Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-14-30042/USCOURTS-ca9-14-30042-0/pdf.json

Parties Involved:
Mark F. Spangler
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.

MARK F. SPANGLER,

Defendant-Appellant.

No. 14-30042

D.C. No. 

2:12-cr-00133-

RSM-1

OPINION

Appeal from the United States District Court

for the Western District of Washington

Ricardo S. Martinez, District Judge, Presiding

Argued and Submitted

December 10, 2015—Seattle, Washington

Filed January 15, 2016

Before: M. Margaret McKeown and Richard C. Tallman,

Circuit Judges, and Joan Humphrew Lefkow,* Senior

District Judge

Opinion by Judge Lefkow

* The Honorable Joan Humphrey Lefkow, Senior United States District

Judge for the Northern District of Illinois, sitting by designation.

 Case: 14-30042, 01/15/2016, ID: 9828589, DktEntry: 45-1, Page 1 of 19
2 UNITED STATES V. SPANGLER

SUMMARY**

Criminal Law

The panel affirmed convictions on twenty-four counts of

wire fraud, seven counts of money laundering, and one count

of investment-adviser fraud.

The panel held that the district court did not abuse its

discretion in barring on relevancy grounds the defendant’s

expert witness from testifying, and held that any error was

harmless. The panel rejected the defendant’s contention that

exclusion of the expert’s testimony violated his Sixth

Amendment right to present a defense.

The panel held that the district court did not abuse its

discretion in admitting testimony regarding the defendant’s

status as a fiduciary, introduced to explain why the

defendant’s clients did not question his documents and

reports, where the investors’ lay understandings of the

defendant’s fiduciary obligations demonstrated how he was

able to accomplish the alleged fraud, and where any concerns

about the jurors’ equating violations of fiduciary duty with

criminal liability were put to rest by the district court’s

careful instructions on the elements of the offenses and the

absence of breach of fiduciary duty as a consideration in

determining guilt.

The panel rejected the defendant’s contention that the

district court violated his Fifth Amendment rights when it

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

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

 Case: 14-30042, 01/15/2016, ID: 9828589, DktEntry: 45-1, Page 2 of 19
UNITED STATES V. SPANGLER 3

declined to strike Count 33, which alleged that the defendant

committed investment-adviser fraud by violating 15 U.S.C.

§ 80b-6 (prohibiting investment advisers from engaging in

certain conduct) without mentioning 15 U.S.C. § 80b-17

(through which violations of § 80b-6 are made criminal) and

without using the word “willful.”

The panel concluded that cumulative error analysis is

inapposite, as the defendant has not demonstrated any errors.

COUNSEL

Suzanne Lee Elliott (argued), Law Office of Suzanne Lee

Elliott, Seattle, Washington, for Defendant-Appellant.

Teal LuthyMiller (argued), Assistant United States Attorney;

Annette L. Hayes, Acting United States Attorney, United

States Attorneys’ Office, Western District of Washington,

Seattle, Washington, for Plaintiff-Appellee.

OPINION

LEFKOW, Senior District Judge:

Mark F. Spangler appeals his jury convictions on twentyfour counts of wire fraud (18 U.S.C. § 1343), seven counts of

money laundering (18 U.S.C. § 1957), and one count of

investment-adviser fraud (15 U.S.C. § 80b-17). We focus on

three of Spangler’s arguments raised on appeal: (1) that the

district court abused its discretion in barring his expert

witness from testifying, and that the exclusion of the expert’s

testimony violated his Sixth Amendment right to present a

 Case: 14-30042, 01/15/2016, ID: 9828589, DktEntry: 45-1, Page 3 of 19
4 UNITED STATES V. SPANGLER

defense; (2) that the district court abused its discretion in

permitting testimony about his status as a fiduciary; and

(3) that the district court violated his Fifth Amendment rights

by failing to strike count 33 from the second superseding

indictment.1 We have jurisdiction under 28 U.S.C. § 1291,

and we affirm.

