United States Court of Appeals

For the First Circuit

No. 00-1822

UNITED STATES OF AMERICA,

Appellee,

v.

GEORGE SERAFINO,

Defendant, Appellant.

 

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Michael A. Ponsor, U.S. District Judge]

 

Before

Torruella, Circuit Judge,

Cyr, Senior Circuit Judge,

and Lipez, Circuit Judge.

 

Richard Abbott for appellant.

Kevin O'Regan, Assistant United States Attorney, with whom

James B. Farmer, United States Attorney, was on brief for appellee.

 

March 7, 2002

 
1Although convicted on the same charges, as well as a tax

evasion charge, see 26 U.S.C. § 7201, Peckham has not appealed.

2

CYR, Senior Circuit Judge. Appellant George Serafino

challenges the judgments of conviction and sentence entered

following his jury trial, in the United States District Court for

the District of Massachusetts, for mail fraud, money laundering,

and conspiracy. See 18 U.S.C. §§ 1341, 1346, 1956, 371. We affirm

the district court judgments in all respects.

I

BACKGROUND

While employed by Milton Bradley Company ("MBC"),

Serafino and codefendant Arthur Peckham participated in a kickback

scheme whereby Peckham, MBC's vice president, instructed MBC's

vendors, Frank Gentile, Inc. ("Gentile") and Edaron, Inc.

("Edaron"), to inflate various charges on their invoices to and

lease agreement with MBC, and to divert the surplus funds —

totaling more than $840,000 — either directly to these defendants

or indirectly to two companies owned by Serafino. Neither

defendant disclosed the kickbacks to MBC.1

II

DISCUSSION

A. The Motion to Sever

Serafino first contends that the district court abused

its discretion in denying his motion to sever his trial from
3

Peckham's. See Fed. R. Crim. P. 14. This contention is predicated

on (i) a statement by Peckham's counsel during opening argument

that Peckham was not directing Serafino in the alleged money-making

enterprise, and (ii) an admission by Peckham that the monies

Gentile ultimately disbursed to Peckham and Serafino were equal in

amount. Serafino insists that these statements were fatally

antagonistic to his anticipated defense: viz., that he was an

unwitting dupe who blindly carried out orders in the fraudulent

scheme devised by Peckham.

We discern no plain abuse of discretion. See United

States v. Sotomayor-Vazquez, 249 F.3d 1, 16-17 (1st Cir. 2001)

(prescribing "plain abuse of discretion" standard of review and

noting "strong preference in the federal system for jointly trying

defendants involved in related crimes, . . . unless 'there is a

serious risk that a joint trial would compromise a specific trial

right of one of the defendants or prevent the jury from making a

reliable judgment about guilt or innocence'") (citation omitted).

Even assuming, arguendo, that Serafino and Peckham presented

somewhat antagonistic defenses, Serafino would have had to

demonstrate that the "defenses [were] so irreconcilable as to

involve fundamental disagreement over core and basic facts," United

States v. Peña-Lora, 225 F.3d 17, 34 (1st Cir. 2000) (citation

omitted; emphasis added), cert. denied, 531 U.S. 1114 (2001), such

that "the jury unjustifiably [would] infer that this conflict alone
4

demonstrate[d] that both [defendants] [were] guilty," United States

v. Talavera, 668 F.2d 625, 630 (1st Cir. 1982) (emphasis added).

A thorough record review has disclosed no such

irreconcilability. Serafino never disputed that the MBC vendors

funneled payments through his companies' accounts, and Peckham's

contention that he was neither the mastermind nor the driving force

behind the scheme did not necessarily require that the jury either

accept or reject the defense that Serafino was an unwitting

participant.

B. The Testimony of Agent Kavrakis

Next, Serafino insists that the district court abused its

discretion by admitting in evidence the trial testimony offered by

IRS Agent Harry Kavrakis. Serafino asserts that the government

failed to provide adequate advance notice of the nature of the

Kavrakis testimony, which focused on the financial benefits

Serafino realized from the kickback scheme and constituted an

improper attempt to establish tax evasion even though the

indictment included no such charge.

Although a tax evasion charge likewise may have turned

upon whether Serafino received unreported income, the government's

proffer relating to Serafino's receipt of these kickbacks

constituted crucial evidence, inter alia, that he knowingly

participated in the mail fraud conspiracy. Thus, unquestionably

the Kavrakis testimony — that Serafino realized financial benefits
2Serafino challenges the admission of Exhibit 675 as well,

which summarized the Kavrakis testimony regarding Serafino's

receipt of the kickbacks. As Serafino did not object at trial,

however, and the evidence was highly relevant, we discern no plain

error.

