F OR P UBLICATION



### UNIT E D ST AT E S CO URT O F APPE AL S FO R T H E NINT H CIRCUIT

U N I T E D S T A T E S O F A M E R I C A , Plaintiff-Appellee

,

v

.

J A M E S L L O Y D , AKA J ames V. L loy d, J r ., AKA J ames Vernon L loy d, Defendant-Appellant

. N o. 12-50499

D.C. No. 2:11-cr-00542- J F W -1

U N I T E D S T A T E S O F A M E R I C A , Plaintiff-Appellee

,

v

.

J A M E S L L O Y D , AKA J ames V. L loy d, J r ., AKA J ames Vernon L loy d, Defendant-Appellant

. N o. 12-50500

D.C. No. 2:11-cr-00543- J F W -3U N I T E D S T A T E S V

. L L O Y D 2

U N I T E D S T A T E S O F A M E R I C A , Plaintiff-Appellee

,

v

.

P A U L B A K E R , AKA Darwin Stanton B aker, J r., AKA Paul D. B a ker, AKA Paul Doug las B aker,

Defendant-Appellant

. N o. 12-50509

D.C. No. 2:11-cr-00543- J F W -4

U N I T E D S T A T E S O F A M E R I C A , Plaintiff-Appellee

,

v

.

D A V I D N E L S O N , AKA David Paul Nelson, Defendant-Appellant

. N o. 12-50514

D.C. No. 2:11-cr-00543- J F W -11

U N I T E D S T A T E S O F A M E R I C A , Plaintiff-Appellee

,

v

.

A L B E R T G R E E N H O U S E , AKA Albert Michael Greenhouse,

Defendant-Appellant

. N o. 12-50526

D.C. No. 2:11-cr-00543- J F W -7U N I T E D S T A T E S V

. L L O Y D 3

U N I T E D S T A T E S O F A M E R I C A , Plaintiff-Appellee

,

v

.

R O B E R T K E S K E M E T Y , Defendant-Appellant

. N o. 12-50566

D.C. No. 2:11-cr-00542- J F W -4

OPI NI ON

A ppeal from the United States District Court for the Central District of California J ohn F . W a lter, District J udg e, Presiding

Arg ued and Submitted J uly 8, 2014—Pasadena, California

F iled December 4, 2015

B efore: Marsha S. B erz on and Richard R. Clifton, Circuit J udg es and L e e H. Rosenthal, * District J udg e.

O pinion by

J udg e Rosenthal

* T h e H o n o rab le L ee H. Ro sen th al, District J u d g e f o r th e U.S. District Co u rt f o r th e So u th ern District o f T ex as, sittin g b y

d esig n atio n

.U N I T E D S T A T E S V

. L L O Y D 4

SUMMARY * *

Crim inal Law

The p an e l affirmed in part, reversed in part, vacated in
par t, a nd remanded in part in cases in which five defendants—who worked for telemark e t i n g “boiler r ooms” in California and F lorida, soliciting investments in partnerships
to finance the production and distribution of movies—appeal their con v i ctions or sentences for selling unreg istered securities.

J ames L loy d pleaded g uilty to two counts of wire fraud and Robert Keskemety to one c ount of mail fraud. The panel affirmed L loy d’s sentence, but concluded t h a t Keskemety ’s
sentence for manag ing the F lorida telemarketing boiler room improperly included fraud losses from the California b oiler

room that L loy d manag ed. T he panel vacated Keske m e t y ’s sentence and remanded for resentencing

.

The jury convicted both D avid Nelson and Paul B aker o f

one count of conspiracy to commit mail and wire fr a u d a nd
to offer and sell unreg ist ered securities, two counts of mail and wire fraud, and two counts of offering a n d s e lling
unreg istered secur i t i e s. The p anel reversed Nelson’s conviction b ased on evidentiary errors—including improper admission of lay o p inion testimony

, F ed. R. E vid. 404(b) evidence, and an email containing he a r s a y statements. The panel affirmed B aker’s conviction due to the overwhelmin g evidence ag ainst him, making the evide ntiary errors harmless.