BACKGROUND2

On May 14, 2013, a grand jury returned a second

superseding indictment charging Spangler with twenty-five

counts of wire fraud, seven counts of money laundering, and

one count of investment-adviser fraud. At trial, the

government presented evidence of the following:

Spangler was a registered investment adviser and a onetime chairman of the National Association of Personal

Financial Advisors. From the early 1980s until 2011,

Spangler headed a Seattle investment firm known during the

relevant time period as The Spangler Group, which serviced

between twenty and twenty-five client families at any given

time.

In 1998, Spangler set up five investment funds, two of

which—the Equity Investors Group, LLC (Equity) and the

Income+ Investors Group, LLC (Income)—are particularly

relevant for purposes of this appeal. Spangler’s clients

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

memorandum disposition filed concurrently with this opinion.

2 We limit this section to general background and expand on the facts

relevant to Spangler’s arguments on appeal in the analysis sections set

forth below.

 Case: 14-30042, 01/15/2016, ID: 9828589, DktEntry: 45-1, Page 4 of 19
UNITED STATES V. SPANGLER 5

expected that the money they put into Equity and Income

would be invested in publicly-traded companies and that

investment decisions would be made by an outside

investment manager, rather than Spangler. These

expectations found support in the private placement

memoranda (PPMs) for the funds. Indeed, the 1998 version

of the PPM for Equity, which was drafted by William

Carleton, Spangler’s attorney, provided that “the securities in

which [Equity] invests are expected to be traded in public

markets” and that Spangler would use Southeastern Asset

Management, Inc. to make investment decisions. Both PPMs

provided that the funds’ investment objectives could be

changed only by a two-thirds vote of the owners.

The PPMs also contained disclaimers, which the defense

emphasized at trial. For example, the PPMs warned clients

that the investments to be made involved a “high degree of

risk” and that “no investment in these securities should be

made by any person who is not in a position to lose the entire

amount of such investment.” At trial, Carleton described

these warnings as “boilerplate.”

In 1999, Spangler and Carleton organized Spangler

Ventures, which consisted of a series of investment funds

dedicated to startup companies. According to Carleton, the

purpose of Spangler Ventures was to offer “high-risk venturestyle . . . startup company investing” separate from the five

funds set up in 1998. Spangler was intimately involved in

two of the startups in which the Spangler Ventures funds

invested: TeraHop and Tamarac. Spangler served as

chairman of both entities and held other positions as well.

Despite his apparent intent to separate the funds invested

in public equities from those invested in startup companies,

 Case: 14-30042, 01/15/2016, ID: 9828589, DktEntry: 45-1, Page 5 of 19
6 UNITED STATES V. SPANGLER

in 2003 Spangler began to move money from Equity and

Income into TeraHop and Tamarac, all without his clients’

consent. Although he sometimes transferred the money

directly, he often funneled the money through the Spangler

Ventures funds first, largely because he stood to gain 16% of

any profits made by Spangler Ventures under the terms of

those funds.

Spangler’s diversion of cash from Equity and Income to

TeraHop was especially problematic because TeraHop lost

more than $50 million between 2001 and 2010. Given

TeraHop’s poor financial performance, TeraHop frequently

could not make interest payments on loans it had taken from

Income. Accordingly, TeraHop borrowed money from

Equity and various Spangler Ventures funds to make the

payments, and Income, in turn, used the money to pay

quarterly dividends to investors. In this way, Spangler

operated a circular Ponzi scheme, using his clients’ money to

generate their interest payments.

To conceal evidence of wrongdoing, Spangler provided

his clients with carefully worded quarterly statements titled

“portfolio performance analyses.” These statements referred

to the funds invested in Equity as “marketable equities” and

the funds invested in Income as “specialty bonds.” 

Investments in “private equities” were listed in a separate

category, creating the illusion that only a small percentage of

funds was dedicated to private investments such as startup

companies. In reality, however, a much larger portion of

Spangler’s clients’ portfolios was invested in private equities,

as funds invested in Equity and Income were also being

moved into TeraHop and Tamarac. For example, a portfolio

report for one of Spangler’s clients from the last quarter of

2010 represented that the client had less than 1% of his

 Case: 14-30042, 01/15/2016, ID: 9828589, DktEntry: 45-1, Page 6 of 19
UNITED STATES V. SPANGLER 7

portfolio invested in TeraHop when 51% of his portfolio was

actually invested in the startup.

