FILED U.S. COURT OF AP P EALS E LEV EN T HC IRC U IT MAY 18 , 2006 THOMAS K. KAH

N CLERK [ DO NO T P UB L I S H] I N THE UN I TE D STATE S C OU RT OF APPE ALS F O R T H E E L E V E N T H C IR C U IT

________________________ N o. 05- 13350 N on -A rgum entC al endar

________________________ D . C. D o c k e tN o . 0 4 - 6 0 3 0 7 - CR- W PD U N I T E D S T A T E S O F A M E R I C A , P la in tif f - A p p e lle e , v ersu s J A M E S L . B I A N C O , J R ., D e f e n d a n t- A p p e lla n t.

________________________ A pp ea l fr om the U ni t ed S t at es D i stri ctC ou rt f orthe S outhe rn D i s tr i c tof F l or i da

_________________________ ( M ay 18, 2006) B efo re B IR C H , M A R C U S an d W IL S O N , C i rcu i tJu d g es. P E R C U R I A M: J a m e s L . B i a nc o, J r . , appe a l s hi s c onvi c t i ons f orw i r e f r a ud, m a i l f

r a ud, a nd2

m one y l a unde r i ng, i n vi ol a t i on of 18 U . S . C . §§ 1343, 1341, 1957. H e c ont e nds tha tthe di s tr i c tc our tabus e d i t s di s c r e t i on w he n i ta dm i tt e d e vi de nc e tha t , a tthe t i m e of the of f e ns e , B i a nc o w a s s e rvi ng pr oba t i on, pa y i ng c our t - or de r e d r e s t i tut i on, a n d u n d e ra n in

ju n c tio n . B e c a u s e th is w a s d ir e c t e v id e n c e o f th e o f f e n s e a n d o f

h is in te n t to d e f

r a u d a n d w a s n o t o v e r ly p r e ju d ic ia l, w e A F F I R M B ia n c o ’s c o n v ic tio n . I . B AC KG RO UN D B i anco sol i ci t ed subst ant i al am ou nt s of m on eyfr om vari ou s i nv es t ors a c r o s s th e c o u n try f

o rap a y d a y lo a n a n d c h e c k c a s h in g b u s in e s s . H e f a ile d to te ll i nv es t ors, i nt eral i a, thathe w as on cr i m i nal prob at i on i n a F l ori da st at e c ou rtca se , he ow ed re st i tut i on un der thatca se , he w as subj ec tt o a U ni t ed S t at es D i stri ctC ou rt f orthe S outhe rn D i s tr i c tof F l or i dai nj unc t i on ba rr i ng hi m f r om pr om ot i ng bu si ness op po rtun i t i es t o the pu bl i c, and thatnei ther he nor hi s c om pany w er e l i c e ns e d t o pr ovi de the s e rvi c e s a dve r t i s e d. H e w a s i ndi c t e d by agr a nd j ury f or el even coun t s of w i re fr aud, tw el ve coun t s of m ai l fr aud, and fou r c ou nt s of m on ey l aund er i ng . T he i nd i ctm ental l eged thathe kn ow i ng l y a nd w i l l ful l y def raud ed approx i m at el y s eventy- ni ne i nv es t ors of over $1, 60 0, 00 0. S peci fi ca l l y, i tst at ed tha tB i a nc o, by m e a ns of t e l e m a rke t e r s , “ m a de a nd c a us e d othe r s t o m a ke m a t e r i a l l y f

a l s e s t a t e m e nt s a nd om i s s i ons of m a t e r i a l f

a c t s t o i nve s t or s , i nc l udi ng .

. . [ om i tt i ng the f

a c ttha the ha d ne ve r ] appl i e d f oral i c e ns e w i th the S t a t e of3

F l ori da t o o pera t e achec k cas hi ng bu si ness . . . [a nd that ] i tw as un l i kel y [ he] w o u l d h av e received su ch a l i cen se i f h e h ad ap p l i ed , d u e t o th e factth ath e w as a c onvi c t e d f

e l on. ” R 1- 1 a t3- 4. M or e ove r , C ount26, one of the m one y l a unde r i ng c o u n ts , s p e c if

ic a lly r e f e r e n c e d ac h e c k f

o r$ 5 5 ,0 0 0 . P r io rto tr ia l, th e g o v e rn m e n t d is c lo s e d th a t it in te n d e d to o f f e r , p u r s u a n t to F ed eral R u l e o f E v i d en ce 4 0 4 (b ), “ reco rd s an d / o r t est i m o n y reg ard i n g [B i an co ’ s] pl ea , se nt enci ng and p robat i on i n [a F l ori da st at e c ou rtca se ] . . . t o sho w that[he] ut i l i z e d f unds f r om [ hi s c om pa ny , w hi c h w a s the s a m e c om pa ny i nvol ve d i n the i nst antoffe nse, ] for hi s ow n p er sonal benefi t. . . t o p aya port i on of the court ordered re st i tut i on , ” a s w el l as “ evi dence and/ or t es t i m on y r egar di ng the fa ctthat [ B i a nc o] w a s unde rac our tor de r e d i nj unc t i on . . . a ga i ns tthe s ol i c i t a t i on of f unds f o rb u s i n e s s o p p o r tu n i t i e s a n d i n c o me - g e n e r a t i n g p r o d u c t s a n d s e rv i c e s a tth e t i me o f th e co m m i ssi o n o f th e i n st an to ffen se . . . t o sh o w th at[h e] m ad e fal se st at em ent s a nd om i ss i on s of m at er i al fa ctw i th res pectt o v i ct i m s i n thi s c as e, as a l l e ge d i n the i ndi c tm e nt . ” R 1- 27 a t1- 2. B i a nc o the n f