** T h is su m m ary co n stitu

t es n o p ar t o f t h e o p in io n o f th e co u rt. It h as b een p rep ared b y

co u rt staf

f f o r th e co n v en i en ce o f

th e read er.U N I T E D S T A T E S V

. L L O Y D 5

The panel vacated B aker’s sentence and reman d e d for resentencing because the district c o u r t did not account for U.S.S.G. § 4A1.2(k), cmt. n.11, in calculating his criminal history score.

The p a n e l found no error in Albert Greenhouse’s
sentence.

COUNSEL

Edward M. Robinson (arg ued), L aw Office of Ed w a rd M

. Robinson, Torrance, C a lifornia, for Defendant-Appellant J ames L loy d

.

J ohn C. L emon (arg

ued), San Dieg o, California, fo r Defendant-Appellant Paul B aker.

Sean K. Kennedy and Kathry n A. Young (arg

ued), Deputy F ederal Public Defenders, L os Ang e les, California, for Defendant-Appellant David Nelson.

L awrence J ay L itman (arg ued), L o s Ang eles, C a lifornia, for Defendant-Appellant Albert Greenhouse.

Russell S. B abcock (arg u ed), L aw Offices of Russe l l S. B abcock, San Dieg o, California, fo r Defendant-Appellant Robert Keskemety

.

André B irotte, J r., U nited States Attorney
, Central District o f California, Robert E. Dug d ale, Chief, Criminal D ivision, Steve n A. Caz ares and Elly n Marcus L insday (arg

ued), Assista n t United States Attorney s, L os A ng eles, California, for Plaintiff-Appellee.U N I T E D S T A T E S V

. L L O Y D 6

OP INION

ROSENTHAL , District J udg e:

F ive defendants appeal their convictions or sentences for selling unreg istered securities. The defendants worked for telemarketing “boiler rooms” in Calif o r n i a and F lorida, soliciti n g i nvestments in partnerships to f inance the production and distribution of m o v i e s. The defendants
p r omised potential investors that the investments wo u l d

re t u r n s wift and larg e profits, with little to no risk. Approx i mately 650 individuals—including unsophisticated people who could not afford the financial loss—invested over $23 million. Most of the investors lost it all.

These appeals a

rise from two indictments issued in the Central District of California on J u n e 1 5
, 2 011. The indictment in United States v. Daniel To l l et al.

, No. 11-cr-543-J F W
, charg ed J ames L loy d, who manag ed a b oiler

room in L os Ang eles, California; telem a r k e t ers Paul B a ker, David Nelson, and Albert Greenhouse; a nd eig ht others, all o f whom worked throug h a California boiler room t o s e ll partnership units in three movies produced (or supposed to be produced) b y Cinamour Entertainment, L L C. The indictment in U nited States v

. James Lloyd

, No. 11-cr-542-J F W
, charg ed L loy d, who left Cinamour to manag e a different boiler room in California, and Robert Keskemety

, who manag ed a F lorida boiler room, along with seven others, for selling partnership units in two movies. These movies wer e produced b y Q Media Assets L L C, a company o w n e d by the same person who owned Cinamour. B oth indictments charg ed conspiracy

, mail fraud, wire f

raud, and securities fraud between 2001 a nd 2009.U N I T E D S T A T E S V

. L L O Y D 7

The two boiler room manag e rs, J ames L loy d and Robert K e s k emety , were convicted a f ter they pleaded g uilty

. Th e y appeal only their sentences. Two Cinamour tele m a r keters working in California, David Nelson and Paul B aker, a nd Albert Greenhouse, a Cinamour tele m a r keter working in F lorida, were tried tog ether. Nelson and B aker appe al their convictions and sentences. The only issue in the Greenhouse appeal is the sentence. W e have jurisdiction under 28 U .S.C. § 1291 and 18 U.S.C. § 3742(a).

The number of defendants, the leng thy period i n v o l ved, and the ty pe of conduct made this a d ifficult case for any trial

c o u r t to resolve. The r ecord shows that the district judg e competently and f

ai r ly resolved many of the innumerable issues t h a t a r o s e in trial and at sentencing

. The points on which we disag ree with the district judg e raise issues that a re both complex and close.