In 2008, Spangler sent letters to his clients and asked

them to sign new PPMs for Equity, Income, and other funds. 

The letters informed Spangler’s clients of name changes for

some of the funds (e.g., Equity became “SG Growth+

Investors Group, L.L.C.” and Income became “SG Income+

Investors Group, L.L.C.”). The new PPMs gave Spangler

discretion to invest funds himself rather than with the

assistance of an outside investment adviser. Further, the

revised PPM for Equity changed the language of the original

PPM stating that securities were “expected to be” traded in

public markets to read that securities “may be” traded in

public markets. The PPMs did not mention TeraHop or

Tamarac directly, and Spangler’s clients testified that theydid

not closely review the new PPMs or seek legal advice before

signing them, largely because theytrusted Spangler and relied

on his expertise.

Concerned about their investments in the wake of the

economic downturn of 2008, some of Spangler’s clients

asked him to liquidate their investments in Equity and

Income, which Spangler could not accomplish within the time

constraints established by the PPMs. When Spangler

informed his clients that he needed to seek new investors to

liquidate their interests, they told him that the plan sounded

like a Ponzi scheme. From there, the situation unraveled, and

in 2011 The Spangler Group was forced into receivership. 

The receiver was able to recover some of Spangler’s clients’

funds, but many of his clients lost millions.

At trial, Spangler rested after the government’s case

without testifying or offering other evidence. On November

 Case: 14-30042, 01/15/2016, ID: 9828589, DktEntry: 45-1, Page 7 of 19
8 UNITED STATES V. SPANGLER

7, 2013, the jury found Spangler guilty of thirty-two of the

thirty-three counts charged, finding him not guilty of one

count of wire fraud. On March 13, 2014, the district court

sentenced him to 192 months of imprisonment and three

years of supervised release. Spangler timely appealed,

challenging only his convictions.

DISCUSSION

I. Whether the District Court Abused its Discretion in

Barring Spangler’s Expert Witness From Testifying

Spangler first argues that the district court erred in

precluding his expert witness, John Keller, from testifying. 

We review a district court’s decision to exclude expert

testimony for an abuse of discretion. See United States v.

Laurienti, 611 F.3d 530, 547 (9th Cir. 2010).

Before trial, Spangler’s counsel disclosedKeller and three

other potential expert witnesses. The Keller disclosure stated

as follows:

John Keller is a forensic accountant and

former criminal investigator with the Internal

Revenue Service. He will testify that he

reviewed the receiver’s investigation of the

Spangler Group businesses. He will testify

that based on his review of the receiver’s

analysis that there were no unexplained

diversions of assets. Mr. Keller personally

reviewed several portfolio position reports

and portfolio performance summaries. He

compared various account statements with the

Spangler Company database of client records. 

 Case: 14-30042, 01/15/2016, ID: 9828589, DktEntry: 45-1, Page 8 of 19
UNITED STATES V. SPANGLER 9

He found nothing in this analysis that let [sic]

him to believe that there was any attempt to

make false representations to client [sic] about

their account balances or account activity. He

saw nothing in the client data reports to

suggest that Mr. Spangler was inappropriately

diverting client funds for his own benefit. Mr.

Keller has also reviewed the client portfolio

analysis to determine the client’s rates of

return on their investments and compared

them to rates of return if the clients had

invested money into index funds or kept their

money in Southeast Asset Management.

The government moved to exclude all four expert

witnesses under Federal Rule of Evidence 702 and Daubert

v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). 

The district court denied the government’s motion as it

related to three of Spangler’s witnesses but granted the

motion with respect to Keller, deeming his testimony not

relevant.

Initially, the government contends that Spangler may not

raise this argument on appeal because he failed to testify on

his own behalf or otherwise introduce witness testimony or

other evidence at trial. In support, the government relies on

Luce v. United States, 469 U.S. 38 (1984), which held that, to

preserve for review a claim of improper impeachment of the

defendant with a prior conviction, the defendant must testify. 