i l e d am ot i on i n l i m i ne , a s ki ng the c our tt o de ny the a dm i s s i on of the evi dence di sc l osed by the go vernm ent , supra. H e a rgued thatthe evi dence w a s p r o h ib ite d u n d e rR u le 4 0 4 ( b ) b e c a u s e it w a s r e m o te in tim e , f a c tu a lly di ss i m i l ar , and i t s probat i ve val ue w as ou tw ei gh ed by the po t ent i al for j ury4

c onf us i on. T he gove rnm e ntf

i l e d ar e s pons e t o B i a nc o’ s m ot i on, a r gui ng tha ta l l of the e vi de nc e a ti s s ue w a s “ r e l e va ntt o the f r a ud s c he m e c ha r ge d i n the i ndi c tm e nt , a nd th e p r o b a tiv e v a lu e o f

th e e v id e n c e [ w a s ] n o t s u b s ta n tia lly o u tw e ig h e d b y its prej ud i ci al ef

fe ct . ” R 1-33 at1-2. S peci fi ca l l y, the go vernm entar gu ed thatB i anco ha d a n a f f i rm a t i ve duty t o di s c l os e hi s l e ga l di s abi l i t i e s a nd i m pe di m e nt s a f f e c t i ng hi s r ol e a s pr e s i de ntof

hi s c om pa ny , a nd tha the f a i l e d t o t e l l hi s i nve s t or s tha the ha d nota tt e m pt e d t o ge tac he c k c a s hi ng bus i ne s s l i c e ns e be c a us e he kne w he w oul d notbe abl e t o ge tone due t o hi s c r i m i na l ba c kgr ound. T he gove rnm e nt further a rgued thatthe evi dence w as no tgo verned by R ul e 404 (b) because i tw as i ntr i ns i c t o the of

f e ns e c ha r ge d, a s the $55, 000 c he c k r e f e r e nc e d i n C ount26 of

the in d ic tm e n t u s e d v ic tim s ’ m o n e y to p a y o f f h is c o u r t- o r d e r e d r e s titu tio n . A ttr i a l , pr i ort o s e l e c t i ng the j ury , the c our tque s t i one d the pa r t i e s on B ia n c o ’s m o tio n a n d th e g o v e rn m e n t’s r e s p o n s e . T h e g o v e rn m e n t e x p la in e d th a t it w as n o t o ff

er in g th e e v id en ce as sim il arfa ct ev id en ce , b u t t o sh o w B ian co ’s b a c k g r o u n d , w h ic h h e h a d f r a u d u le n tly m is r e p r e s e n te d a n d o m itte d in h is r e p r e s e n ta tio n s to th e v ic tim s . W h e n th e c o u r t c h a lle n g e d th e g o v e rn m e n t to e xpl a i n w hy the e vi de nc e of apr i orf r a ud s c he m e c onvi c t i on w oul d notbe p r o h ib ite d b y F e d e r a l R u le o f E v id e n c e 4 0 3 , th e g o v e rn m e n t c o n c e d e d th a t it d id5

notne e d t o “ r e f

e rt o i ta s a n or ga ni z e d s c he m e t o de f r a ud . . . [ but ] w oul d be s a tis f ie d if [ it] c o u ld ju s t e s tab lis h th e f a c t [ th a t B ia n c o ] h a d ac r im in a l c a s e in w hi ch he w as on prob at i on , ” w hi ch w ou l d al l ow the vi ct i m s t o t es t i fythati f they ha d know n tha t , the y w oul d notha ve i nve s t e d i n the c om pa ny . R 10 a t7. T he go vernm entfurther a rgued thatthe evi dence of the i nj un ct i on w ou l d sho w that B i a nc o “ de l i be r a t e l y a voi d[ e d] ge tt i ng al i c e ns e be c a us e he kne w . . . he w oul d not h a v e b e e n e lig ib le .” I d . a t 8 . T he courtthen chal l enged B i anco t o exp l ai n w hy, i f there w as no re fe re nce as t o w hy he w as on prob at i on , “ the fa ctthathe w as on prob at i on and w as ordered to p a y r e s titu tio n ” a n d p a id s o m e o f h is r e s titu tio n o u t o f

th e s o lic ite d f

u n d s w o u ld no tbe re l evant . Id. at8-9. B i anco res po nd ed thathe di d n otthi nk thatthe j ury needed t o k no w thathe w as payi ng re st i tut i on atal l , as l on g as they knew he had conv ert ed the fund s f

or hi s ow n u se . T he courtthen rul ed that“ the fa ctthathe w as on pr oba t i on a nd pa y i ng r e s t i tut i on . . . a nd . . . ha d be e n or de r e d . . . nott o e nga ge i n b usi ness op po rtun i t i es ” w as re l evant , bu tproh i bi t ed any m ent i on of w hy he w as on pr oba t i on. I d. a t10. S ubs e que nt l y , the c our te nt e r e d aw r i tt e n or de r , s t a t i ng s i m pl y tha tB i a nc o’ s m ot i on i n l i m i ne w a s “ [ d] e ni e d, e xc e pta s t o the na tur e of the p r io rf e lo n y c o n v ic tio n .” R 1 - 3 6 . D ur i ng ope ni ng s t a t e m e nt s , the gove rnm e nta s s e r t e d tha tB i a nc o ha d m a de6

