Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-15-30262/USCOURTS-ca9-15-30262-0/pdf.json

Parties Involved:
Joseph Brent Loftis
Appellee
United States of America
Appellant

Document Text:

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,

Plaintiff-Appellant,

v.

JOSEPH BRENT LOFTIS,

Defendant-Appellee.

No. 15-30262

D.C. No.

2:15-cr-00011-DLC-1

OPINION

Appeal from the United States District Court

for the District of Montana

Dana L. Christensen, Chief Judge, Presiding

Argued and Submitted October 7, 2016

Seattle, Washington

Filed December 9, 2016

Before: William A. Fletcher, Raymond C. Fisher

and N. Randy Smith, Circuit Judges.

Opinion by Judge Fisher

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2 UNITED STATES V. LOFTIS

SUMMARY*

Criminal Law

The panel affirmed the district court’s order granting in

part the defendant’s motion in limine in a case in which the

government has charged the defendant with five counts of

wire fraud for victimizing investors through false

representations about his oil business.

The five charged uses of the wires involve a total of three

investors, and all involve the scheme as perpetrated in

Montana. The government sought to introduce evidence of

investor victims not specifically named in the indictment,

additional uses of the wires and aspects of the scheme carried

out in states other than Montana (“uncharged transactions”).

The panel held that the uncharged transactions are part of

the charged offense – the fraudulent scheme as a whole – not

“other” crimes or “other” acts evidence; and that Fed. R.

Evid. 404(b) thus does not preclude the government from

introducing evidence of uncharged transactions to prove the

first element of wire fraud – the existence of a scheme to

defraud. The panel wrote that even if the uncharged

transactions were not part of the crime charged, they would

not be subject to exclusion under Rule 404(b) because they

are “part of the same transaction” as the charged transactions,

and that the inextricably-intertwined doctrine therefore

affords a second basis for concluding the evidence should not

* 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. LOFTIS 3

be treated as “other” crimes or “other” acts evidence under

Rule 404(b). 

The panel wrote that, notwithstanding some ambiguity in

the district court’s ruling, it does not construe the district

court’s ruling as contrary to the panel’s holding.

COUNSEL

Chad Spraker (argued), Assistant United States Attorney;

Michael W. Cotter, United States Attorney; United States

Attorney’s Office, Helena, Montana; for Plaintiff-Appellant.

John Rhodes (argued), Assistant Federal Defender; Anthony

R. Gallagher, Federal Defender; Office of the Federal Public

Defender, Missoula, Montana; for Defendant-Appellee.

OPINION

FISHER, Circuit Judge:

The defendant, Joseph Brent Loftis, has been charged

with five counts of wire fraud. The government alleges

Loftis victimized investors through false representations

about his oil business. The indictment charges a broad

scheme to defraud, spanning six years, several states and

numerous alleged victims. Each of the five counts in the

indictment pertains to a particular wire transfer in which a

defrauded investor wired money to Loftis. These five uses of

the wires (“charged transactions”) involve a total of three

investors, and all involve the scheme as perpetrated in a

single state, Montana.

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4 UNITED STATES V. LOFTIS

As the trial approached, it became clear the government

intended to offer evidence of investor victims not specifically

named in the indictment, additional uses of the wires and

aspects of the scheme carried out in states other than Montana

(“uncharged transactions”). Loftis moved in limine to

exclude this evidence, arguing the district court should “limit

the government’s case to evidence regarding the [three]

named investors and alleged criminal activity involving

Montana.” He sought to bar the government from calling

“witnesses other than [the three investors] from wh[om] the

wired funds were received in the criminal cou[n]ts.”

The district court granted the motion in part, suggesting

the evidence the government sought to introduce pertained to

“other wire frauds” that would be subject to exclusion under

Federal Rule of Evidence 404(b) unless the government could

show the evidence was either “inextricably intertwined with

the scheme Loftis employed in Montana” or admissible for

one of the purposes authorized by Rule 404(b) itself. The

government has appealed the court’s order, and the district

court has stayed proceedings pending disposition of this

interlocutory appeal.

We have jurisdiction under 18 U.S.C. § 3731, see United

States v. DeCinces, 808 F.3d 785, 789-90 (9th Cir. 2015), and

we affirm the district court’s order. We hold the evidence of

uncharged transactions is not evidence of “other” crimes or

acts under Rule 404(b), because it is evidence of part of the

crime charged in the indictment – the overall scheme to

defraud.1

1

“We review admission of ‘other crimes’ evidence for abuse of

discretion; however, whether the evidence is indeed other crimes evidence

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UNITED STATES V. LOFTIS 5

I

Under Rule 404(b), “[e]vidence of a crime, wrong, or

other act is not admissible to prove a person’s character in

order to show that on a particular occasion the person acted

in accordance with the character.” Fed. R. Evid. 404(b)(1). 

But the evidence “may be admissible for another purpose,

such as provingmotive, opportunity, intent, preparation, plan,

knowledge, identity, absence of mistake, or lack of accident.” 

