosecutor.

How to Use: The Ninth’s holding on the conjunctive fraud instruction is a welcome change, that brings the Circuit in line with other circuits and SCOTUS. Id. at *4-*6. 

  Before embracing a defense based on that instruction, however, read Miller carefully. Even with a conjunctive instruction, “Intent to repay . . . is not a defense to wire fraud.” Id. at *6. The “loan” defense to fraud, rejected by the Ninth in Treadwell, still doesn’t work – despite the new fraud instruction required by Miller. *6 & n.10

                                               

For Further Reading: The hottest NorCal hearing next week is an innocuous-looking civil proceeding before the Honorable Magistrate Judge Nathanael Cousins: Babu et al v. Ahern. See court calendar here. 

The Honorable Magistrate Judge Nathanael Cousins

  In Babu, civil rights plaintiffs representing inmates at Santa Rita Jail are hunting for the jail’s mysterious 80-page COVID-19 manual. This is a rumored document that the USAO and ND Cal Court have apparently been given, and that AUSAs expressly rely upon while fighting pretrial release, but that has still not been provided to any defense counsel. 

  Notably, last week a Santa Rita Jail nurse tested positive for COVID-19, see Mercury News Article here. As a result, two SRJ units with federal prisoners are now on quarantine.

  Three hundred and fourteen state and county defendants have now been released from Santa Rita Jail to respond to the COVID-19 risk. See article here. 

  In marked contrast, with the exception of former Presidents, federal pretrial inmates are not being released in NorCal in response to COVID-19.

  What fate awaits our desperate federal clients in Santa Rita Jail, if widespread release doesn’t happen soon? For a thoroughly terrifying description of the scenarios ahead for state prisons and jails, see David Montgomery, ‘Prisons are Bacteria Factories’; Elderly Most at Risk, available here. 

Image of the band, “Thin Ice” from https://easyreadernews.com/miller-indictment-divided-manhattan-beach/

Image of the Honorable Magistrate Judge Nathanael Cousins from https://www.law.com/therecorder/almID/1202719524838/Uber-Unlikely-to-Dodge-Discrimination-Suit/

Image of inmate shackled to hospital bed from https://www.pewtrusts.org/en/research-and-analysis/reports/2018/07/19/state-prisons-and-the-delivery-of-hospital-care

Steven Kalar, Federal Public Defender N.D. Cal. Website at www.ndcalfd.org

Case o' The Week: Go Big, or Go Home - Collazo E.B. Order with questions, and (Potential) Drug Mens Rea requirements

  Looks like we’ve won the battle.

Collazo En Banc Court

  Do we now have a shot at the war?

United States v. Robert Collazo, Nos. 16-50509 (9th Cir. Jan. 29, 2020) (Ord.).

Players: New questions from the en banc panel: CJ Thomas, Judges W. Fletcher, Callahan, M. Smith, Ikuta, Nguyen, Watford, Hurwitz, Miller, Bade and Bress.

   Admirable en banc argument by SD Cal Defender alumnus Ben Coleman.  

Facts: Last September the Ninth ordered the Collazo case to be reheard en banc. See overview of this en banc order here. 

  The Ninth resolved to sort-out the jury instructions for the “mess” of drug conspiracy mens rea requirements. On January 13 the case was argued before the en banc court. See video of en banc argument here.  

  Roughly two weeks after oral argument, the Court issued the following questions:

Issue(s): “1. How do United States v. Feola, 420 U.S. 671 (1975), and its progeny in this Circuit . . . apply to the government’s burden of proving that a defendant is guilty of conspiracy under 21 U.S.C. § 846 for agreeing to commit an offense under § 841(a), (b)? The parties should address whether the requisite intent for conspiracy under § 846 is the same as the requisite intent for distributing a controlled substance under § 841(a), (b). The parties should also address whether the government has to prove beyond a reasonable doubt that the scope of the defendant’s agreement for a § 846 and § 841(a), (b) offense includes a particular drug type and quantity. In connection with these issues, does the rule in Feola apply only to jurisdictional elements, or does it also apply to elements such as drug type and quantity?