“ [ o] m i s s i ons of

i m port a nti nf

orm a t i on” t o the i nve s t or s , R 8 a t10, i nc l udi ng the fa ctthathe di d n othave a l i ce nse t o run the check ca shi ng bu si ness he w as prop osi ng , and that“ he w as on prob at i on i n a cr i m i nal ca se i n S ou th F l ori da[, ] that he had res t i tut i on m on i es thathe ow ed[, ] and that. . . i n a ci vi l fe dera l di stri ctcourt c a s e th a t th e r e h a d b e e n a n o r d e r. . . c a lle d ap e rm a n e n t in ju n c tio n [ th a t] . . . pe rm a ne nt l y pr ohi bi t e d [ hi m ] f r om e nga gi ng i n a n e nt e rpr i s e r a i s i ng m one y f r om th e g e n e r a l p u b lic ,” id . a t 2 2 . T e s tim o n y a t tr ia l b y s o m e o f B ia n c o ’s v ic tim s e s tab lis h e d th a t, b e g in n in g in a tl e a s tJ une 2001 a nd c ont i nui ng i nt o 2002, i ndi vi dua l s r e pr e s e nt i ng ac om pa ny c a lle d A C E P a y d a y P lu s , L L C ( “P a y d a y ” ) , m a d e u n s o lic ite d te le p h o n e c a lls to prospect i ve i nv es t ors a roun d the coun try . T he t el em arket er s r epre se nt ed that P a y d a y h a d b e e n f

o rm e d to p u r c h a s e a n d m a in ta in s to r e s o f f e r in g “p a y d a y lo a n s ,” ch eck cash i n g , an d o th er serv i ces. T h ey, an d th e d o cu m en t s th ey sen tt o i n v est o rs, further r epre se nt ed, or al l ow ed the i nv es t ors t o b el i eve, thatP ay day w as l i ce nsed u n d e rF lo r id ala w to p e r f o rm th is s e rv ic e . T he t el em arket er s a l so l ed the i nv es t ors t o b el i eve thatthe com pany had an e xpe r i e nc e d m a na ge m e ntt e a m , i nc l udi ng B i a nc o a nd C he s t e rP ot a s h. F ur the r , the i nve s t or s w e r e l e d t o unde r s t a nd tha tthe s a l e s c om m i s s i on w a s onl y 10% of the i nve s tm e nt . B i a nc o s e ntthos e w ho i nve s t e d al e tt e rw e l c om i ng the m t o the7

c om pa ny a nd ac e r t i f

i c a t e of m e m be r s hi p, both s i gne d by B i a nc o a s pr e s i de ntof P ay day. O n cross -e xam i nat i on , on e of the w i tness es adm i tt ed thatthe w ri tt en m at er i al s s entt o h i m by P ay day di d saythatthe com pany w as “ new l y organi ze d a nd ha [ d] no ope r a t i ng hi s t ory , ” butc ont e nde d tha tthi s w a s notw ha tthe t e l e m a rke t e r s s t a t e d. R 12 a t38. T he go vernm entas ked each of the w i tness es w hether they had been t ol d that B i a nc o ha d ac r i m i na l ba c kgr ound orhi s t ory , w a s on c r i m i na l pr oba t i on i n a F l or i das t a t e c our tc a s e , a nd w a s s ubj e c tt o a n i nj unc t i on pr ohi bi t i ng hi m f r om of f e r i ng i nve s tm e ntoppor tuni t i e s t o the publ i c . T he y a l l r e pl i e d tha tthe y ha d not be e n t ol d tha t , a nd tha t , i f the y ha d, the y w oul d notha ve i nve s t e d i n P a y da y . T he g o v e rn m e n t a ls o a s k e d tw o o f th e w itn e s s e s w h e th e rth e y w o u ld h a v e in v e s te d in P ayd ay h ad th ey k n o w n th atth e co m p an y w as n o tl i cen sed t o d o b u si n ess as a chec k cas hi ng se rvi ce , and b oth repl i ed “ [a ] bsol ut el y” no t . R 11 at17 9; R 12 at 1 0 3 . T he go vernm entnextca l l ed four t el em arket er s, three of w ho m t es t i fi ed that the y w e r e pa i d 35- 40% c om m i s s i ons . O n c r os s - e xa m i na t i on, one of the te le m a rk e te r s a d m itte d th a t h e a n d o th e r s w e r e k n o w in g ly m a k in g f a ls e s ta te m e n ts r e ga r di ng the pr oduc t , butc a l l e d i t“ ove r - s e l l i ng” a nd c ons i de r e d i t“ [ p] a r tof the s a l e s bus i ne s s . ” R 13 a t31- 32. J a c que R e ne t e s t i f i e d tha the s ol d hi s c he c k c a s hi ng8

s to r e , c a lle d P a y d a y , I n c ., to B ia n c o in A u g u s t 2 0 0 1 f o r$ 4 5 ,0 0 0 . O u t o f th e p r e s e n c e o f

th e ju ry , th e g o v e rn m e n t m o v e d to a d m it its E x h ib it 24, the r e c or ds of

the F l or i das t a t e c our tc a s e tha tr e s ul t e d i n B i a nc o’ s pr oba t i on a n d r e s titu tio n . T h e c o u r t s u g g e s te d th a t o n ly o n e o f th e p a g e s w a s n e c e s s a ry , a s it in d ic a te d th e p r o b a tio n s e n te n c e , th e r e s titu tio n a m o u n t, w a s s ig n e d b y b o th B i a nc o a nd the s t a t e c our tj udge , a nd di d noti ndi c a t e the na tur e of the f e l ony com m i tt ed. B i anco’ s c ou nsel obj ec t ed, ar gu i ng that , as the page i nd i ca t ed that B i a nc o ow e d r e s t i tut i on t o m ul t i pl e de f e nda nt s , i ta l l ow e d f