J ames L loy d pleaded g uilty to two counts o f wir e fraud

a n d R obert Keskemety to one count of mail fraud. They appeal their sentences. W e affirm L loy d’s sentence, b ut we conclude that Keskemety ’s sentence for manag ing the F lorida telemarketing boiler room improperly included fraud losses from the Cal i fo rnia b oiler r oom that L loy d manag ed. W e vacate Keskemety ’s sentence and remand for resentencing

.

David Nelson and Paul B aker appeal both the convictions and sentences entered after th e j u r y convicted each of o ne count o f cons piracy to commit mail and wire fraud a nd to offer and sell unreg istered securities, two counts each of mail and wire fraud, and two c o u n t s of offering and selling
unreg istered securitie s

. W e reverse Nelson’s conviction based on evidentiary r

uling s, vacate t h e sentence, a nd remand. We affirm Ba k e r ’s conviction d ue to theU N I T E D S T A T E S V

. L L O Y D 8

overwhelming evidence a g ainst him, making the evidentiary errors harmless, but we vacate B aker’s sentence and remand for resentencing b e cause of an error in calculating the Guidelines sentence.

F inally

, Albert G reenhouse appeals the sen t ence he received after th e jury convicted him of two c ounts o f offering a nd selling unreg istered securities. W e find no error, and we affirm.

BACK G ROUND

G l en Hartford, a film producer, founded Cinamou r i n 2000 to make and distribute independent films, and served a s its chief ex ecutive officer a nd majority shareholder. Hartford used telemarketing to solicit money from individual investors
to finance three movies: F orbidd e n W

arrior
, From Mexico with Love
, and Red W

ater 12

. These t h r e e m o v ies are the basis of the United States v. Toll indictment.

Cinamour beg an raising money for Forbidden W arrior in 20 0 1 o u t of a telemarketing b oiler r oom in L os Ang eles, California. L loy d a

nd B a ker were involved in the Forbidden W arrior fundraising

. That movie was r eleased i n 2005 directly to video distribution and made abou t $ 5 0 0 ,000, a commercial failure of larg e proportions.

F rom 2004 to 2007, Cinamour used telemarketing to solicit p urchases of partnership units to finance From Mexico W ith Love

. Cinamour raised approx imately $14.2 million fro m 445 investors nationwide. From Mexico W ith Love
g rossed a bout $800,000 from a very limited theatrical release. The investors received no r eturn on the money they sent.U N I T E D S T A T E S V

. L L O Y D 9

L loy d, B aker, and Greenhouse were involved in soliciting investments in From Mexico W ith Love.

I n 2007, Cinamour beg an telemarketing sales o f partnership units in Red W ater

. Cinamour rai s ed
approx imately $2.8 million from a pprox imately 100 v ictims nationwide but spent only $23,000 on making the movie. The investors lost every

thing

. B aker and Nelson were involved in soliciting the investments in Red W ater

.

I n 2009, after an undercover investig ation, the F B I raided Cina mour’s L o s Ang eles o ffices. Hartford committed suicide day s after the raid.

The indictment in U

nit ed States v. Lloyd arose from telemarketed i n

v e s t m e n t s i n two movies written, directed, a nd produced by a former Central I ntellig ence Ag ency officer, Michael D. Sellers. Sellers retained J o el L ee Craft, J r ., founder and chief ex ecutive o fficer o f American I n formation Strateg ies, I nc., to help raise capital for the f ilms, Eye of the Dolphin and W

ay of the Dolphin

. Sellers worked w ith Craft
to set up telemarketing boiler rooms, hir i n g Keskemety in F lorida, and later, L loy d in California, to manag e them.

I n 2 0 0 2
, Sellers recruited Keskemety to establish a nd
manag e the F lorida telemarketing o ffice. The g oal was to raise money for the two Dolphin movies. I n 2 004, Keskemety beg a

n soliciting in v e stments for Eye o f the Dolphin

. Sellers asked Craft to intr o d u c e h im to other potential boiler-room manag ers. Throug h Craft, Sellers met L lo y d a n d hired him in 2007 to move from manag ing the Cinamour telemarketing office in L os Ang eles to manag ing

an office in the same city to solicit investments in partnership units to finance Sellers’s films. Keskemety and L loy d hiredU N I T E D S T A T E S V

. L L O Y D 10

and pai d t h e other telemarketers to raise money for the Dolphin films.