  2. Whether this Court should adopt Judge W. Fletcher’s position in United States v. Jefferson, 791 F.3d1013, 1019 (9th Cir. 2015) (W. Fletcher, J., concurring), as to both substantive drug offenses under § 841(a) and conspiracy offenses under § 846. See Jefferson, 791 F.3d at 1023 (“I do not believe the government can subject the defendant to escalating mandatory minimums . . . without proving that he knew which illegal drug he was importing.”).

  3. Whether this Court should adopt the approach reflected in United States v. Gentry, 941 F.3d 767, 785–86, 794 (5th Cir. 2019) (requiring that defendant “knew or reasonably should have known that the scope of the conspiracy involved at least 50 grams of a mixture containing a detectable amount of meth”). 
  United States v. Callazo,  No. 15-50509, Ord., Dkt. Entry 171 (emphasis and hyperlinks added).

Held: Awaiting the decision of the en banc court.

Of Note: Defense counsel Ben Coleman slugged away for his client in this argument. He was enthusiastic for Judge Fletcher’s much bigger goal of revising drug mens rea requirements, but appropriately focused on the narrow path to victory for his specific client: “conjunctive” jury instructions.

  Ben was unfailingly diplomatic, but –well, watch the oral argument at around 24:20. He can’t resist gently noting the irony that it was the Ninth itself that created this mess nearly twenty years ago in Buckland. In Buckland, the Ninth avoided an Apprendi attack by (questionably) re-characterizing drug type and quantity as “material facts” and not “sentencing factors.” United States v. Buckland, 289 F.3d 558,568 (9th Cir. 2002). 

  After the Ninth avoided serious Apprendi constitutional challenges to the drug statutes in Buckland, it never went on to finish the job. The Court never required that these newly-minted pseudo-elements for drug offenses also carry mens rea requirements. See United States v. Carranza, 289 F.3d 634, 644 (9th Cir. 2002) (“the government need not prove that the defendant knew the type and amount of a controlled substance that he imported or possessed; the government need only show that the defendant knew that he imported or possessed some controlled substance.”) (emphasis in original). 

  In sum, the Callazo en banc court today reaps the chaos of Buckland seeds sown eighteen years ago.

  Ben knows of what he speaks -- he and former San Diego AFD Steve Hubachek were two of the attorneys at the forefront of that bitter Buckland battle. Funny old world, to now watch Mr. Coleman (politely) addressing the downstream unintended consequences of the unfortunate Buckland decision, two decades after it was delivered.

How to Use: Spoiler alert: we won the battle (probably).

   During the en banc argument, Judge M. Smith deftly boxed the government into conceding its case -- conjunctive instructions will likely be the e.b. court’s holding. (Such an admirable cross that it earned a chuckle from the Chief).

  The far more interesting remaining issue that remains for the en banc Court is whether Judge Fletcher’s compelling Jefferson concurrence will prevail.  [Ed. opinion: it should!].

Hon. Judge W. Fletcher

   Read Judge Fletcher’s Jefferson concurrence and preserve these drug mens rea issues: this is a very hot topic, and (hopefully) a profoundly important legal development.

                                               

For Further Reading: Judge W. Fletcher’s must-read Jefferson concurrence is available here, at page 13. 

  For an overview of Judge Fletcher's concurrence, see blog entry  here. 

Screen shot of en banc court from https://www.youtube.com/watch?v=m3jMm-P7GWY

Image of the Honorable Judge W. Fletcher from https://www.yahoo.com/news/scholars-liberal-reputation-9th-circuit-overblown-080453616.html

Image of, "as you sow so shall you reap" from https://www.youtube.com/watch?v=P2emkEainUw 

Steven Kalar, Federal Public Defender N.D. Cal. Website at www.ndcalfpd.org

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Case o' The Week: Read 'Em or Weep - Becerra and Structural Error

Prominent crim-law jurists tangle over knotty Weaver.

United States v. Becerra, 2019 WL 4582835 (9th Cir. Sept. 23, 2019), decision available here.

Players: Decision by Judge Berzon, joined by ED PA DJ Robreno.

  Dissent by Judge Graber.

Facts: Becerra was tried on drug charges. Id. at *1. At the pretrial conference, the district court explained that it would give the jury written instructions, would confirm that the jury read them, but the DJ would not actually read the instructions aloud unless the instructions later changed. Id. Neither party objected. Id.