orthe i nf e r e nc e tha tthe u n d e r ly in g c r im e in v o lv e d f r a u d . C o u n s e l f

u r th e ra r g u e d th a t B ia n c o w o u ld st i pu l at e thathe had o w ed re st i tut i on du e t o a cr i m i nal m att eri n F l ori da st at e c ou rt and thatthe re st i tut i on w as pai d o utof hi s bank account . T he courtac ce pt ed that the do cum entm i gh tal l ow an i nfer ence of m ul t i pl e vi ct i m s, bu tdeni ed thatthat m a de i ti na dm i s s abl e a nd, ove ra ddi t i ona l obj e c t i ons by B i a nc o, a dm i tt e d the exhi bi tw i th the prov i si on thati tw ou l d t el l the j ury thatthe do cum entst em m ed f r o m a“w ith h o ld a d

ju d ic a tio n .” R 1 4 a t 1 0 - 1 2 . T he go vernm entthen m ov ed t o adm i ti t s E xh i bi t25 , the i nj un ct i on order i ss ued b y U ni t ed S t at es D i stri ctC ou rtJudg e f or the S ou thern D i stri ctof F l ori da, U r s u laU n g a r o - B e n a g e s a g a in s t B ia n c o . B ia n c o o b je c te d a n d o f

f e r e d to s tip u la te to th e in ju n c tio n , th e r e b y p r e v e n tin g th e ju ry f r o m m a k in g a n y in f

e r e n c e s .9

U l t i m at el y, the j ud ge al l ow ed i nt o evi dence “ the styl e, the t i t l e of the order, R om an N um e r a l I I I a nd the J udge ’ s s i gna tur e . ” I d. a t15. P ot as h t es t i fi ed that : (1) he w as a t el l erata c heck cas hi ng st ore; (2) B i anco p a id h im $ 1 0 ,0 0 0 to b e ac o n s u lta n t; ( 3 ) h e s h a r e d h is b u s in e s s p r o c e d u r e s w ith B i a nc o, butw a s noti nvol ve d i n the f orm a t i on of

P a y da y ori n the f

und r a i s i ng a nd w a s ne ve ram a na ge rof the c om pa ny ; a nd ( 4) he w r ot e abi ogr aphi c a l s ke t c h a nd l i e d t o B i a nc o aboutha vi ng aP h. D . , butdi d nothol d hi m s e l f “ outt o be one of

the i ndus try l e a di ng e xpe r t s i n the c he c k c a s hi ng i ndus try , ” a s r e pr e s e nt e d i n the P a y d a y m a te r ia ls . R 1 5 a t 5 3 - 5 9 . O n c r o s s - e x a m in a tio n , P o ta s h a d m itte d th a t, if th e b u s in e s s h a d b e e n ru n c o rr e c tly , th e in v e s to r s s h o u ld h a v e g o tte n th e ir in v e s tm e n t b a c k . O m a rR odr i gue z , a n i nve s t i ga t orf orthe F l or i daD e pa r tm e ntof B a nki ng a nd F in a n c e , te s tif

ie d th a t h e in v e s tig a te d P a y d a y b a s e d o n ac o m p la in t f ile d w ith h is d e p a r tm e n t in S e p te m b e r2 0 0 1 . R o d r ig u e z te s tif ie d th a t B ia n c o a d m itte d to

“ s e e ki ng i nve s t or s t o ge tt oge the re nough m one y t o pur c ha s e ” ac he c k c a s hi ng bu si ness , bu tdeni ed thathe w as cond uct i ng such a busi ness atthatt i m e. Id. at 162. B i a nc o t ol d R odr i gue z tha the kne w he ne e de d al i c e ns e t o run s uc h a bus i ne s s a nd e xpl a i ne d tha the i nt e nde d t o obt a i n s uc h al i c e ns e . B i a nc o di d not te ll R o d r ig u e z th a t h e a lr e a d y w a s ru n n in g as to r e .10

A n adm i ni stra t or fr om the F l ori da O ff i ce of F i nanci al R egul at i on t es t i fi ed that , t o g eta c heck cas hi ng l i ce nse, a per son h ad t o m ake an app l i ca t i on that di sc l osed any c ri m i nal re cord and ci vi l l i t i gat i on i n w hi ch the appl i ca ntw as i nv ol ved as adefe nd antand any bu si ness i n w hi ch the appl i ca ntw as i nv ol ved that ha d a n a dm i ni s tr a t i ve c om pl a i ntf i l e d a ga i ns ti t . H e t e s t i f i e d tha tno r e c or d of

a ny ap p lic a tio n o rlic e n s e f

o rP a y d a y o rB ia n c o e x is te d . A st af f a tt orney w i th the S ec uri t i es and E xchang e C om m i ss i on (“ S E C ”) te s tif ie d th a t th e S E C in itia te d a n a c tio n a g a in s t P a y d a y a n d B ia n c o in M a r c h 2 0 0 2 . T hei r i nv es t i gat i on re veal ed that79 i nd i vi du al s had i nv es t ed i n P ay day. O ther S E C in v e s tig a to r s te s tif ie d th a t th e y h a d tr a c e d in v e s to rf u n d s th r o u g h m u ltip le ba nk a c c ount s he l d by B i a nc o, a nd tha tB i a nc o ha d us e d s om e of the f unds t o buy hi s w i f e aM e r c e de s - B e nz a nd t o pa y of f $55, 000 of