W h en L loy d beg an manag ing t h e L os Ang eles b oiler

room for Sellers, he h ad been working for Cinamour for over four y ears soliciting money for Forbidden W arrior and From Mexico W

ith Love

. H e broug ht the same marketing techniques to selling partnership units in Eye of the Dolphin and W ay o f the Dolphin

. The California and F lori d a b oiler

rooms tog ether raised $9.6 million from 264 investors for the
two Dolphin movies. B oth movies failed. The i n v e s t o r s in the first movie, as a gr o u p, received o nly $370,656 of their i n i t i a l investment. The investors in the second movie lost
every thing

.

The boiler roo m s w ere similar. L ess e x p erienced telemarketers served as “fronters,” cold- calling potential investors from lists of leads and reading from scripts to pitch the investments. The scripts included assurances to prospective investors of quick and larg e profits with little to

no risk. These p romises, and the det a i l s s upporting them,

were false. I f the cold-calls led t o ex pressions of interest, “closers”—more ex perienced telemarket ers—would f ollow
up and try to g et sig ned investment documents and a check to close the d eal. “Reloaders” would induce some of those w ho had already

invested to put in more.

Many of the defendants had multiple roles, but e ach of the appellants worked as closers some of the time. L loy d helped close investment s in Forbidden W arrior and From Mexico with Love

. B aker helped close investments in F o rbidden W arrior
, From Mexico with Love
, an d Red W ater

. Nelson helped c lose investments in Red W ater

. Greenhouse h elped close investments in From Mexico with Love

. L loy d a ndU N I T E D S T A T E S V

. L L O Y D 11

Keskemety were closers for Eye of the Dol p h i n and W

ay of the Dolphin

.

L loy d, B aker, Nelson, and Greenh o u s e also worked a s

“ reloaders” on the Cinamour films, targ eting those wh o h a d already invested to persuade them to invest more. Reloaders participated in con f

e r ence calls with these investors. The calls included telemarketers who pretended to be investors and e nthusiastically ag reed to commit more money

. L loy d

a l s o worked as a reloader o n the two Dolphin films, b u t Keskemety

did not.

Most o f the defendants asserted that they believed the leads they c o l d

- c alled a

nd persuaded to invest were suitable and accredited ind i v i d u als who w ere sophisticated a nd financially able to risk losing the money

. The trial testimony from and about the investors, as w ell as the information in the presentence reports, tell a different s t o r y

. Many of the investors had n o sig nificant ex perience in investing and few had sig nificant liquid assets. Many ha d or w ere about to

r e t i r e

. At the trial, some of the investors testified that t h e y had told the fronters, the closers, a n d the reloaders about their limited investment ex perience, t h eir limited resources, a nd their life situations. The investors repeatedly testified about the d e fendants’ assurances that the investments were r isk free and would be returned with a p ro f i t w ithin a short period. The inv estors briefly testified about the effects on them o f losing the money

.

The scripts the t el emarketers used varied depending on the movie they

were pitching , but there were many common elements. I n initial solicitation cold-calls, the fronters stated that: (1) there was little to no risk in the investment because there were presale distribution contracts for the mov i es,U N I T E D S T A T E S V

. L L O Y D 12

which g uaranteed that the inv e s t o rs would r ecoup their i n vestments and make a profit; (2) investors would quick l y beg in to receive returns because the movies were completed

or n earing completion and, with the presales contracts, would be distributed in the near f u t ure; (3) films previously produced by the same company had y ielded g ood returns for inv estors; (4) the money invested would be used to make, promote, and distribute the movies, not to pay for fundraising

, overhead ex penses, or sales commissions; (5) the marketers earned little to no commissions; (6) investors would g et their
money b ack and more out of the movie proceeds before the promoters a

nd sellers were paid ; a n d ( 7) there was a time limit because the units would sh o r t l y b ecome unavailable, requiring a quick commitment. These statements were affirmatively and materially false o r omitted material information needed to make them true.