  The district court read preliminary instructions to the jurors, but did not read the substantive instructions or explain the elements. Id. at *2. The court later confirmed with each juror that they had read the draft instructions, and – for a few new or modified instructions – the judge read the instructions aloud. Id. at *2. “The district court did not after the close of evidence read aloud any of the remaining twenty-seven instructions, or otherwise orally instruct the jurors as to the substantive law.” Id.

  Becerra was convicted of all counts. Id.

Issue(s): “Becerra [argues] . . . that the district court erred by not reading the jury instructions aloud to the jury. Becerra did not object in the district court . . . . We therefore review the failure to provide an oral jury charge for plain error.” Id. at *3.

  “[The government] recognizes that, as [Guam v. Marquez, 963 F.2d 1311 (9th Cir. 1992)] makes clear, the district court in this case erred by not reading the essential jury instructions aloud. Rather, the government’s central contention is that Marquez is not here binding as to its second holding—that the failure of the district court to read jury instructions aloud to the jurors in open court is structural error and so not subject to harmless error analysis.” Id. at *5.

Held: “[ ] Marquez is binding on us not only with regard to its substantive holding as to the necessity of oral jury instructions but also as to its second holding—that the district court committed structural error by failing to read an oral charge to the jurors.” Id. at *5.

   “A trial court does not satisfy its duty to instruct jurors in a criminal case just by providing those jurors with a set of written instructions to use during deliberations. . . . [A] trial court abdicates its responsibility to charge the jury orally as to the elements of the charged crimes, it commits structural error. . . . We . . . reverse the conviction . . .” Id. at *1 (internal citations omitted).

Of Note: So, District Judges have to read instructions to the jury. To be honest, that’s yesterday’s news – that’s been the clear rule for three decades.

 Far more interesting in Becerra is Judge Berzon’s thoughtful analysis of how to approach structural error.

  Structural error is critically important to protect, well, structural constitutional rights, but has been under increasing attack from the Supreme Court.

  Judge Graber presses this attack, arguing in dissent that this plain error was not structural, and was harmless. Id. at *8 (Graber, J., dissenting, citing Weaver, 137 S.Ct. 1899 (2017)).

  The core issue in Becerra, therefore, is whether SCOTUS decisions after the Ninth’s ’92 Marquez opinion undermined the Ninth’s rule that failure to orally advise the jury is structural error? Id. at *8.

  “Nope,” concludes the majority. Id. at *5.

  Writing for the Court, Judge Berzon carefully describes the case-by-case analysis necessary for structural error – an approach that jives with SCOTUS dictates.

   Appellate folks, this battle is worth a close read: the Berzon v. Graber debate over Weaver sets the stage for future structural error battles to come.

How to Use: Remember Becerra and object when a frazzled DJ wants to skip reading a new jury instruction at the end of a long trial. It is a rare, bright-line rule: written instructions alone won’t cut it.

                                               

For Further Reading: Weaver is referenced thirteen times, in Judge Berzon's and Judge Graber's debate. What does that Supreme Court decision mean? 

   For an interesting overview of Justice Kennedy’s opinion, see Prof. Rory Little’s piece here.  

Image of Weaver from https://www.artic.edu/artworks/151363/the-weaver

Steven Kalar, Federal Public Defender ND Cal. Website at www.ndcalfpd.org

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Case o' The Week: Hoping Ninth Gets Conjunctive-itus - E.B. Grant on Drug Conspiracy Jury Instructions

 “Or” no more, urge fans of “and.”

United States v. Robert Collazo, No. 15-50509, (9th Cir. Sept. 19, 2019), Ord. granting rehearing e.b., available here.

Players: Court-ordered brief for initial en banc consideration by former Federal Defender of San Diego, Inc. AFD, John Lemon.    

Facts: Appellants in Collazo were co-conspirators convicted of drug man-mins. They also suffered guideline enhancements, based on drugs distributed by co-conspirators in prison. See United States v. Rodriguez, Appellants’ Brief for E.B. Consideration, 2019 WL 3947844 at *1. 