hi s r e s t i tut i on obl i ga t i on. D ur i ng thi s t e s t i m ony , the gove rnm e ntpubl i s he d i t s E xhi bi t24, the F l or i da s t a t e c our tr e c or d i ndi c a t i ng B i a nc o’ s pr oba t i on a nd r e s t i tut i on, a nd the c our tga ve th e fo l l o w i n g i n stru ct i o n t o th e j u ry: L e tm e m e nt i on t o the j ury tha ti n s t a t e c our tthe y ha ve s om e thi ng ca l l ed a “ w i thh ol di ng of adj ud i ca t i on of gu i l t , ” a nd that ’ s w hat h ap p e n e d to M r . B ia n c o ’s c a s e , w h ic h m e a n s h e is n o t c o n s id e r e d to have been conv i ct ed of thatcr i m e a tthatt i m e. N ow , you j usthear d e vi de nc e of

a c t s of M r . B i a nc o, w hi c h w e r e a l l e ge dl y c om m i tt e d on o th e ro c c a s io n s . Y o u m u s t n o t c o n s id e ra n y o f th is e v id e n c e in de c i di ng i f

the de f e nda ntc om m i tt e d the a c t s c ha r ge d i n the [i ] nd i ctm ent . H ow ever , you m ayconsi der thi s e vi dence for other very11

l i m i t ed pu rposes . If

you fi nd beyond a[ ] re as on abl e dou btfr om other e v id e n c e in th e c a s e th a t th e d e f e n d a n t d id c o m m it th e a c ts c h a r g e d in th e [ i]n d ic tm e n t, th e n y o u m a y c o n s id e re v id e n c e o f o th e ra lle g e d ly c om m i tt e d a c t s a s t o de t e rm i ne w he the rM r . B i a nc o ha d the s t a t e of m i nd ori nt e ntne c e s s a ry t o c om m i tthe c r i m e c ha r ge d i n the [ i]n d ic tm e n t. R 1 6 at1 3 9 . F o l l o w i n g th e co u rt ’ s i n stru ct i o n , th e g o v ern m en task ed th e w i tn ess

“ [ a ] nd, a ga i n, thi s one doc um e nts i m pl y s how s on tha tda t e the r e w a s a n or de rof p ro b at i o n an d an o rd er o f rest i tu t i o n , co rrect ? ” Id . at1 3 9 . T o w h i ch th e w i tn ess r e p lie d , “[ c ]o rr e c t.” I d . a t 1 4 0 . A f t e rthe gove rnm e ntr e s t e d i t s c a s e , the c our t , on the gove rnm e nt ’ s m ot i on, di s m i s s e d one of

the m a i l f

r a ud c ount s be c a us e the vi c t i m i n tha tc ountha d not te s tif ie d . T h e r e a f

te r , w ith o u t o f

f e r in g a n y e v id e n c e , th e d e f e n s e a ls o r e s te d . D ur i ng i t s c l os i ng a r gum e nt , the gove rnm e nts tr ongl y e m pha s i z e d, r e pe a t i ng it tw ic e , th a t th e in v e s to r s w e r e n o t to ld th a t, a t th e tim e o f th e f r a u d , B ia n c o w a s : on pr oba t i on i n ac r i m i na l c a s e , tha the ha d a n out s t a ndi ng or de rof re st i tut i on agai nsthi m thathe hadn ’ tpai d yet , and, furtherm ore, that h e w a s u n d e rac o u r t- o r d e r e d in ju n c tio n th a t h a d b e e n is s u e d in e a r ly 20 01 . . . . [T ] hese [w er e] m at er i al fa ct s thatshou l d h ave been d i s c l o s e d t o i n v e s t o r s i f th e r e wa s al e g i t i m a t e o p e r a t i o n . B u twe k n o w itw as n ’ta leg it im ate o p er atio n . T h is in fo rm atio n w as n ’t d i scl o sed t o th ese v i ct i m s an d th at ’ s w h y th ey l o stth ei r m o n ey. R 1 7 at1 1 . L at er, th e g o v ern m en tw al k ed th e j u ry th ro u g h i t s E x h i b i t2 5 , fi rst no t i ng thatthe i nj un ct i on had b ee n ent er ed i n F ebruary20 01 , before B i anco st art ed s o lic itin g in v e s to r s f

o rP a y d a y . I t h ig h lig h te d th a t th e in ju n c tio n p e rm a n e n tly12

ba rr e d B i a nc o f

r om “ e nga gi ng orpa r t i c i pa t i ng i n the a dve r t i s i ng, m a rke t i ng, p ro m o t i o n , o fferi n g fo r sal e o r sal e o f an y fran ch i se, b u si n ess v en tu re, b u si n ess op po rtun i ty or i ncom e genera t i ng prod uctor se rvi ce . ” I d. at21 . Itre as se rt ed that P a y da y w a s e xa c t l y the ki nd of ope r a t i on ba rr e d by the i nj unc t i on. T he gove rnm e nta l s o a r gue d tha tB i a nc o di d notappl y f oral i c e ns e be c a us e he kne w he w o u ld n o t g e t o n e d u e to h is c r im in a l b a c k g r o u n d a n d th e in ju n c tio n a n d th a t th is w a s “a f r a u d u le n t o m is s io n o f

im p o r ta n t in f

o rm a tio n .” I d . a t 3 1 . I n h is c lo s in g a r g u m e n t, B ia n c o ’s c o u n s e l la id o u t a“g o o d f a ith d e f e n s e ,” e x p la in in g th a t B ia n c o h a d “d r e a m [ e d ] to g o o u t a n d b e g in ac o rp o r a tio n , to b e g in a busi ness i dea, ” a nd that“ he needed t o rai se m on eyi n o rdert o st artthat bu si ness . ” I d. at34 . H e a rgued thatB i anco t oo k st eps t o k ee p h i s t el em arket er s hone s t , butthe i nve s t or s onl y br i e f l y l ooke d a tthe pr i nt e d m a t e r i a l s a nd di d not t ake e no ug h car e i n thei r dec i si on t o i nv es t . H e then p oi nt ed ou tthatB i anco had