T h e evidence presented a t trial and recounted in the presentence reports showed that there were few or no g uaranteed presale distribution contracts and no p rospects o f obtaining them. While some of the movies were finished a nd failed in distribution, some were not in production and were

never made. Prior investors in fil m s p r o d uced b y the same company had lost money

. Most o f the money from investors did not g o to make or distribute th e f i l m s, but to pay personnel and promoters. Most o f the telemarketers earned 35 percent in commissions, althoug h some earned as little a s 12 percent a

nd others a s much a s 40 percent. There was no time limit on the investments. L ies abounded.

I f a f ronter’s cold-call produced an ex pression of interest, the p otential investor w ould receive a private placement memorandum. The memorandum c ontained some cautionary lang uag e but repeated many of the same lies. Closers wouldU N I T E D S T A T E S V

. L L O Y D 13

follow up, making similar p romises to g e t sig ned investment
contracts an d c hecks. Some of the investors were later targ e ted for r eloading throug h the stag ed conference calls. I n g eneral, the defendants did n o t c o ntend that the statements they made were true, but rather that they believed what t h ey were told to say

.

The f irst set of issues a naly

z ed below arises from the sentencing appeals of the two defendants who pleaded g uilty

, Robert Keskemety a nd J ames L loy d. The second set o f issues arises from the appe a l s of the three defendants tried tog ether and convicted.

D ISCUSSION

I. K eskem ety’s and Lloyd’s Sentencing Appeals

A. The Standard of

Review

W e review a district court’s sentencing decision for an abuse of discretion. United States v

. Carty
, 5 20 F .3d 984, 993 (9th Cir. 2008) (en banc). A d i s t r ict court abuses its discretion when it improperly calculates the Guidelines r ang e

or bases its sentencin g d ecision on clearly erroneous facts. Id. ; United State s v. Treadwell

, 593 F .3d 990, 9 99 (9th Cir. 2009). W h en a defendant does no t object at sentencing

, we review for plain error. See United States v. Vargem
, 747 F .3d 724, 727 (9th C i r. 2014). “Under the p lain error standard, relief is warranted where the district court committed (1) error that (2) is plain; (3) ‘affected substantial rig hts;’ a nd (4) ‘ seriously affected the f airness, integ rity

, or public reputation of judicial proceeding s.’” Id. at 728 (q u o t ing United S tates v. Teague
, 722 F

. 3d 1187, 1190 (9th Cir. 2013)).U N I T E D S T A T E S V

. L L O Y D 14

B. The G uilty P leas and Sentences

I n 2002, Michael Sellers hired Keskemety to set up a nd

run a telemarketing boile r r o o m in F lorida to solicit investments in the two Dolp h in movies. Keskemety would
pay for the boiler-room e x penses, including buy ing h i s o wn lead lists and pay i n g t h e telemarketers. Sellers would pay Keskemet y 25 to 40 percent of the money r aised in the F lorida b o i l e r room. K eskemety b e g an running the b oiler

r o o m in 2004, soliciting investments first for the Eye o f t h e Dolphin

, then f

or the W ay of the Dolphin

. The telemarketers made their solicit at i o n calls using lead lists Keskemety purchased f

rom Craft. Keskemety manag ed the F lorida b oiler

room from 2 004 to 2009. D u r i ng this period, the telemarketers raised approx imately $2 milli o n from v ictims who invested in making and marketing the two Dolphin films.

L loy d worked as Cinamour’s boiler-room manag er from 2003 to 2007. Among other thing s, L loy d recruited telemarketers and helped prepare scripts that closers used to
g et sig ned investment contracts and checks.

I n 2007
, S e llers hired L loy d to set up and run a b oiler

room in L os Ang eles to sell partne r s hip units in Sellers’s D o l p h in films. Unlike his arrang ement with Keskemety in F lorida, Sellers paid the overhead for the L os Ang eles–based boiler r o o m t h at L loy d manag ed. L loy d convinced many o f the te l e m arketers w ho worked with him at Cinamour a s closers, inc l u d i n g Allen Ag ler, to join him and do the same kind of telemarketing solicitation for Sellers’s Dolphin films that they had been doing for Cinamour.

F rom 2007 t o 2009, the California and F lorida b oiler rooms tog ether sold partnership units in the Dolphin moviesU N I T E D S T A T E S V

. L L O Y D 15

to 264 victims, raising $9.3 million. Keskemety contends that his F lorida boiler ro o m r aised $1.5 to $2 million of this
amount. There is no co ntroverting information. B ased on this, L loy d’s Californi a b oiler r oom raised approx imately $7.3 million. The numbe r o f victims attributable to e ach location is unclear.

