Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-14-30232/USCOURTS-ca9-14-30232-0/pdf.json

Parties Involved:
Gary Joseph Conti
Appellant
United States of America
Appellee

Document Text:

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

v.

GARY JOSEPH CONTI,

Defendant-Appellant.

No. 14-30232

D.C. No.

4:13-cr-00065-BMM-3

OPINION

Appeal from the United States District Court

for the District of Montana

Brian M. Morris, District Judge, Presiding

Argued and Submitted

August 31, 2015—Seattle, Washington

Filed October 21, 2015

Before: Alfred T. Goodwin, Ronald M. Gould,

and Sandra S. Ikuta, Circuit Judges.

Opinion by Judge Gould

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2 UNITED STATES V. CONTI

SUMMARY*

Criminal Law

The panel affirmed the district court in a case in which the

defendant was convicted of, inter alia, conspiracy to defraud

the United States in violation of 18 U.S.C. § 371.

The defendant and his co-conspirators, through their

affiliation with the federally funded Po’Ka Project, stole or

helped steal millions of dollars in grant funding that

otherwise could have gone to provide mental health and

substance abuse treatment to Blackfeet Indian youth. The

count at issue rested on § 371’s “defraud” clause, which

includes the element of “deceitful or dishonest means,” but

the district court instructed the jury only on § 371’s “offense”

clause, which sets forth an alternate means of commission of

the offense and does not include the element of deceitful or

dishonest means.

The panel observed that to the extent United States v.

Caldwell, 989 F.2d 1056 (9th Cir. 1993), held that the failure

to instruct the jury on an essential element of the crime is per

se prejudicial, it is inconsistent with the subsequent Supreme

Court decision in Neder v. United States, 527 U.S. 1 (1999),

which does not permit a jury instruction error to be

considered a structural error. The panel concluded that

Caldwell is therefore overruled, and need not be followed to

the extent it held otherwise.

* This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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UNITED STATES V. CONTI 3

The panel held that the district court’s instructions, which

did not include the element of “deceitful or dishonest”

conduct, were erroneous, but that there was no plain error

affecting the defendant’s substantial rights under Fed. R.

Crim. P. 52(b) because the government presented strong and

convincing evidence of deceitful and dishonest means, and

the defendant’s evidence is not sufficient to support a

contrary finding.

The panel resolved other issues in a jointly-filed

memorandum disposition.

COUNSEL

Larry Jent, Williams & Jent, LLP, Bozeman, Montana, for

Defendant-Appellant.

Michael W. Cotter, United States Attorney, Carl E. Rostad

(argued) and Bryan T. Dake, Assistant United States

Attorneys, United States Attorney’s Office, Great Falls,

Montana, for Plaintiff-Appellee.

OPINION

GOULD, Circuit Judge:

Gary Conti appeals his jury convictions and sentence for

bankruptcy fraud (18 U.S.C. § 157), conspiracy to defraud the

United States (18 U.S.C. § 371), scheme to commit wire

fraud against the United States and the Blackfeet Indian Tribe

(18 U.S.C. § 1343), and conspiracy to submit false claims

(18 U.S.C. § 286). Conti and his co-conspirators, through

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4 UNITED STATES V. CONTI

their affiliation with the federally funded Po’Ka Project, stole

or helped steal millions of dollars in grant funding that

otherwise could have gone to provide mental health and

substance abuse treatment to Blackfeet youth. Conti was

tried twice and convicted on twenty-seven counts.

Conti’s conviction on Count 1 rested on a charge for

which the jury instructions did not match the indictment. The

sole question we consider here is whether an error in jury

instructions here amounted to “plain error” under Fed. R.

Crim. P. 52(b). For the reasons that follow, we affirm Conti’s

conviction on Count 1.1

One of Conti’s twenty-seven convictions was for

conspiracy to defraud the United States under the general

conspiracy statute, 18 U.S.C. § 371. This statute criminalizes

conspiracy “either to commit any offense against the United

States, or to defraud the United States.” 18 U.S.C. § 371

(emphasis added). This court has held that the separate

clauses in the statute create two alternate means of

commission of the offense. United States v. Smith, 891 F.2d

703, 712 (9th Cir. 1989). To convict on a charge under the

“defraud” clause, the government must show that the

defendant (1) entered into an agreement (2) to obstruct a

lawful government function (3) by deceitful or dishonest

means and (4) committed at least one overt act in furtherance

of the conspiracy. United States v. Caldwell, 989 F.2d 1056,

1059 (9th Cir. 1993); see also Hammerschmidt v. United

States, 265 U.S. 182, 188 (1924). This circuit’s model jury

instructions for the “defraud” clause of § 371 (No. 8.21)

include the element of “deceitful or dishonest means,”

1 We resolve all other issues and affirm the district court in a

memorandum disposition filed jointly with this opinion.

