# United Stat es Court of Appeals For the First C ircuit

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'R e gan , Assistant United States Attorney, with whom James B. Farmer , United States Attorney, was on brief for appellee.

March 7, 20021 Alt houg h 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 C ircuit Judge . Appellant George Serafino challenges the judgments of convi cti on and sentence entered following his jury trial, in the United States District Court for the District of Mass achusetts, for mail fraud, money laundering, andconspiracy. 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 Peckhamparticipated in a kickback scheme whereby Peckham, MBC's vice president, instru cted MBC's vendors, Frank Gentile, Inc. ("G entile") and Edaron, Inc. ("Edaron"), to inflate various charges on their in voices to and lease agreement with MBC, and to divert the surplus funds — totaling more than $840,000 — either directly to these defendants

or indir ectly 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 from3

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

on (i) a statement by Peckham's counsel durin g o pening argument that Peckhamwas not directing Serafino in the alleged money-making

en ter prise, and (ii) an admission by Peckham that the monies Gentile ultimately disbursed to Peckham and Serafino were equal in amount. S eraf ino insists that these statements were fatally antagonistic to his anticipated defense: viz. , that he was an unwitt ing 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 present e d 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 alone4

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

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

Athor o ugh record review has disclosed no such ir reco ncilability. Serafino never disputed that the MBC vendors funneledpayments throug h hi s companies' accounts, and Peckham's contention that he was neither the mastermind nor the driving force behindthe 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 Kav rak is. Serafino asserts that the government failedto provide adequate advance notice of the nature of the Kavrakis testimony, which focused on the f ina ncial 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 e vasi on charge likewise may have turned upon whether Serafino received unreported income, the government's proffer relating to Serafino's receipt of the se k ickbacks consti tut edcrucial evidence, inter alia , that he knowingly participatedin the mail fraud conspiracy. Thus, unqu estionably the Kavrakis testimony — that Serafino realized financial benefits2 Serafino 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 fromthe 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 financia l bene fits may be probative of defendant's intent to facilitate conspiracy). Finally, the trial recordplainly 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 r ever sible error to instruct the jury, sua sponte , that Kavrakis was testifying as an expert witne ss for the government. Since no objection was asserted, either during or following the jury charge, we rev iew 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 gove rnme nt, 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 there3 The 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 ot her testimony. You may adopt it or reject it. In weighing the expert opinion receivedin evidence in this case, you sho uld co nsider the soundness of his reasons for his opinion, and whether the opinion is supportedby 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 gooddeal more income than he reported."). Yet the defense assertedno objection. Although it may well have been more prudent to instruct the jury, in specific terms, that Kavra kis was to be consideredan 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 tria l, g iven that (i) by its expr ess 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 dem onstrating that Serafino had receivedproceeds from the fraudulent scheme, 3 and (ii) the district court immediately mitigated whatever special aura the jury7

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 discreti on i n rejecting his request for an evidentiary hearing reg arding whether he had been prosecuted vindictively by t h e government based on his involvement in t he kic kback scheme, even though various other participants were never prosecuted. See UnitedStates 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, defendan ts are not entitled to evidentiary hearings on their selective or vindictive prosecution claims unless they first identify fact s tending to demonstrate (i) t hat the government refrained from prosecuting others who were "similarly situated," and (ii) that the reasons for any such discriminati on wer e 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 receiv ed 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 defendant8

who rejects a plea agreement normally is not deemed vindictive for purposes of a selectiv e pros ecution 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 t hat he placedsome kickback proceeds, in cash , in the trunk of Ditomassi's automobile, an allegation wh ich 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 i mp ortant discrepancy in the respective levels of participation by two individuals in narcotics distribution scheme for purposes of assessing whether the two were "similarly si tua ted" for purposes of determining whether to prosecute). Since Serafino's "selective prosecution" allegations

were not colorab le, 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 econo mic value by false pretenses," or that Serafino engagedin "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 that4 We review all direct and circumstantial evidence, and the

reasonable inferences therefrom, as a whole and in the light most favorable to t he gov ernment, 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 suffe red 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 Serafi no's honest services, since the government failed to prove that any MBC policy prohibited its employees from retaining undisclosedkickbacks from MBC vendors . T hese contentions are belied by the record as well. 4

In the first place, Serafino was n ot acquitted of all counts relating to the Gentile kickbacks; the conspiracy charged in count 1 ex plic itly encompassed these kickbacks. Second, Peckham expressly instructed both Gentile and Edaron to inflate their charges to MBC, on both contracts and leases, a nd 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 to5 Further, Serafino faults the district court's refusal to

grant his request that the verdict form require the jury to indicate whether its mail-fraud ve rdic ts were based on a deprivation of property, a deprivation of honest services, or both. First, there is no questio n tha t 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 what soever 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 finan cial harm to MBC under section 1346. Cf. United States v. Jain , 93 F.3d 436, 441-42 (8th Cir. 1996) (vacating mail-fraud verdict agai nst psychiatrist who received kickbacks from hospital for patient referrals, since all patients nee ded hospitalization in any event and apparently receivedtheir money's worth in quality medica l 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 the6 Serafino further contends that the distr ict court erred in

attributing between $200,000 and $350,000 to him for sentencing purposes. See U.S.S.G. § 2F1.1(b). G iven t he perfunctory treatment acco rde d 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 whic h ha d legitimate business dealings either with Gentile or Edaron. Nonetheless, the district court generously discounted the a moun t of loss it attributedto 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 tw o com panies. 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, andthrough that eminently foreseeable mechanism delivered the very m onies 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). 612 As the remaining contentions advanced by a ppellant are utterl y la cking in merit, no separate discussion is warranted. Accordingly, the judgments of conviction and sentence are affirmed.

Affirmed .