Luce provides no analog for the situation here. Spangler’s

 Case: 14-30042, 01/15/2016, ID: 9828589, DktEntry: 45-1, Page 9 of 19
10 UNITED STATES V. SPANGLER

ability to challenge the ruling excluding expert testimony is

governed by Federal Rule of Evidence 702.3

With respect to diversions of assets and false

representations, the district court did not abuse its discretion

in excluding the proffered testimony. Spangler argues that

Keller’s testimony would have been relevant to his intent to

defraud his clients. At trial, the government argued that

Spangler had hidden from his clients that he had been moving

their money from Equity and Income into TeraHop and

Tamarac by listing on his clients’ financial statements the

funds invested in Equity and Income in separate categories

from the funds invested in private equities. In doing so,

Spangler failed to disclose that the funds in Equity and

Income were also being funneled into private equities,

creating the illusion that his clients’ portfolios were primarily

invested in publicly traded companies. Given the

government’s theory, any testimony that the clients’ financial

statements accuratelyreflected the amount of money invested

in each Spangler Group fund would have been irrelevant. 

Rather, the government’s point was that, while the financial

statements were technically accurate, they failed to disclose

the reality behind Spangler’s investment decisions. Indeed,

the statements were in evidence for the jury to consider.

Nor was Keller’s proposed testimony about the prudence

of Spangler’s investment decisions relevant to fraudulent

3 Neither party disputes that the district court applied the correct legal

rule. Indeed, the court’s cited reason for exclusion was lack of relevance,

which is folded into the Daubert standard under Federal Rule of Evidence

702. See Estate of Barabin v. AstenJohnson, Inc., 740 F.3d 457, 463 (9th

Cir. 2014) (“We have interpreted Rule 702 to require that ‘[e]xpert

testimony . . . be both relevant and reliable.”’ (alterations in original)

(quoting United States v. Vallejo, 237 F.3d 1008, 1019 (9th Cir. 2001))).

 Case: 14-30042, 01/15/2016, ID: 9828589, DktEntry: 45-1, Page 10 of 19
UNITED STATES V. SPANGLER 11

intent. The government’s case did not depend on whether

investing in private equities was an advisable investment

strategy but on whether Spangler diverted his clients’ funds

without their knowledge or consent. That in hindsight

Spangler’s investments in startup companies were arguably

prudent does not negate his fraudulent intent. See United

States v. Benny, 786 F.2d 1410, 1417 (9th Cir. 1986) (“While

an honest, good-faith belief in the truth of the

misrepresentations may negate intent to defraud, a good-faith

belief that the victim will be repaid and will sustain no loss is

no defense at all.” (citation omitted)).

Even if the district court had erred in barring Keller’s

testimony, the error was harmless. Under our test for

harmless error, we “must reverse unless it is more probable

than not that the error did not materially affect the verdict.” 

Laurienti, 611 F.3d at 547 (quoting United States v. Rahm,

993 F.2d 1405, 1415 (9th Cir. 1993)). Spangler was able to

assert repeatedlythrough cross-examination and his counsel’s

opening statement and closing argument that the financial

statements distributed by Spangler accurately reflected his

clients’ investments in the different Spangler Group funds

and that Spangler’s investment strategywas prudent given the

financial crisis of 2008. Moreover, Spangler could have

called a different expert witness, Peter Brous, to testify about

“the state of the economy and its effects on various

investments during a time frame spanning from 2005 to

2010.” Given that Spangler chose not to call Brous to support

his argument that Spangler’s investment strategy was sound,

he cannot credibly argue that he was prejudiced by the district

court’s exclusion of Keller. Cf. United States v. Cohen,

510 F.3d 1114, 1127 (9th Cir. 2007) (reversing the

defendant’s conviction and remanding for a new trial when

 Case: 14-30042, 01/15/2016, ID: 9828589, DktEntry: 45-1, Page 11 of 19
12 UNITED STATES V. SPANGLER

the erroneous exclusion of expert testimony left the defendant

“without any way to explain” his argument).

We also reject Spangler’s attempt to constitutionalize his

claims by arguing that the district court’s ruling deprived him

of his Sixth Amendment right to present a defense. While the

Constitution affords the accused “a meaningful opportunity

to present a complete defense,” Holmes v. South Carolina,

547 U.S. 319, 324 (2006) (quoting Crane v. Kentucky,

476 U.S. 683, 690 (1986)), a criminal defendant “must

comply with established rules of procedure and evidence

designed to assure both fairness and reliability in the

ascertainment of guilt and innocence.” United States v.