  Defendant Rodriguez argued at trial that he did not distribute over 100 grams of heroin: he was an addict, and explained that he consumed “copious amounts” of the drug smuggled to him in prison. Id. at *4-*5. Rodriguez argued for a jury instruction that required that the heroin attributable to him must have been both jointly undertaken in furtherance of the conspirators’ agreement and reasonably foreseeable (i.e., the “conjunctive formulation.”) Id. at *2. 

  The district court refused. 

  The district court instead instructed in the disjunctive: the amounts of drugs must have either been jointly undertaken or reasonably foreseeable. Id. Using this disjunctive instruction, the jury found Rodriguez guilty of conspiracy, and that 100 grams or more of heroin was attributable to him. Id. at *7. 

  Rodriguez was sentenced to a whopping high-end sentence of 175 months, when the court relied on the jury’s findings on the amounts of heroin attributable to him. Id. 

  After briefing on appeal and oral argument, the Ninth issued an order and asked the parties to “address the proper jury instruction under 21 U.S.C. § 841(b) for determining the drug type and quantity involved in a conspiracy offense.” Id. at *2.

 On September 19, the consolidated Collazo cases went en banc.

Issue(s): How is the Ninth going to “sort the whole mess out”? United States v. Torres, 869 F.3d 1089, 1106 (9th Cir. 2017) (Clifton, J. concurring).

Held: T.B.D.

Of Note: Judge Clifton was right in Torres: the Ninth’s law on drug conspiracy is a “mess.” 

  The most straightforward path to victory is for the Ninth to follow its own (and the Supreme Court’s) clear precedent: guidelines and statutes are supposed to be interpreted consistently. See United States v. Becerra, 992 F.3d 960, 967 (1990); see also Dorsey v. United States, 567 U.S. 260, 264 (2012).

   The Ninth got off track because old guidelines handled drug-attribution in the disjunctive. See Becerra, 992 F.3d at 966. In 1992, however, the guidelines were amended to require the conjunctive. Torres, 869 F.3d at 1097 (“[T]he Sentencing Commission . . . amended the Guidelines in 1992 and adopted a conjunctive approach.”) 

  Despite that amendment, the Ninth never corrected its own law and jury instructions – that will change (we hope) with this en banc decision.

How to Use: Object, obviously, in a drug conspiracy trial, and demand the conjunctive formulation. The current problematic disjunctive language is in the “Special Verdicts” section of Ninth Model Instruction 9.19, available here. 

   Query, moreover, what grand juries have been told, as they’ve returned federal drug conspiracy indictments? Fed. Rule Crim. Proc. 6 disclosures of grand jury transcripts may be in order, for drug conspiracy cases heading for trial.

                                               

For Further Reading: The sure win is always the best defense approach: anticipate that Rodriguez will be hammering on the guideline and instruction dissonance in the argument to the en banc court.

  A more interesting argument, however, is Judge Berzon’s very thoughtful concurrence, and compelling conspiracy analysis, in Jauregui, 918 F.3d 1050, 1060 (9th Cir. 2019). Judge Berzon carefully explains how the Ninth’s mélange of conspiracy intent requirements have “muddied an already-confusing area of law.” Id. at 1063.

  For a description of Judge Berzon’s clarion call for en banc action on the Ninth’s conspiracy jurisprudence, see COTW blog entry here.  

Image of man with conflicting arrows from https://www.practiceportuguese.com/learning-notes/disjunctive-coordinating-conjunctions/

Steven Kalar, Federal Public Defender, N.D. Cal. Website at www.ndcalfpd.org.

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Case o' The Week: Low Marks for Gov't Semantic Gymnastics - Lidia Rodriguez and "Reckless Disregard" Jury Instruction

  Huzzah for the Heartland.

United States v. Lidia Rodriguez (9th Cir. Jan. 30, 2018), decision available here.

Players: Notable decision by the Hon. D.J. Mark Bennett, N.D. Iowa, joined by Judges Kozinski and Friedland. 

  Admirable win for AFPD M. Edith (“Edie”) Cunningham and FPD Jon Sands, Office of the Federal Public Defender, District of Arizona. 