“ puta n a w f

ul l otof ne ga t i ve m a t e r i a l ” i n the m a t e r i a l s he s e ntt o i nve s t or s , a nd que s t i one d w ha tgood i nc l udi ng hi s c r i m i na l hi s t ory a nd the i nj unc t i on w oul d ha ve do ne. Id. at45 . L at er , he ar gu ed thatthe go vernm enthad t ol d the j ury thatB i anco us e d s om e of

the i nve s t orm one y t o pa y r e s t i tut i on “ a s a n i nc e ndi a ry pi e c e of in f o rm a tio n . I t’s o f

f e r e d f o rits e m o tio n a l ap p e a l, b e c a u s e in tru th [ B ia n c o ] . . . w as perm i tt ed t o t ake m on eyou tof thi s c om pany. ” I d. at60 . F i nal l y, coun se l13

a r gue d tha ti tw oul d notha ve m a de am a t e r i a l di f f e r e nc e ha d B i a nc o di s c l os e d the i nj un ct i on because the i nv es t ors w ou l d n othave rea d the i nform at i on , even i f i thad b e e n in c lu d e d in th e m a te r ia ls . I n r e b u tta l, th e g o v e rn m e n t a s k e d h o w B ia n c o c o u ld h a v e b e e n a c tin g in good f a i th w he n he w a s vi ol a t i ng the c our t - or de r e d i nj unc t i on a nd ope r a t i ng w i tho utthe prop erl i ce nse. T here af t er , ou tof the pres ence of the j ury, the court r e da c t e d the w or ds “ due t o the f a c ttha the w a s ac onvi c t e d f e l on” f r om the i ndi c tm e nt . I d. a t83- 85. A tthe c l os e of the tr i a l , the c our tr e pe a t e d the i ns truc t i on i tga ve the j ury r e ga r di ng the e vi de nc e of pr i ora c t s . U l t i m a t e l y , the j ury f ound B i a nc o gui l ty on a l l c ount s , a nd the c our ts e nt e nc e d hi m t o 168 m onths of im p r is o n m e n t. I I . DI S CUS S I ON B i a nc o a r gue s tha tthe c our te rr e d by a dm i tt i ng the e vi de nc e of hi s s t a tus on p r o b a tio n , h is r e s titu tio n o b lig a tio n , a n d th e c o u r t- o r d e r e din ju n c tio n b e c a u s e it w as no tprob at i ve of the offens es char ged and un fa i rl y i nv i t ed the j ury t o d i sr egar d hi s goo d fai th d ef

ense , part i cul ar l y the fa ctthatthe bu si ness coul d h ave been profi t abl e i f w el l -run , thatthe prom ot i on al m at er i al s e xp l ai ned the ri sks, and that the t el em arket er s l i ed i nd ependent l y. S peci fi ca l l y, he ar gu es thatthe evi dence w as undul y pr e

j udi c i a l be c a us e i t : ( 1) c oul d l e a d the j ury t o i nf e rtha the w a s gui l ty a ndBia nco additionally

contends that his failure to disclose his probationar y status and 1 other omissions werenot directly relevant to any

of the charg ed off

enses be causethe indictment did not include any

alleg ations of material omissions . In fac t, the indictment does include such alleg ations. R1-1 at 2. 14 had a prop ensi ty f

or fr aud b ec ause he had b ee n p re vi ou sl y c on vi ct ed of si m i l ar cri m es an d (2 ) ag g rav at ed h i s cu l p ab i l i ty, b u tw as i rrel ev an tas t o h i s g u i l t . H e al so a r gue s tha tthe i s s ue of

w he the rhe c oul d ha ve gott e n al i c e ns e w a s noti m por t a nt enou gh t o j ust i fythe evi dence and thatthe j ury di d n otneed t o k no w thathe w as payi ng re st i tut i on w i th the i nv es t or’ s f un ds, as l on g as they knew thathe conv ert ed i tt o h i s ow n u se . 1 W e r e vi e w pr ope r l y pr e s e rve d c ha l l e nge s t o the di s tr i c tc our t ’ s rul i ngs on a dm i s s i on of

e vi de nc e f

ora n abus e of

di s c r e t i on. U ni t e d S t a t e s v. J i m i ne z , 224 F . 3d 1243, 1249 ( 11th C i r . 2000) . A c our tabus e s i t s di s c r e t i on w he n i t s de c i s i on