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UNITED STATES V. CONTI 5

whereas the instructions for the “offense” clause (No. 8.20)

do not.

Here the “defraud” clause was the basis of the Count 1

indictment, but the district court instructed the jury only on

the “offense” clause. Jury instructions Nos. 4 and 5, which

were used at trial, parallel Ninth Circuit model instruction

8.20 under the “offense” clause. They omit the “defraud”

language from a reprinting of 18 U.S.C. § 371, and they do

not include the essential element of “deceitful or dishonest”

conduct. Conti contends that these instructions allowed the

jury to convict him on Count 1 without finding an essential

element.

In Caldwell, the jury found a defendant bookkeeper guilty

of conspiring to defraud the United States, but the district

court did not instruct the jury on the essential element of

“deceitful or dishonest means.” Caldwell, 989 F.2d at 1060. 

Instead, the instructions allowed the jury to convict if it found

a plan to “obstruct” or “impede” the IRS, even if the

defendant did not do so dishonestly. Id. The Ninth Circuit

reversed the conviction, holding that failure to instruct the

jury on an essential element of a crime is constitutional error

because it permits a conviction without finding the defendant

guilty of that element. Id. And because the Sixth

Amendment requires the jury to find all elements of the

crime, the court in Caldwell concluded that the error in the 

instructions was not harmless. Id. at 1061.

To the extent Caldwell held that the failure to instruct the

jury on an essential element of the crime is per se prejudicial,

it is inconsistent with the subsequent Supreme Court decision

in Neder v. United States, 527 U.S. 1, 8 (1999), which does

not permit a jury instruction error to be considered a

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6 UNITED STATES V. CONTI

structural error. Therefore, Caldwell is overruled, and we

need not follow it, to the extent it held otherwise. See Miller

v. Gammie, 335 F.3d 889, 900 (9th Cir. 2003).2

We follow the Supreme Court’s guidance in Neder. 

There, the Supreme Court held that a similar error in jury

instructions, failure to submit the element of materiality to the

jury in a fraud prosecution, does not amount to a “structural”

error warranting automatic reversal, but instead is subject to

harmless error analysis.3 An error is harmless if it appears

“beyond a reasonable doubt that the error complained of did

not contribute to the verdict obtained.” Chapman v.

California, 386 U.S. 18, 24 (1967). Neder rejected the

defendant’s argument that “a finding of harmless error may

be made only upon a determination that the jury rested its

verdict on evidence that its instructions allowed it to

consider,” and because the jury did not consider the omitted

element of materiality, it could not be harmless. 527 U.S. at

17. As Neder explained, “at bottom this is simply another

form of the argument that a failure to instruct on any element

of the crime is not subject to harmless-error analysis.” Id.

Rather, the reviewing court must “conduct a thorough

examination” of the evidence in the record and ask whether

“it is clear beyond a reasonable doubt that a rational jury

would have found the defendant guilty absent the error.” Id. 

2 Under this standard set in our en banc opinion in Miller v. Gammie, our

panel is not bound by a prior precedent that is “clearly irreconcilable” with

a subsequent Supreme Court opinion.

 

3

 Structural errors that warrant automatic reversal are rare, and include

Gideon v. Wainwright, 372 U.S. 335 (1963) (complete denial of counsel);

Tumey v. Ohio, 273 U.S. 510 (1927) (biased trial judge); and Vasquez v.

Hillery, 474 U.S. 254 (1986) (racial discrimination in selection of grand

jury).

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UNITED STATES V. CONTI 7

“[W]here a reviewing court concludes beyond a reasonable

doubt that the omitted element was uncontested and

supported by overwhelming evidence, such that the jury

verdict would have been the same absent the error, the

erroneous instruction is properly found to be harmless.” Id.

By contrast, if “the defendant contested the omitted element

and raised evidence sufficient to support a contrary

finding—it should not find the error harmless.” Id. at 19.

Because Conti did not object to the missing element in the

jury instruction, we review his claim not just for harmless

error, but for plain error. Fed. R. Crim. P. 52(b). A circuit

court has discretion to correct a plain error that meets several

requirements. First, there must be an “error,” a deviation

from a legal rule that is not waived. United States v. Puckett,

556 U.S. 129, 135 (2009); see also United States v. Olano,

507 U.S. 725, 732–33 (1993). Waiver, the intentional

relinquishment of a known right, differs from forfeiture,

which is the failure to timely assert a right. Olano, 507 U.S.

at 733. Second, the error must be “plain,” meaning “clear” or

“obvious.” Id. at 734. Third, the error must affect substantial

rights, meaning it was prejudicial, or there was a “reasonable

probability” that it “affected the outcome of the district court

proceedings.” Id.; United States v. Marcus, 560 U.S. 258,

262 (2010). Finally, an appellate court may exercise its

discretion to correct a forfeited error only if the error

“seriously affects the fairness, integrity, or public reputation

of judicial proceedings.” Olano, 507 U.S. at 736; see also

Johnson v. United States, 520 U.S. 461, 469–70 (1997).