The J une 2011 i n dictment arising from the Dolphin movies, United States v. Lloyd

, et al

. , No. 11-cr-542, charg ed Keskemety with c o n s p i racy under 18 U.S.C. § 371, two counts of mail fraud under 18 U .S.C. § 1341, and offering and selling unreg istered securities u nder 15 U.S.C. §§ 7 7e

a nd 7 7x and aiding and abetting under 18 U.S.C. § 2. 1 On March 2, 201 2
, Keskemety pleaded g uilty without a plea
ag reement to one count of mail fraud.

T h e same indictment charg ed L loy d with one count o f conspiracy u nder 18 U.S.C. § 371, seven counts of mail fraud under 18 U .S.C. § 1341, seven counts of w ire fraud under 18 U.S.C. § 1343, eig ht counts of o ffe r i n g and selling (or aiding and abetting the offer and sal e of) an unreg istered security under 15 U.S.C. §§ 77e and 77x and 18 U.S.C. § 2, and two counts of eng ag ing in monetary transactions in property derived from illeg al activity under 18 U.S.C. § 1957. L loy d was also named in United States v. Toll, et al.

, No. 11- cr-543, arising from t he Cinamour film telemarketing

. This indictment charg ed L loy d with one count of conspiracy under 18 U.S.C. § 371, four c ounts o f mail fraud under 18 U .S.C. § 1341, f o ur counts of wire fraud under 18 U.S.C

. § 1343,

1 T h e in d ictm en t also ch arg ed C raf t f o r h is ro le at A m erican In f o rm atio n Strateg ies an d A g ler, J ad y L au ren ce Herrm an n , J o sep h McC a rth y , Matth ew B ry an W ellm an

- M a c k in

, Mo rab ito

, an d Ro b ert Ram irez f o r th eir

ro les as clo sers.U N I T E D S T A T E S V

. L L O Y D 16

three c ounts o f offering and selling (or aiding and abetting the offer and sale of) an unreg istered security under 15 U.S.C. §§ 77e and 77x and 18 U.S.C. § 2, and one count of eng ag ing in monetary transactions in property derived from ill e ga l activity under 18 U.S.C. § 1957. 2

I n F ebruary 2012, L l o y d pleaded g uilty to one c ount o f wire fraud in United States v. Lloyd ; in A pril 2012, he pl e aded g uilty to one count of wire f raud in U nited States v

. Toll . The two actions were consolidated for sentencing

.

Neither Keskemety nor L loy d appeal s h i s conviction. B oth appeal their sentences. Keskemety receive d an 80-month prison sentence, well below the 121 to 151 month Guidelines rang e, and was ordered t o p a y $8,628,733.93 in restitution. The offense level and restitution a mo u n t were b ased on the victims’ losses in b oth the F lorida boiler r o o m Keskemety manag ed b etween 2 004 and 2009 and the L os Ang eles boiler room L loy d manag ed between 2007 and 2009. Keskemety ag r ees that he is properly held accountable for the fraud losses from the F lorida boiler room while he worked there, but he challeng es including t h e L o s Ang e les boilerroom fraud losses in his relevant conduct.

L loy d received a 1 56-month s entence and had to pay $22,258,489.04 in restitution. He c h alleng es the sentence

2 T h e in d ictm en t also ch arg ed Dan i e l T o ll f o r h is ro le as Cin am o u r’ s p resid en t; Jo el L ee Craf

t, J r. f o r h is ro le as h ead o f A m erican In f o rm atio n Strateg ies, w

h ich su p p lied Cin am o u r w ith telem ark eters, sales m aterials, telep h o n e scrip ts, p riv ate p lacem en t m em o ran d a, an d lists o f pro sp ects to

co ld

- call; an d B art Do u g las Slan ak er, A llen B ru ce A g ler, Delith a Flo y d

, B rian Em m an u el Ellis, Dan iel Mo rab ito

, an d Dary l Van Sn o w d en , w h o

w ere clo sers.U N I T E D S T A T E S V

. L L O Y D 17

leng th as both proced u r a l ly flawed and substantively unreasonable.