Waters, 627 F.3d 345, 354 (9th Cir. 2010) (quoting United

States v. Perkins, 937 F.2d 1397, 1401 (9th Cir. 1991)). In

this case, Spangler was able “to present the substance” of his

defense to the jury. See id.; see also Perkins, 937 F.2d at

1401. The limited nature of Spangler’s defense was in large

part self-imposed, as he declined to introduce three expert

witnesses the district court deemed admissible. Accordingly,

we find no constitutional error.

II. Whether the District Court Abused its Discretion in

Admitting Testimony Regarding Spangler’s Status as

a Fiduciary

Spangler next contends that the district court erred in

permitting testimony about Spangler’s status as a fiduciary. 

We review for an abuse of discretion a district court’s

decision to admit evidence. United States v. Curtin, 489 F.3d

935, 943 (9th Cir. 2007) (en banc).

Before trial, Spangler moved to strike the part of the

second superseding indictment that referenced the fiduciary

 Case: 14-30042, 01/15/2016, ID: 9828589, DktEntry: 45-1, Page 12 of 19
UNITED STATES V. SPANGLER 13

duty he owed to his clients4and to exclude any evidence of

his status as a fiduciary at trial. Specifically, Spangler argued

that evidence of his fiduciary duty would raise the risk that

the jury would perceive a violation of his fiduciary duties (a

civil offense that can result from negligent conduct) as

tantamount to willful fraud, and consequently, find criminal

liability. After finding that the portion of the motion directed

at the indictment was moot, as the court would not read the

indictment to the jury, the district court denied the remainder

of the motion on the basis that its instructions would delineate

“what the elements of each of the crimes charged against Mr.

Spangler are, and what specific burden the government bears

in proving each of those particular elements.”

Government witnesses did mention Spangler’s status as

a fiduciary in their testimony. For example, when the

prosecutor asked James Peterson, a former client of

Spangler’s, whether he had a lawyer review various legal

documents he had received from Spangler, Petersen answered

that he had not and explained, “I mean, I was paying Mr.

Spangler a good amount of money to be a financial

advisor. . . . And, you know, he was my fiduciary. He had a

fiduciary responsibility to me.” Similarly, the prosecutor

referenced Spangler’s fiduciary duty to his clients during

closing argument and rebuttal. For example, the prosecutor

argued that Spangler’s clients had asked him to “protect my

life’s work. . . . And Mark Spangler, as their investment

advisor, as their fiduciary, said, I will protect it. . . . That is

what a fiduciary is. That is why Mark Spangler’s clients

4 The investment-adviser-fraud count of the second superseding

indictment provided, “MARK F. SPANGLER . . . owed a fiduciary

obligation of good faith, loyalty, and fair dealing to [his] clients, which

entrusted MARK F. SPANGLER . . . with their money to manage.”

 Case: 14-30042, 01/15/2016, ID: 9828589, DktEntry: 45-1, Page 13 of 19
14 UNITED STATES V. SPANGLER

trusted him when they handed him their life’s work. That is

how these crimes happened.” Although the government

proffered a proposed jury instruction specifying when a

fiduciary duty exists and instructing the jury that a violation

of that duty was one factor to consider in determining

whether the government had proved investment-adviser fraud

beyond a reasonable doubt, the district court refused the

instruction. With respect to both the wire-fraud and

investment-adviser-fraud counts, the court instructed the jury

on the elements of proof without indicating that it could

consider breach of fiduciary duty.

Spangler now relies on United States v. Christo, 614 F.2d

486 (5th Cir. 1980), and United States v. Wolf, 820 F.2d 1499

(9th Cir. 1987), to argue that the cumulative effect of

references to Spangler’s fiduciary duties by government

witnesses and the prosecutor, as well as the district court’s

failure to give a limiting instruction, raised the risk that a

reasonable juror would have concluded that any breach of

fiduciary duty constituted fraud. Both Christo and Wolf dealt

with the danger of jurors’ equating violations of civil statutes

or regulations with criminal liability in the context of

prosecutions against bank executives for misapplication of

bank funds under 18 U.S.C. § 656.