“ re st s upo n a cl earl y e rr on eous fi nd i ng of fa ct , an erra ntconcl usi on of l aw , or an i m pr ope rappl i c a t i on of l a w t o f a c t . ” U ni t e d S t a t e s v. B a ke r , 432 F . 3d 1189, 1202 ( 11th C i r . 2005) , c e r tde ni e d s ub nom . , __ U . S . __, __ S . C t . __, 2006 W L 654797 ( U .S . A p r . 1 7 , 2 0 0 6 ) ( N o . 0 5 - 9 6 8 7 ) . E vi de nc e s how i ng “ a ny t e nde nc y t o m a ke the e xi s t e nc e of a ny f a c ttha ti s of consequence t o the det erm i nat i on of the ac t i on m ore probabl e or l es s probabl e than it w o u ld [ o th e rw is e ] b e ” is “[ r ]e le v a n t e v id e n c e ,” a n d “[ a ]ll r e le v a n t e v id e n c e is [genera l l y] adm i ss i bl e” attri al . F ed. R . E vi d. 40 1, 40 2. H ow ever , even i f e vi dence15

i s r el evant , i t“ m aybe excl ud ed i f i t s probat i ve val ue i s s ub st ant i al l y outw ei gh ed by the dang erof un fa i r pre j ud i ce , confusi on of the i ss ues, or m i sl ea di ng the j ury. ” F e d. R . E vi d. 403. B o th th e “ru le s a n d p r a c tic e f a v o rth e a d m is s io n o f

e v id e n c e r a th e rth a n its e x c lu s io n if

it h a s a n y p r o b a tiv e v a lu e a t a ll.” Y o u n g v . I ll. C e n t. G u lf R .R . C o ., 61 8 F . 2d 33 2, 33 7 (5th C i r. 19 80 ) ( qu ot at i on s om i tt ed). R ul e 403 i s a n

“ extra ordi naryre m edy . . . w hi ch shou l d b e use d spari ng l y s i nce i tperm i t s the tri al c our tt o e xc l ude c onc e de dl y pr oba t i ve e vi de nc e . ” U ni t e d S t a t e s v. W r i ght , 392 F . 3d 1269, 1276 ( 11th C i r . 2004) ( quot a t i ons om i tt e d) , c e r t . de ni e d, __ U . S . __, 125 S . C t . 1751 ( 2005) . R ul e 403’ s “ m a j orf unc t i on [ i s ] e xc l udi ng m a tt e rof s c a nt or cum ul at i ve prob at i ve force , dragged i n b y the heel s f or the sa ke of i t s pre

j ud i ci al e f f e c t . ” U ni t e d S t a t e s v. U tt e r , 97 F . 3d 509, 514- 15 ( 11th C i r . 1996) ( quot a t i ons om i tt ed). R ul e 404 (b) prohi bi t s a l l evi dence of “ cr i m es , w rong s, or ac t s” t o p rove that a per son i s of achar ac t erthatw ou l d com m i tthe cr i m e c harged, bu ti tperm i t s s uch e vi de nc e t o pr ove , a m ong othe rthi ngs , m ot i ve , i nt e nt , orabs e nc e of m i s t a ke or acci d en t . B ak er, 4 3 2 F . 3 d at1 2 0 4 . If (1 ) th e ev i d en ce i s rel ev an tt o o n e o f th ese e le m e n ts , ( 2 ) th e r e is “s u f f ic ie n t p r o o f

th a t th e d e f

e n d a n t c o m m itte d th e p r io ra c t, a nd [ ( 3) the gove rnm e nt ] c a n s how tha tthe pr oba t i ve va l ue of the e vi de nc e i s not16

subst ant i al l y outw ei gh ed by i t s und ue prej ud i ce , and [i t ] m ee t s the other re qu i re m ent s of [ R ul e] 40 3, ” then i tm aybe adm i ss i bl e und erR ul e 404 (b). Id. at 12 05 . R ul e 404 (b) “ i s arul e of i ncl usi on . ” I d. at12 04 -05. “ E vi dence of cr i m i nal a c tiv ity o th e rth a n th e c h a r g e d o f f e n s e is n o t e x tr in s ic u n d e rR u le 4 0 4 ( b ) if it is . . . nece ss ary t o com pl et e the st ory of the cr i m e, or [i s] . . . i nextri cabl y i nt ertw i ned w i th the e vi de nc e r e ga r di ng the c ha r ge d of f e ns e . ” W r i ght , 392 F . 3d a t1276 (quo t at i on s om i tt ed). T o pr ove m a i l a nd w i r e f r a ud unde r18 U . S . C . §§ 1341 a nd 1343, the go vernm entm ustes t abl i sh thatthe defendant : (1) i nt ent i on al l y part i ci pat ed i n a s c he m e t o de f

r a ud ape r s on of

m one y orpr ope r ty , a nd ( 2) us e d the m a i l s a nd i nt e r s t a t e w i r e s i n f

ur the r a nc e of

the s c he m e . S e e U ni t e d S t a t e s v. S ha rpe , 438 F . 3d 1257, 1263 ( 11th C i r . 2006) ; U ni t e d S t a t e s v. H a s s on, 333 F . 3d 1264, 1270 (11th C i r. 20 03 ). “ A sc hem e t o d ef raud re qu i re s proof of m at er i al m is r e p r e s e n ta tio n s , o rth e o m is s io n o rc o n c e a lm e n t o f m a te r ia l f

a c ts , r e a s o n ab ly c a l c ul a t e d t o de c e i ve pe r s ons of or di na ry prude nc e . ” H a s s on, 333 F . 3d a t1270- 71 ( c ita tio n s o m itte d ) . B i anco cont ends thatU ni t ed S t at es v. C oo k, 55 7 F . 2d 11 49 (5th C i r. 19 77 ), i s di sposi t i ve. In C oo k, the defendant , by the ac t i on s of hi s c om pany, w as char ged w ith m a il f

r a u d b y m a k in g u n tru e s ta te m e n ts to p o te n tia l in v e s to r s . I d . a t 1 1 5 0 - 5 1 .17

O ver the defendant ’ s obj ec t i on , the di stri ctcourtadm i tt ed i nt o evi dence unredact ed