C. K eskem ety’s Sentencing Appeal

The district court larg ely adopted the revised presentence report and overruled Keskemety ’s objections, includ i n g his objections to the fraud loss. The court c a l c u l at ed the Guidelines rang e based on a 20-level increase in offense level under § 2B 1 .1(b)(1)(K) f or $9,304,929.62 in intended fraud losses and a 6-level increase for over 250 vict i m s

. T h ese amounts included both the California and F lorida v ictims a nd their losses. The court c alculated r es t i tution the same way , i ncluding the 2 42 investors solicited by the California a n d F lorida boiler rooms who could be identified by name. W ith

a 2-level increase for the vulnerability of some of the v ictims and a 3 -level reduction for acceptance of responsibility

, the result was a n o f

f ense level of 32, which produced a sentencing rang e of 121 to 151 months. Citing Keskemety ’s military service, ag e, and poor health, the district court sentenced him to serve 80 months in p rison and ordered him to pay $8,628,733.93 in restitution.

Keskemety does not dispute that he is accounta b l e for Guideline-calculation purposes f or the amount raised from telemarketers’ solicitations in the F lorida boiler room during the time h e manag ed i t , a fraud loss of $1.5 to $ 2 million. Nor does he dispute that he must p ay restitution to the identifiable investors solicited from the F lorida boiler room. He does dispute that his r elevant conduct includes the fraud losses g enerated by the L os Ang eles telemarketing office that J a mes L loy d manag ed during the same period; that t h e number of victims of the F lorida office ex ceed 2 50; and that he owes restitution to the identifiable investors so l i cited b yU N I T E D S T A T E S V

. L L O Y D 18

the L os Ang eles a s well as the F lorida operation. Kesketemy
ag rees that he knew that the Calif o r nia boiler room e x isted and what it was doing

, but he d isputes that this knowledg e is
enoug h to include the f

r aud losses from the California b oiler room in his own relevant conduct.

“[ I ] n the c ase of jointly undertaken criminal activ i t y ,” a defendant i s responsible for “all reasonably foreseeable acts and omissions of o t h e rs in furtherance of the jointly undertaken criminal activity

, that occ u r red during the commission of the offense o f c o nviction, in preparation for that offense, or in the course of attempting to avoid detection

o r r e s p o n s i b i l i t y f

o r t h a t o f

f e n s e

. ” U

. S

. S

. G

. § 1B 1.3(a)(1)(B ). T h e defendant is accountable for the conduct o f o t h e r s that was both: “‘(i) in furtherance of the jointly undertaken criminal activit y ; and (ii) reasonably foreseeable in c onnection with th a t c riminal activity .’” United States v. Blitz

, 151 F .3d 1002, 1012 ( 9 t h C i r

. 1 998) (quoting U.S.S.G. § 1B 1.3, cmt. n.2). “ [ W ] e have held that

a district court may not a utomatically h o l d an individual defendant responsible for losses attributable to the entire conspiracy

, but r ather must identify t h e loss that fell within the scope of the defendant’s ag reement with his co-conspirators and was reasonably foreseeable to the defendant.” United States v. Treadwell , 593 F .3d 990, 1002 (9th Cir. 2010). Althoug h a district court need not “proceed item-by -item throug h a complete list of all losses attribut ed
to a criminal conspiracy and

. . . then make an individualiz ed determination whether or not each item was within the scope of the defendant’s ‘joint un d e r t a k ing ’ a nd was ‘reasonably foreseeable’ to that d efendant,” id. at 1002–03, the court must make particulariz ed finding s about “‘the scope of the criminal activity the particular defendant a g reed to jointly undertake,’”U N I T E D S T A T E S V

. L L O Y D 19

B litz

, 151 F .3d at 1012–13 ( quoting U.S.S.G. § 1B 1.3, cmt

. n.2).