5

from the scheme — was independently relevant to the mail fraud,

money laundering, and conspiracy counts as well. See, e.g., United

States v. Isabel, 945 F.2d 1193, 1203 (1st Cir. 1991) (noting that

evidence of receipt of financial benefits may be probative of

defendant's intent to facilitate conspiracy). Finally, the trial

record plainly belies any contention that Serafino did not know the

nature of the Kavrakis testimony sufficiently in advance of trial.2

C. The Expert Witness Instruction

Serafino next contends that it was reversible error to

instruct the jury, sua sponte, that Kavrakis was testifying as an

expert witness for the government. Since no objection was

asserted, either during or following the jury charge, we review

only for plain error. See United States v. Lemmerer, 277 F.3d 579,

591 (1st Cir. 2002) (no "plain error" unless ruling was clearly or

obviously erroneous, affected defendant's substantial rights and

impaired the right to fair trial). We discern no plain error.

First, even though it was not requested by the

government, the expert witness instruction was arguably correct.

That is, presumably Kavrakis was qualified to testify as an

"expert" regarding the amount of Peckham's outstanding tax

liability on the tax evasion count. Indeed, during the trial there
3The jury instruction stated: "You have heard testimony from

an expert witness, Harry Kavrakis. An expert witness has special

knowledge or experience that allows the witness to give an opinion.

Expert testimony should be considered just like other testimony.

You may adopt it or reject it. In weighing the expert opinion

received in evidence in this case, you should consider the

soundness of his reasons for his opinion, and whether the opinion

is supported by other evidence in the case. Remember that you

alone decide how much weight it should be given."

6

were open references to Kavrakis as an "expert," both by the

government ("our expert witness") and by the district court ("The

testimony of the Government's expert was that Mr. Peckham had a

good deal more income than he reported."). Yet the defense

asserted no objection. Although it may well have been more prudent

to instruct the jury, in specific terms, that Kavrakis was to be

considered an expert witness in regard to the tax evasion issue

only, viewed in context the sua sponte charge certainly did not

"blindside" the defense, nor was it obviously erroneous.

Furthermore, the district court's passing reference to

Kavrakis as an "expert" did not, in all probability, substantially

impair Serafino's right to a fair trial, given that (i) by its

express terms the jury charge applied exclusively to Kavrakis'

"opinions," and the jury common-sensically would not have regarded

the Kavrakis testimony — "number-crunching" the figures summarized

in Exhibit 675 — as an expert "opinion," but rather as an objective

rendition of the historical data demonstrating that Serafino had

received proceeds from the fraudulent scheme,3 and (ii) the

district court immediately mitigated whatever special aura the jury
7

might otherwise have attached to the term "expert," by emphasizing

that "[e]xpert testimony should be considered just like other

testimony." (Emphasis added.)

D. The Selective Prosecution Claim

Serafino next contends that the district court abused its

discretion in rejecting his request for an evidentiary hearing

regarding whether he had been prosecuted vindictively by the

government based on his involvement in the kickback scheme, even

though various other participants were never prosecuted. See

United States v. Graham, 146 F.3d 6, 9 (1st Cir. 1998). Since the

government is presumed to have exercised its prosecutorial

responsibilities in good faith, however, defendants are not

entitled to evidentiary hearings on their selective or vindictive

prosecution claims unless they first identify facts tending to

demonstrate (i) that the government refrained from prosecuting

others who were "similarly situated," and (ii) that the reasons for

any such discrimination were illegitimate. See id. Serafino

managed neither showing.

First, unlike Serafino, who received several thousands of

dollars in kickbacks, the MBC vendors who disbursed the kickbacks

received no proceeds for their personal benefit; second, the MBC

vendors provided their full cooperation to the prosecution. See,

e.g., Bordenkircher v. Hayes, 434 U.S. 357, 361-62 (1978) (noting

that, without more, the government's decision to indict a defendant
8

who rejects a plea agreement normally is not deemed vindictive for

purposes of a selective prosecution claim). Moreover, other MBC

officials, such as its former president, George Ditomassi, were

implicated only by Serafino's uncorroborated allegations of their

complicity in the scheme, including his bald accusation that he

placed some kickback proceeds, in cash, in the trunk of Ditomassi's

automobile, an allegation which the government — quite

understandably — was not able to verify. See, e.g., United States

v. Peterson, 233 F.3d 101, 105 (1st Cir. 2000) (noting propriety of

government's consideration of an important discrepancy in the

respective levels of participation by two individuals in narcotics

distribution scheme for purposes of assessing whether the two were

"similarly situated" for purposes of determining whether to

prosecute). Since Serafino's "selective prosecution" allegations

were not colorable, the district court correctly declined to

conduct an evidentiary hearing.

E. Sufficiency of Evidence: Deprivation

of Property or Honest Services

Serafino further contends that the government adduced

insufficient evidence on the mail fraud charge, in that it failed

to establish either that MBC sustained a loss of "property or other

items of economic value by false pretenses," or that Serafino

engaged in "a scheme to defraud MBC of [its employee's] honest

services by false pretenses." United States v. Martin, 228 F.3d 1,

15-16 (1st Cir. 2000); see 18 U.S.C. § 1346. Serafino argues that
4We review all direct and circumstantial evidence, and the

reasonable inferences therefrom, as a whole and in the light most

favorable to the government, abjuring plenary assessments of

witness credibility, to determine whether a rational jury could

have found all elements of the charged offense beyond a reasonable

doubt. See Martin, 228 F.3d at 10.