Fed. R. Evid. 404(b)(2).

Rule 404(b) applies solely to evidence of “other” acts, not

to evidence of the very acts charged as crimes in the

indictment. As a leading treatise explains, “[o]ne of the key

words in determining the scope of Rule 404(b) is ‘other’; only

crimes, wrongs, or acts ‘other’ than those at issue under the

pleadings are made inadmissible under the general rule.” 22B

Kenneth W. Graham, Jr., Federal Practice and Procedure

§ 5239 (1st ed. 2016). For example:

In cases where the incident offered is a

part of the conspiracy alleged in the

indictment, the evidence is admissible under

Rule 404(b) because it is not an “other” crime. 

The evidence is offered as direct evidence of

the fact in issue, not as circumstantial

evidence requiring an inference as to the

character of the accused. Such proof can be

quite time-consuming and it may be

extremely prejudicial to the defendant but the

court would have no discretion to exclude it

we review de novo.” United States v. Parks, 285 F.3d 1133, 1141 (9th

Cir. 2002).

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6 UNITED STATES V. LOFTIS

[under Rule 404(b)] because it is proof of the

ultimate issue in the case. To the extent that

these consequences may seem unfair, this is

attributable to the nature of the conspiracy

charge, not to any defect in the other crimes

rule.

Id. (footnotes omitted); see, e.g., United States v. Ripinsky,

109 F.3d 1436, 1442 (9th Cir. 1997) (holding evidence in

question “was not evidence of ‘other crimes’ under Rule

404(b)” where it was “direct evidence of the ongoing

conspiracy charged in the indictment”), overruled on other

grounds by United States v. Sablan, 114 F.3d 913, 916 (9th

Cir. 1997) (en banc).

This principle applies not only to charges of conspiracy

but also to any prosecution in which the “other” crime in

question is in fact “an element of the crime charged.” 

Graham, Federal Practice and Procedure, supra, § 5239. In

United States v. Smith, 685 F.2d 1293, 1294 (11th Cir. 1982),

for example, the defendant was charged with four counts of

mail fraud, each arising from an alleged scheme of the

defendant to defraud his insurance company by presenting

fraudulent claims.2 At trial, the government introduced

evidence of three previous fraudulent insurance claims, none

of which was alleged in the indictment. See id. Although the

previous claims were uncharged transactions in the sense that

they were not charged as specific executions of the scheme,

the Eleventh Circuit held evidence of those transactions was

2

“It is well settled that cases construing the mail fraud and wire fraud

statutes are applicable to either.” United States v. Green, 592 F.3d 1057,

1063 n.3 (9th Cir. 2010) (quoting United States v. Shipsey, 363 F.3d 962,

971 n.10 (9th Cir. 2004)).

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UNITED STATES V. LOFTIS 7

admissible, without going through Rule 404(b), “to

demonstrate the existence of the fraudulent scheme; an

essential element of the crime.” Id. at 1295. It was “not

necessary to consider whether the evidence was admissible as

other crimes evidence under Rule 404(b).” Id. at 1296.

Similarly, in United States v. Swinton, 75 F.3d 374, 376

(8th Cir. 1996), the defendant was charged with seven counts

of bank fraud. Each count involved a residential loan

transaction on a particular property. See id. at 376–77. At

trial, the government introduced evidence concerning

additional property transactions in which the defendant was

involved but for which he was not specifically charged. See

id. at 377. The government argued “the evidence concerning

the other uncharged transactions went directly to an element

of the crime – the existence of a scheme or artifice” – and

thus was not subject to Rule 404(b). Id. at 378. The Eighth

Circuit agreed, holding “[s]uch evidence did not concern

‘other acts’ but rather acts belonging to the charged scheme.” 

Id. at 379. The evidence did not “implicate Rule 404(b)[,]

because [it] related to the existence of a scheme, an element

of the charged crime.” Id. at 379.

II

These principles apply here. “The elements of wire fraud

are: (1) the existence of a scheme to defraud; (2) the use of

wire, radio, or television to further the scheme; and (3) a

specific intent to defraud.” United States v. Jinian, 725 F.3d

954, 960 (9th Cir. 2013). The crime charged in a wire fraud

prosecution therefore includes not only the specific

executions of the scheme alleged as the second element of the

offense but also the overall scheme alleged as the first

element of the offense. As we recently explained, “the

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8 UNITED STATES V. LOFTIS

commission of . . . a mail fraud or wire fraud offense

necessarily includes a fraudulent scheme as a whole . . . ,

including additional executions of the scheme that were not

specifically charged.” United States v. Lo, 839 F.3d 777, 793

(9th Cir. 2016). The uncharged transactions, therefore, are

part of the charged offense – the fraudulent scheme as a

whole – not “other” crimes or “other” acts evidence. Rule

404(b) thus does not preclude the government from

introducing evidence of uncharged transactions to prove the

first element of wire fraud – the existence of a scheme to

defraud.