In Christo, the government’s case centered on a series of

overdrafts in the defendant executive’s account which, the

government argued, were violations of a civil statute

prohibiting a bank from extending more than $5,000 credit to

its executive officers. Christo, 614 F.2d at 489. The

government “attempt[ed] to bootstrap” the civil violations

into criminal misapplication felonies. Id. at 492. In addition,

the court instructed the jury to consider whether the

overdrafts violated the civil statute in determining criminal

 Case: 14-30042, 01/15/2016, ID: 9828589, DktEntry: 45-1, Page 14 of 19
UNITED STATES V. SPANGLER 15

liability. Id. at 491. The Fifth Circuit reversed the

convictions on the basis that the government’s conduct

compounded by the improper jury instruction required a new

trial. See id. at 492 (“After examining the record of the trial,

one questions whether Christo was found guilty of willful

misapplication with intent to injure and defraud the bank or

. . . for overdrafting his checking account.”).

Similarly, in Wolf, we relied on Christo in reversing

convictions of a bank executive for criminal misapplication

of bank funds and false entry. There, the government relied

on violations of banking Regulation O, which requires the

defendant to disclose to the bank’s directors his interest in

bank loans, to show a material nondisclosure on a loan

application. Wolf, 820 F.2d at 1505. The jury was instructed

that violation of Regulation O was “background evidence,”

but we concluded the instruction was insufficient to cure the

“serious risk that the jury would find Wolf guilty of criminal

misapplication and false entry because he failed to comply

with Regulation O.” Id.

Nothing in this record indicates that testimony and

argument regarding Spangler’s fiduciary status

“impermissibly infected” Spangler’s prosecution. Cf.

Christo, 614 F.2d at 492. As set out above, the testimony

regarding fiduciary duty was introduced to explain why

Spangler’s clients did not question his documents and reports. 

The investors’ lay understandings of Spangler’s fiduciary

obligations—they thought they could trust

him—demonstrated how he was able to accomplish the

alleged fraud. We are satisfied that admission of the

testimony did not result in the sort of bootstrapping against

which Christo and Wolf warned. Moreover, any concerns

about the jurors’ equating violations of fiduciary duty with

 Case: 14-30042, 01/15/2016, ID: 9828589, DktEntry: 45-1, Page 15 of 19
16 UNITED STATES V. SPANGLER

criminal liability were put to rest by the district court’s

careful instructions on the elements of the offenses and the

absence of reference to breach of fiduciary duty as a

consideration in determining guilt. As such, we conclude

there was no abuse of discretion.

III. Whether the District Court Violated Spangler’s

Fifth Amendment Rights When it Declined to

Strike Count 33 From the Indictment

Spangler also contends that the district court violated his

Fifth Amendment rights when it declined to dismiss count 33

of the second superseding indictment. We review the

sufficiency of an indictment de novo. United States v. Lo,

231 F.3d 471, 481 (9th Cir. 2000).

Count 33 alleged that Spangler committed investmentadviser fraud under the Investment Advisers Act of 1940 by

violating 15 U.S.C. § 80b-6, which prohibits investment

advisers from engaging in certain conduct. A separate section

of the Act, 15 U.S.C. § 80b-17, provides that “[a]ny person

who willfully violates any provision of this subchapter . . .

shall, upon conviction, be fined not more than $10,000,

imprisoned for not more than five years, or both.” Although

the second superseding indictment charged Spangler with

failing to disclose his interests in TeraHop and Tamarac and

the full extent of his clients’ investments in those entities in

violation of § 80b-6, it made no mention of § 80b-17. Nor

did it use the word “willful.”

Ten days into trial and after the government had presented

all of its evidence, Spangler moved to dismiss count 33,

arguing that the second superseding indictment failed to cite

the correct statutory subsection and to allege willfulness, an

 Case: 14-30042, 01/15/2016, ID: 9828589, DktEntry: 45-1, Page 16 of 19
UNITED STATES V. SPANGLER 17

essential element of the offense. Because of these defects,

Spangler argued, it was unclear whether the grand jury had

passed on the charge. The district court denied the motion,

finding that it was untimely and therefore that, giving the

indictment a liberal and common-sense reading, it could not

be said “that the defendant was in any way misled or

prejudiced by the error, if there is an error, in the citation. 