9

(i) he was convicted only on the counts involving kickbacks from

Edaron, not on those involving Gentile; (ii) MBC suffered no

financial harm due to the Edaron kickbacks, since Peckham had no

control over MBC's decision to do business with Edaron, and MBC

presumably received full value from Edaron for those contract

services because Edaron was the low bidder in an "arms length"

transaction; and (iii) the government failed to adduce any evidence

that Edaron's lease to MBC was not for fair market value. Finally,

Serafino argues that MBC was deprived of neither Peckham's nor

Serafino's honest services, since the government failed to prove

that any MBC policy prohibited its employees from retaining

undisclosed kickbacks from MBC vendors. These contentions are

belied by the record as well.4

In the first place, Serafino was not acquitted of all

counts relating to the Gentile kickbacks; the conspiracy charged in

count 1 explicitly encompassed these kickbacks. Second, Peckham

expressly instructed both Gentile and Edaron to inflate their

charges to MBC, on both contracts and leases, and to pass the

resulting windfall along to him and Serafino. The evidence of the

deliberate inflation of these charges, together with the remittance

of the resulting surplus to the codefendants, plainly sufficed to
5Further, Serafino faults the district court's refusal to

grant his request that the verdict form require the jury to

indicate whether its mail-fraud verdicts were based on a

deprivation of property, a deprivation of honest services, or both.

First, there is no question that the district court, in its jury

instruction, amply differentiated between the two types of

deprivation, so that the jury was well aware of the distinction.

The only question, therefore, is whether a jury in a mail fraud

case should be required to enter a special verdict. There is no

authority whatsoever for such a proposition. See, e.g., Martin,

228 F.3d at 16 (noting that mail fraud conviction may rest on proof

of either form of deprivation); United States v. Ellis, 168 F.3d

558, 562 (1st Cir. 1999) (noting that review of trial court's

refusal to require special verdict form is for "abuse of

discretion" only, since such practice is "generally disfavored" in

criminal cases).

10

establish the requisite cognizable financial harm to MBC under

section 1346. Cf. United States v. Jain, 93 F.3d 436, 441-42 (8th

Cir. 1996) (vacating mail-fraud verdict against psychiatrist who

received kickbacks from hospital for patient referrals, since all

patients needed hospitalization in any event and apparently

received their money's worth in quality medical care). Finally,

the government called MBC officials who testified — not

surprisingly — that MBC imposed on its employees a duty of loyalty

which would have required Peckham and Serafino to inform MBC that

they were receiving kickbacks from any MBC vendors. It is

undisputed that no such disclosure was ever made by Serafino.5

F. Sufficiency of Evidence; Foreseeability of Use of Mails

Finally, Serafino contends that the government adduced

insufficient evidence that he reasonably could have foreseen use of

the mails in furtherance of the kickback scheme, see United States

v. Royal, 100 F.3d 1019, 1030 (1st Cir. 1996) (noting that the
6Serafino further contends that the district court erred in

attributing between $200,000 and $350,000 to him for sentencing

purposes. See U.S.S.G. § 2F1.1(b). Given the perfunctory

treatment accorded this issue on appeal, however, we deem it

waived. See United States v. Bongiorno, 106 F.3d 1027, 1034 (1st

Cir. 1997). Nevertheless, we note that the record contains ample

uncontroverted evidence that Gentile and Edaron funneled $560,000

into Serafino's two companies, neither of which had legitimate

business dealings either with Gentile or Edaron. Nonetheless, the

district court generously discounted the amount of loss it

attributed to Serafino. See United States v. Blastos, 258 F.3d 25,

30 (1st Cir. 2001) (§ 2F1.1(b) loss calculation reviewed only for

clear error).

11

defendant need not have used the mails, but must reasonably have

foreseen their use by others to facilitate conspiracy), since

Gentile and Edaron did not mail the kickback checks to Serafino's

two companies. As Serafino failed to preserve this issue in his

motions for judgment of acquittal, we may reverse the judgment of

conviction only if Serafino demonstrates a "clear and gross

injustice." United States v. Van Horn, 277 F.3d 48, 54 (1st Cir.

2002). He has not done so.

The government established, beyond a reasonable doubt,

that MBC mailed its invoices and lease payments to Gentile and

Edaron, and through that eminently foreseeable mechanism delivered

the very monies Edaron and Gentile "kicked back" to the

codefendants. No more evidence was needed. See United States v.

Woodward, 149 F.3d 46, 63 (1st Cir. 1998) (noting that use of mails

may be either central or merely "incidental" to mail or wire fraud

scheme) (emphasis added).6
12

As the remaining contentions advanced by appellant are

utterly lacking in merit, no separate discussion is warranted.

Accordingly, the judgments of conviction and sentence are affirmed.

Affirmed.