III

Because the evidence from other investors is charged

conduct, the government is not required to rely on the

inextricably intertwined doctrine to avoid Rule 404(b). 

However, we have also “held that evidence should not be

considered ‘other crimes’ or ‘other act’ evidence within the

meaning of Rule 404(b) if ‘the evidence concerning the

“other” act and the evidence concerning the crime charged

are inextricably intertwined.’” United States v. Dorsey,

677 F.3d 944, 951 (9th Cir. 2012) (quoting United States v.

Soliman, 813 F.2d 277, 279 (9th Cir. 1987)). This doctrine

applies when the acts in question are so interwoven with the

charged offense that they should not be treated as other

crimes or acts for purposes of Rule 404(b).

“There are generally two categories of cases in which we

have concluded that ‘other act’ evidence is inextricably

intertwined with the crime with which the defendant is

charged and therefore need not meet the requirements of Rule

404(b).” United States v. Vizcarra-Martinez, 66 F.3d 1006,

1012 (9th Cir. 1995). “First, we have sometimes allowed

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UNITED STATES V. LOFTIS 9

evidence to be admitted because it constitutes a part of the

transaction that serves as the basis for the criminal charge.” 

Id. “Second, we have allowed ‘other act’ evidence to be

admitted when it was necessary to do so in order to permit the

prosecutor to offer a coherent and comprehensible story

regarding the commission of the crime; it is obviously

necessary in certain cases for the government to explain

either the circumstances under which particular evidence was

obtained or the events surrounding the commission of the

crime.” Id. at 1012–13.

In the context of mail and wire fraud, we have held that

uncharged transactions that are part of an overall scheme are

“part of the same transaction” as the charged transactions,

such that evidence of the uncharged transactions falls under

the first inextricably intertwined exception. In United States

v. Mundi, 892 F.2d 817, 818 (9th Cir. 1989), for example, the

defendant was charged with wire fraud arising from a broad

scheme to defraud travel agencies. The indictment “named

only one [travel] agency specifically,” although it also spoke

of the defendant’s scheme “in terms that indicated a far wider

scope of operations.” Id. at 820. At trial, the district court

“allowed testimony which named several travel agencies not

specificallymentioned in the indictment, and which discussed

[the defendant’s]scheme with respect to them.” Id. We held

the evidence was admissible notwithstanding Rule 404(b). 

Because the uncharged transactions were part of the overall

scheme, the evidence “was ‘inextricably intertwined’ with,

and ‘part of the same transaction’ as, the conduct alleged in

the indictment.” Id. (quoting Soliman, 813 F.2d at 279). 

Similarly, in United States v. Sayakhom, 186 F.3d 928, 933

(9th Cir. 1999), the defendant was charged with multiple

counts of mail fraud arising from her fraudulent sale of life

insurance products through a single business entity (AAC). 

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10 UNITED STATES V. LOFTIS

After the government effectivelyshut downAAC’s operation,

the defendant began operating through a second entity

(MAPS), “in order to continue the unlawful sale of life

insurance products.” Id. at 937–38. At trial, the district court

allowed the government to introduce evidence regarding the

defendant’s operation of MAPS. See id. at 937. Explaining

that “AAC and MAPS were part of an ongoing scheme to

defraud,” we held “[t]he MAPS evidence is not subject to

exclusion under Rule 404(b) because it is inextricably

intertwined with the indicted crimes.” Id. at 937–38 (citing

Vizcarra-Martinez, 66 F.3d at 1006).

Under these authorities, even if the uncharged

transactions at issue were not part of the crime charged, they

would not be subject to exclusion under Rule 404(b) because

they are “part of the same transaction” as the charged

transactions. The inextricablyintertwined doctrine, therefore,

affords a second basis for concluding the evidence should not

be treated as “other” crimes or “other” acts evidence under

Rule 404(b).

IV

We emphasize these holdings address solely the

application of Rule 404(b) to the evidence the government

has said it seeks to introduce. We do not address whether the

evidence may be excluded for any other reason, such as under

Rule 403. We also make clear these holdings apply only

when the charged and uncharged transactions can fairly be

characterized as parts of a single fraudulent scheme. See

Swinton, 75 F.3d at 378.

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UNITED STATES V. LOFTIS 11

V

The extent to which the district court properly applied

these principles is not clear. On the one hand, the court

appears to have applied the law correctly when it recognized

“[e]vidence of other wires may be admissible to support the

first, but not the second, element of wire fraud,” and when it

said the evidence in dispute “may be admissible if offered as

proof of the scheme underlying” the charged transactions. On

the other hand, the court may have erred when it said the

evidence involving other investors pertained to “other wire

frauds” and suggested the evidence would be excluded under

Rule 404(b) unless “the government can prove that the

evidence is in fact inextricably intertwined with the scheme

Loftis employed in Montana.” Notwithstanding some

ambiguity in the district court’s ruling, we do not construe it

as ruling contrary to our holding here.

ORDER AFFIRMED.

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