Facts: Lidia Rodriguez, a citizen, was stopped at the border coming into the States: she and her passenger were questioned. Id. at *1. The passenger had a border crossing card, but was allegedly “ill at ease,” wore a new shirt (a purported sign of aliens who changed out of clothes after crossing the desert), and had an empty wallet despite his story that he was coming to the States to shop. Id. at *1-*2. The passenger later admitted in a depo (admitted at trial) that he was an undocumented alien with a false border-crossing card. Id. 

  Rodriguez was tried on a charge of transporting an illegal alien for financial gain. The government sought a “reckless disregard” instruction. Id. at *3. The reckless disregard instruction ultimately given to the jury did not require proof that Rodriguez was aware of the risk (a subjective component). Id. at *4. 

  After an Allen charge, and an alternate juror subbing in, Rodriguez was convicted. Id. at *3.

Issue(s): “Rodriguez seeks reversal of her conviction and remand for a new trial . . . . She contends a jury instruction incorrectly defined ‘reckless disregard.’” Id. at *1.

Held: “We reverse.” Id. 

  “[A] correct definition of ‘reckless disregard,’ consistent with Supreme Court and Ninth Circuit law, would include the defendant’s disregard of a risk of harm of which the defendant is aware.” Id. at *7 (quotations and citations omitted) (emphasis added).

Of Note: Lidia Rodriguez is a terrific decision – both for its legal analysis, and for its holdings. In a careful deconstruction, Judge Bennet surveys the evolution of the “recklessness” mens rea requirement. He parses (and rejects) cases that relied upon in the commentary to the Ninth’s model instruction, and explains why the Eighth, Tenth, and Eleventh have it wrong in light of the Supreme’s 1994 Farmer opinion. Id. at *3-*8. 

  Along the way, the Ninth grumbles that it is “unable to follow or accept the government’s semantic gymnastics” arising from a recklessness definition that didn’t require a subjective awareness of risk. Id. at *6. 

  Rodriguez is now a lead opinion on the “reckless” mens rea standard – it is your starting point in any case where this instruction may loom. (Along these lines, dust off your Rolodex and start calling shrinks. We’ll need mental health experts to address our clients’ (subjective) capacity to appreciate the “risk of harm.” With “subjective” in play for this instruction, our clients’ various impairments become very real and relevant issues).

How to Use: Appellate advocates –read Rodriguez. The Court gives us a very favorable read on the preservation of objections for instructional error, id. at *4, sternly enforces the government’s waiver of its “harmless error” argument, id. at *8, and rejects that damnable “exceptional circumstances” trope that gifts the government a Mulligan on its harmless error whiffs, id. at *9-*11. 

  Our AOB’s will glitter with Rodriguez nuggets.

                                               

Hon. Judge Mark Bennett

For Further Reading: Who is this Hawkeye, this outspoken visiting D.J.? 

  The Honorable District Judge Mark Bennett is a jurist with views. He’s a brave critic of the grave injustices of mandatory minimum sentences. See NPR interview here. 

  He’s a brave visiting judge in the Ninth, cheerfully challenging incorrect majority opinions with dissenting dissertations. See United States v. Leal-Felix, 625 F.3d 1148, 1151 (9th Cir. 2010) (Bennett, D.J., dissenting), rev’d by 665 F.3d 1037 (9th Cir. 2011) (en banc). 

  And perhaps most notably, Judge Bennett is at the forefront of efforts to recognize the reality of implicit bias, and its pervasive impact on our criminal justice system. See, e.g., Judging Implicit Bias: A National Empirical Study of Judicial Stereotypes, available here. 

  Love those heartland values.

Image of “gymnastic fail” from http://www.failepicfail.com/gymnast-fail-gymnast-parallel-bars-epic-fail-229.html

Image of the Honorable Judge Mark W. Bennett from https://herculesandtheumpire.com/tag/judge-mark-bennett/

Steven Kalar, Federal Public Defender Northern District of California

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Case o' The Week: A Touch of Evil on Ninth's Mind - Hernandez and Mens Rea + Actus Reus Match

 Bad mind, wrong crime?

 No time.

 United States v. Lucio Hernandez, 859 F.3d 817(9th Cir. June 15, 2017), decision available here.

Players: Per curiam decision with Judges Shroeder and Bybee, and Chief D.J. William Smith. 

  Admirable win for Deputy Federal Public Defender Alexandra Yates, Central District of California.