Nor is the citation omission grounds to dismiss the

indictment, at least at this point in time.”

Although the failure of an indictment to state an offense

cannot be waived, a tardy challenge—that is, one made

during trial or after the verdict—‘“suggests a purely tactical

motivation’ and is needlessly wasteful because pleading

defects can usually be readily cured through a superseding

indictment before trial.” Lo, 231 F.3d at 481 (quoting United

States v. Pheaster, 544 F.2d 353, 361 (9th Cir. 1976)). 

Further, ‘“the fact of the delay tends to negate the possibility

of prejudice in the preparation of the defense,’ because one

can expect that the challenge would have come earlier were

there any real confusion about the elements of the crime

charged.” Id. (quoting Pheaster, 544 F.2d at 361). Given

these considerations, “indictments which are tardily

challenged are liberally construed in favor of validity,”

Echavarria-Olarte v. Reno, 35 F.3d 395, 397 (9th Cir. 1994)

(quoting United States v. Rodriguez-Ramirez, 777 F.2d 454,

459 (9th Cir. 1985)), and the question becomes whether the

indictment is sufficient when “read in a common sense,

nontechnical fashion.” Lo, 231 F.3d at 481.

Applying that standard here, we have no trouble

sustaining the indictment. “Correct citation to the relevant

statute, though always desirable, is not fatal if omitted,” as

long as the “the error did not mislead the defendant to his

 Case: 14-30042, 01/15/2016, ID: 9828589, DktEntry: 45-1, Page 17 of 19
18 UNITED STATES V. SPANGLER

prejudice.” United States v. Vroman, 975 F.2d 669, 671 (9th

Cir. 1992) (internal quotation marks and citations omitted). 

Here, Spangler does not argue that he was prejudiced by the

lack of a citation to § 80b-17 nor could he, as he

acknowledged in a pretrial motion that “[v]iolations of § 

80b-6 are made criminal through § 80b-17.”

Instead, Spangler argues that the absence of the word

“willful” from the investment-adviser-fraud count raises the

risk that the grand jury did not find that Spangler acted with

fraudulent intent. This contention also fails. As we stated in

United States v. Awad, 551 F.3d 930, 936 (9th Cir. 2009), “an

inference of willfulness is obvious because of the facts

alleged in the indictment.” Specifically, the second

superseding indictment alleged, among other things, that

Spangler “knowinglydevised a scheme and artifice to defraud

investors” by diverting their money “into two risky private

start-up companies” and concealing evidence of any

wrongdoing. Count 33 expressly incorporated all other

portions of the indictment by reference, including the

language quoted above. Given that the Supreme Court in a

related context has defined a “willful” act as “one undertaken

with a ‘bad purpose,”’ Bryan v. United States, 524 U.S. 184,

191 (1998); see also Awad, 551 F.3d at 936, a reasonable

grand juror would infer from the second superseding

indictment that Spangler acted with the requisite bad purpose.

IV. Cumulative Error

Finally, Spangler maintains that the cumulative effect of

the errors committed at trial justifies reversal of his

convictions. Under the law of cumulative error, where “no

single trial error examined in isolation is sufficiently

prejudicial to warrant reversal, the cumulative effect of

 Case: 14-30042, 01/15/2016, ID: 9828589, DktEntry: 45-1, Page 18 of 19
UNITED STATES V. SPANGLER 19

multiple errors may still prejudice a defendant.” United

States v. Frederick, 78 F.3d 1370, 1381 (9th Cir. 1996). 

Here, the cumulative error analysis is inapposite, as Spangler

has not demonstrated any errors by the district court. See

United States v. Martinez-Martinez, 369 F.3d 1076, 1090 (9th

Cir. 2004).

CONCLUSION

For the foregoing reasons, we affirm Spangler’s

convictions.

AFFIRMED.

 Case: 14-30042, 01/15/2016, ID: 9828589, DktEntry: 45-1, Page 19 of 19