We apply these standards to determine whether the

conviction on Count 1 is a plain error. First, there is an error

because although Conti did not object to the invalid jury

instructions at trial, he has not intentionally relinquished or

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8 UNITED STATES V. CONTI

abandoned his ability to challenge them on appeal. See

Olano, 507 U.S. at 733–34. Second, the error was plain or

obvious because the jury instructions clearly do not match the

indictment.

We next address whether the error affected “substantial

rights.” We have held that an omission of an element from a

jury instruction that is harmless, under the standard set forth

in Neder, does not affect a defendant’s substantial rights for

purposes of plain error review. United States v. Tuyet ThiBach Nguyen, 565 F.3d 668, 677 (9th Cir. 2009). We must

“conduct a thorough examination” of all the evidence in the

record and ask whether the omitted element was supported by

sufficient evidence. Neder, 527 U.S. at 17. Cases that have

upheld convictions rendered on incomplete or erroneous jury

instructions have relied on “strong and convincing evidence”

that the prosecution has adequately proved the missing

element of the crime. United States v. Perez, 116 F.3d 840,

848 (9th Cir. 1997); see also United States v. Smith, 282 F.3d

758 (9th Cir. 2002) (holding that the omission of an element

from jury instructions was not plain error where the

underlying fact supporting the element was “undisputed”

based on the “uncontradicted testimony” of a government

witness); Tuyet Thi-Bach Nguyen, 565 F.3d at 677 (holding

the defendant’s substantial rights were not affected because

of “overwhelming evidence” of the missing element). We

must also consider whether the defendant contested the

omitted element “and raised evidence sufficient to support a

contrary finding,” Neder, 527 U.S. at 19, and finally whether

“the jury verdict would have been the same absent the error.” 

Id. at 17.

A review of the trial record of evidence regarding the

omitted element (that Conti acted with “deceitful or dishonest

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UNITED STATES V. CONTI 9

means” in participating in the scheme to steal millions of

grant dollars from the United States) shows that the

government presented substantial evidence on this element

during the course of the trial. Among other evidence, the

government introduced emails showing that other participants

in the scheme considered Conti to be someone who would

“come up with” in-kind services to meet grant requirements,

and could help explain invoices for in-kind services that

supposed contributors did not remember contributing. Other

emails sent by Conti indicated that he fabricated invoices for

in-kind audit documentation, including changing the dates of

work done and “adding a few things” to give the

documentation “some diversity.” Further, emails showed that

Conti suggested ways to retroactively meet the in-kind

contribution requirements of a prior year and fabricated the

documentation and dollar amounts of the services

“contributed.” In one email, Conti asked a supposed

contributor of in-kind services to verify the contribution by

signing an invoice Conti had prepared, or alternatively to

“delete this message” if she was not comfortable with the

idea. A witness testified that the invoice sent to the supposed

contributor was for fraudulently inflated amounts. Finally,

the government adduced testimony that Conti knew the

invoices he helped prepare were “false and fraudulent.”

On the other hand, the record shows that Conti contested

the omitted element, arguing that the government’s case

rested on circumstantial evidence. Conti’s counsel asserted

at trial that “you can’t accidentally commit fraud . . . you

have to know what you’re doing. You have to have intent to

defraud. That’s one of the elements. The government’s own

witness agreed that [Conti], in that respect, did not intend to

defraud.” Conti’s counsel also claimed that Conti could not

be part of a conspiracy to defraud if his misrepresentations

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10 UNITED STATES V. CONTI

were intended to give money back to the community, and “he

doesn’t know the objective of doing it falsely.”

In support of this defense, Conti elicited testimony that he

had not been involved in creating the fabricated invoices. 

Conti also adduced testimony that he had actually performed

the work reflected in his own invoices. Finally, one witness

conceded on cross-examination that he did not know whether

Conti was aware of certain fraudulent activities.

After carefully considering the extensive trial record, we

conclude that on balance, the government presented “strong

and convincing evidence” of deceitful and dishonest means,

Perez, 116 F.3d at 848, and Conti’s evidence is not

“sufficient to support a contrary finding,” Neder, 527 U.S. at

19. We hold that the prosecution adequately proved the

missing element of the crime, see Perez, 116 F.3d at 848, and

that there is not a “reasonable probability” that the error in

jury instructions affected the outcome. See Marcus, 560 U.S.

at 262. We conclude that there was no plain error affecting

Conti’s substantial rights.4

AFFIRMED.

4 Because we conclude that the error did not affect Conti’s substantial

rights, we need not reach the final question whether it “seriously affects

the fairness, integrity, or public reputation of judicial proceedings.” 

Olano, 507 U.S. at 736.

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