Facts: Hernandez drove from Arizona to California to transfer title on a car. Id. at 819. In Arizona, he (legally) purchased multiple weapons at a gun show, without any waiting period (things prohibited in California). Id. He listed Arizona as his current residence on the ATF form, though he lived in California. Id. 

  When the guns were later found by California cops in the possession of others, the ATF got a search warrant. Id. No Arizona guns were found in the search: some had been stolen, Hernandez explained, others buried in the desert. Id. 

  He was indicted with illegal transportation of firearms into his state of residence, in violation of 18 U.S.C. § 922(a)(3). Id. at 820. 

  At the government’s urging, the court gave an instruction based on Bryan, 524 U.S. 184 (1998) that may have permitted the jury to find Hernandez guilty “even if he did not know that his act of transporting guns into California was illegal.” Id. “The court rejected an instruction that would have connected the required willfulness to the act of transporting the guns into California.” Id. 

  During trial, the government introduced evidence about “straw purchasers,” and revealed several of the guns were recovered from others by police. Id. The government argued this evidence showed Hernandez’s “bad purpose;”the jury found Hernandez guilty.

Issue(s): “In order to convict Hernandez of this crime, the government was required to prove that his violation was ‘willful,’ i.e., that the defendant acted with knowledge that the charged conduct (transporting the firearms into his state of residence) was unlawful. Hernandez argues on appeal that the evidence was insufficient to prove that the specifically charged conduct was done ‘willfully.’ Moreover, Hernandez contends that because the district court allowed the government to introduce evidence of other (uncharged) criminal acts allegedly committed by Hernandez in connection with the firearms at issue, combined with a broad interpretation of the willfulness instruction contemplated by Bryan . . . ., the jury may have convicted him without finding the requisite level of culpability.” Id. at 819.

Held: “[W]e agree. We . . . reverse and remand for a new trial.” Id. at 819. “We conclude that, given the district court's broad jury instruction and the government’s theory of the case, it is not clear beyond a reasonable doubt that the jury actually found that Hernandez had willfully committed the charged conduct.” Id. at 821. “We hold that the broad jury instruction, combined with the evidence of the commission of later crimes and the government's argument to the jury, resulted in significant prejudice to Hernandez.” Id. at 824.

Of Note: This prosecution went awry when the district court rejected a defense instruction that would have required Hernandez to know his conduct was unlawful, and that he intended to disobey the law when he transported firearms purchased in Arizona to California. Id. at 823. Without that “concurrence of an evil-meaning mind with an evil-doing hand”, id. at 823, the jury could have convicted Hernandez for being an arms trafficker. As Hernandez helpfully observes, “It is a longstanding precept of the common law that a person cannot be convicted of one crime on the basis of an intent to commit another.” Id. at 823. 

  A rare and welcome mens rea win – particularly involving the comparatively low “willfulness” mental state.  

How to Use: Remember back in CrimLaw when we were taught that a crime required a match between the mens rea and charged actus reus? 

  Sometimes it feels AUSAs skipped that class. 

  Hernandez is a clean and emphatic endorsement of the proposition that the government has to prove more than intent to commit some crime or another -- there has to be intent to commit the crime charged. Id. at 823. Fair to assume Hernandez was up to various unlawful shenanigans with guns, which makes the Ninth's strict focus on the charged offense particularly potent (and per curiam to boot!). 

                                               

For Further Reading: After almost eighteen years on the Ninth, the Honorable Judge Richard Tallman is taking senior status. See Press Release here. 

  Judge Tallman replaced Judge Betty Fletcher, and will himself be replaced by one of the (now-five) Trump nominees for the Ninth.

  When will those shoes drop? Depends if Dem Senators are feeling blue (slips).  See article on nominations here.  

Image of “evil hand” t-shirt from https://rlv.zcache.com/warning_i_have_an_evil_hand_that_has_a_mind_t_shirt-recd06010b5eb4765937db6a9aadf3b81_k2gr0_324.jpg

Steven Kalar, Federal Public Defender N.D. Cal. Website at www.ndcalfpd.org

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Case o' The Week: Ninth Bangs on Rusty Shields -- Shields and "Duty to Disclose" Instructions in Wire Fraud Cases

 Rusty Shields offers some protection for "omission" theory, wire fraud cases.  