“ i nj un ct i on do cum ent s” thatre l at ed t o ano ther c om pany the defendanthad pr e vi ous l y ow ne d. I d. a t1151- 52. T he s e doc um e nt s pr ohi bi t e d the s e l l i ng of se curi t i es i n a m anner vi ol at i ve of fe dera l l aw and l i st ed a num ber of a ct s that wo u l d c o n s t i tu t e f

r a u d i f th e d e f e n d a n te n g a g e d i n th e m . I d . C i t i n g R u l e 4 0 3 , we r e ve r s e d the de f

e nda nt ’ s c onvi c t i on be c a us e the doc um e nt s “ ha d l i tt l e orno i nde pe nde ntpr oba t i ve va l ue i n r e l a t i on t o a ny di s put e d que s t i on i n the c a s e ” a nd

“ de s c r i bi ng num e r ous f r a udul e nta c t s w a s . . . l i ke l y t o ha ve ha d as i gni f i c a nt pr e j udi c i a l i m pa c ton the m i nds of j ur or s . ” I d. a t1153, 1155. W e r e i t e r a t e d, how e ve r , “ tha tR ul e 403 r e qui r e s tha te a c h c a s e be de c i de d on i t s ow n f a c t s [ a nd that ] [s ] i tuat i on s i nv ol vi ng a danger of prej ud i ce ar e notsusc ept i bl e t o g ener al rul e s . ” I d. a t1154 n. 10. H er e, the chal l enged evi dence agai nstB i anco sa t i sf i es the three -prong ed adm i ss i bi l i ty t es tun der 404 (b). W i th regar d t o the fi rs tpron g, B i anco w as in d ic te d , in p a r t, f

o rm a k in g m a te r ia l o m is s io n s , w h ic h in c lu d e th e f a ilu r e to te ll the i nve s t or s the f

a c ttha the w a s on pr oba t i on, tha the ow e d r e s t i tut i on, a nd tha the w a s e n jo in e d f r o m , a m o n g o th e rth in g s , s o lic itin g in v e s tm e n ts f r o m th e p u b lic , T h e s e f a c ts m a k e u p e le m e n ts o f th e o f f e n s e a n d a r e e ith e rn e c e s s a ry to un ders t andi ng the “ st ory of the cr i m e” or “ i nextri cabl y i nt ertw i ned” w i th o ther18

di r e c te vi de nc e of

the of f e ns e . S e e W r i ght , 392 F . 3d a t1276. U nl i ke the de f e nda nti n C ook, the e vi de nc e of hi s s t a tus on pr oba t i on a nd the i nj unc t i on e nt e r e d a ga i ns thi m ha d s ubs t a nt i a l , i nde pe nde ntpr oba t i ve va l ue a s t o hi s i nt e nt and absence of mis t ake i n o m i tt i ng m at er i al fa ct s i n furthera nce of the offens e. S ee C o o k , 5 5 7 F .2 d a t 1 1 5 3 - 5 4 . A d d itio n a lly , e v id e n c e c o n c e rn in g th e p a y m e n t o f h is re st i tut i on ob l i gat i on w as i ntri nsi c t o the charge of mo ney- l aund er i ng . T he fa ct th a t h is c r im in a l b a c k g r o u n d p r e v e n te d h im f r o m o b ta in in g th e n e c e s s a ry lic e n s e to o p er ate h is b u sin es s is a lso n ec es sa ry in u n d er stan d in g th e s co p e o f B ian co ’s de c e pt i on be c a us e i nve s t or s w e r e l e d t o be l i e ve tha thi s c om pa ny ha d s uc h a l i ce nse. T he s e c ond pr ong unde r404( b) w a s notc ont e s t e d be l ow , a nd i s not c o n te s te d h e r e , a n d is s a tis f ie d in a s m u c h a s B ia n c o w a s w illin g to s tip u la te to h is st at e c ou rtcr i m i nal re cord and the exi st ence of the i nj un ct i on . A s t o the thi rd pron g, because the di stri ctcourtca re ful l y r es tri ct ed and redact ed the evi dence s uch thatno di re ctre fe re nces w er e m ade t o the nature of B i anco’ s pri or cr i m i nal offe nses and tw i ce i nstruct ed the j ury on the prop eruse of the evi dence, the dang er of un fa i r pre

j ud i ce w as m i ni m al as com pare d t o i t s probat i ve val ue. S ee U ni t ed S t a t e s v. C a l de r on, 127 F . 3d 1314, 1334 ( 11th C i r . 1997) ( the c our t ’ s i ns truc t i ons c u r e p r e ju d ic e b e c a u s e th e ju ry is p r e s u m e d to f o llo w th e m ) . T h e d is tr ic t c o u r t d id19

n o tab u se i t s d i scret i o n i n al l o w i n g i n ev i d en ce reg ard i n g th e l ack o f a b u si n ess l i c e ns e a nd the f

a c ttha t$55, 000 of

l a unde r e d m one y w a s us e d t o pa y r e s t i tut i on because s uch evi dence w as no tused t o p rove thatB i anco had a cri m i nal pr ope ns i ty , butr a the rt o pr ovi de ac om pl e t e a nd ne c e s s a ry a c c ountof the c ir c u m s ta n c e s u n d e r ly in g B ia n c o ’s v a r io u s o f f e n s e s . I I I . CONCL US I ON B i anco argues thatthe cont es t ed evi dence agai nsthi m w as hi gh l y pre j ud i ci al and any prob at i ve val ue w as fa r outw ei gh ed by i t s pre j ud i ci al i m pact . W e di sa gree a n d c o n c lu d e th a t it w a s n o t a n ab u s e o f d is c r e tio n f

o rth e d is tr ic t c o u r t to a d m it s u c h e v id e n c e . AF F I RME D.