United States v. Melvin Russell "Rusty" Shields, 2016 Westlaw 7384022 (9th Cir. Dec. 21, 2016), decision available here.

Players:  Decision by Judge M. Smith, joined by Judge Tashima and District Judge Korman. Hard-fought appeal by ND Cal CJA colleagues Erick Guzman and Ethan Balogh. 

Facts: Shields and co-D Sims were charged with wire fraud relating to real estate. Id. at *1. Funds were solicited for Arizona and Florida projects, with promises of safe and secure investments. Investments, however, were actually diverted to other projects. Id. 

  The jury was not instructed that it had to find that the defendants had a duty to disclose omitted information. (And the defense didn’t object at that failure to instruct). Id. at *2. Both men were convicted after trial. Id. at *1.  

Issue(s): “Defendants argue that their wire fraud convictions should be reversed because the court erred in not instructing the jury that in order to find the defendants guilty based on a material non-disclosure, it must first find that defendants had a duty to disclose the omitted information.” Id. at *2 (footnote omitted).

Held: “Defendants are correct that a nondisclosure can support a wire fraud charge only when there exists an independent duty that has been breached by the person so charged.” Id. at *2 (quotations and citations omitted).

Hon. Judge Milan Smith

  “In light of [our] precedents, we conclude that it was error not to instruct the jury that it must find a relationship creating a duty to disclose before it could conclude that a material non-disclosure supports a wire fraud charge.” Id. at *3.

  “We conclude that the district court erred by not instructing the jury that it must find a relationship creating a duty to disclose in order to convict defendants of wire fraud based on any material omissions. We hold that, in order for an omission to support a wire fraud charge, the jury must be instructed that it must first find that the defendant and the defrauded party had a trusting relationship in which the defendant acted for the benefit of another and induced the trusting party to relax the care and vigilance which it would ordinarily exercise.” Id. at *4 (internal quotations and citation omitted).

Of Note: Plain error snatches defeat from the jaws of victory for Shields. See id. at *3. In the plain error discussion, Judge Smith explains how the jury would have likely found that the defendants induced the needed “trusting relationship.” Id. at *3. 

  The plain error analysis (relying on the government's pitch) seems a tad circular – the defendants failed to disclose their previous bankruptcies, in order to induce trust from the investors, the better to defraud investors by – among other things – failing to disclose the defendants' previous bankruptcies?

  Shields is the first Ninth Circuit decision that holds jury must find that a duty to disclose exists in wire fraud "omissions" cases – but it is not the opinion to read to understand what it takes to prove that duty.

How to Use: An “omissions” theory of wire fraud posits that a defendant failed to disclose material facts to the victims of the fraud. In Shields, the Ninth adopts the “duty” requirement set forth in Milovanovic, and applies it to wire fraud when the government proceeds on an omissions theory. “Specifically, the relationship creating a duty to disclose may be a formal fiduciary relationship, or an informal, trusting relationship in which one party acts for the benefit of another and induces the trusting party to relax the care and vigilance which it would ordinarily exercise.” . . . This is a factual determination to be made by a properly-instructed jury.” Id. at *3 (internal quotations and citations omitted). 

  Beware that the Ninth's Model Criminal Instruction 8.124 (Wire Fraud) doesn’t include a requirement that the jury finds that this duty existed. See Model Instructions here. Make sure to argue to modify the model instructions, when defending wire fraud charges on an “omissions” theory.

                                               

For Further Reading: Why did Shields have a duty to disclose to his investors? What happened to arms-length bargaining? Does Shields create new disclosure worries for other types of investments? 
  For an interesting discussion on how court-created disclosure duties can run afoul of traditional bargaining postures, see Kathryn Zeiler, Common-Law Disclosure Duties and the Sin of Omission: Testing the Meta Theories (2005), available here. 

Image of rusty shield from http://www.dundjinni.com/forums/uploads/Kepli/A15_RustyShield_FL_kpl01.png

Image of the Honorable Judge Milan Smith from https://law.ucdavis.edu/blogs/deans/posts/neumiller-competition-2012.html

Steven Kalar, Federal Public Defender ND Cal. Website at www.ndcalfpd.org

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