“I n determining the scope of the criminal activity that the particular defendant ag reed to jointly undertake (i.e., the
scope of the specific conduct and objectives embraced by the defendant’s ag reeme n t ), the court may consider any ex plicit
ag reem e n t or implicit ag reement fairly inferred from the conduct of the defendant and others.” U.S.S.G. § 1B 1.3, cmt. n.2. The ex ample of jointly und e rtaken criminal activity in the Application Notes is a street-level drug dealer w ho pools resources and shares profits with four other street-level drug d e a l er s. The first dealer is eng ag e d in jointly undertaken criminal activity and is acc o u n t a ble for all the drug s he a nd the four other dealers sell d uring the time he works with them. Their sales a

re in furtherance of the first d ealer’s jointly undertaken criminal a ctivity and reasonably f oreseeable to him. Id.

, cmt. n.2, I llustration (c) (6 )

. By contrast, a dealer who sells to his own customers, in h is o wn territory , and does not share information, other resources, or profits with other dealers who have their own territories and customers, is not eng ag ed in jointly undertaken drug dealing with the o ther dealers and is n o t a cc o untable for the drug s they sell. That is true even if the first dealer knows about the other d ealers and wh o t h e y are and knows that the drug s

come from the same supplier. Si m i l a r l y , e ven if the first street-level drug dealer knows that the person who recruited him to sell drug s also recruited the other dealers for the same purpose, the first dealer is g enerally a c countable only f or the drug s he sells. U.S.S.G. § 1B 1.3, c mt. n.2, I llustration (c)(7). The dealers are doing the same kind of criminal activity at the

same time, but it is n ot a jointly u ndertaken criminal a ctivity

. U.S.S.G. § 1B 1.3, cmt. n.2, I llustration (c)(6).U N I T E D S T A T E S V

. L L O Y D 20

Knowledg e of “another participant’s crimi nal acts is not enoug h to hold the de f

e ndant r esponsible for those acts,” United S tates v. Studley

, 47 F .3d 569, 575 (2d Cir. 1 995), a nd knowledg e of a conspiracy ’ s overall objectives does not make the defendant accountable for all the coconspirators’ acts furthering those objectives. I n the telemarketing contex t, “the
scope of a joint u ndertaking for se n t e n c ing purposes depend[ s] on w hether the te l e m a rketers ‘worked tog e ther,’ ‘relied o n one another to ma k e a sale,’ attended the same sales meeting s, and ‘depended o n t h e s uccess o f

. . . the operation as a wh o le for their financial compensation.’” Treadwe l l

, 593 F .3d a t 1005 (quoting Blitz

, 1 5 1 F .3d at 1013). I f two defendants, working tog ether, desig n a nd

ex e c ute a scheme to sell f raudule n t s tocks in a telephone boiler-room operation, each is a ccountable for a ll the fraud losses that re s u l t

. The c onduct of each is in furtherance o f their jointly undertaken c r iminal a c tivity and is reasonably foreseeable in connection with that crim i n a l a ctivity

. U.S.S.G. § 1B 1.3, cmt. n.2, I llustration (c)(2). To determine

a defendant’s fraud-loss amount and r e sult i n g offense level,

a district court must consider that defendant’s role in the overall scheme. See Treadwell

, 593 F.3d at 1005; Studley

, 47 F .3d at 576.

The d istrict court made the f ollowing statements a

bout the
scope o f the criminal activity K es kemety ag reed to jointly undertake:

[ T ] h a t t h e l o s s e s o f t h a t a m o u n t [ $9,304,929.62] to those [ 264] v icti m s were sustained during the period of, the relevant period of [ Keskemety ’s ] p articipation in the scheme and a lso that they d o include relevant conduct with respect to M r. L loy d, and theyU N I T E D S T A T E S V

. L L O Y D 21

were clearly foreseeable and theref o r e properly attributable to [ Keskemety ]

.

The court appeared to b a s e t his conclusion o n Keskemety ’s knowledg e about L loy d’s operations and Sellers’s over a ll objectives and g oals:

Althoug h [ Kesketemy ] was in F lorida, he was f u lly aware of all the major facets of the scheme, knew o thers who were raising money from the [ Dolphin ] movies, [ sic] ran his own boiler r oom operation that emp loy e d several closers who worked for him.

The district court did not identify a dditional facts supporting it s conclusion that the solicitation a nd sales activities in L loy d’s L os Ang eles boiler r oom were w i t h i n “the scope o f the crimin a l a ctivity [ Keskemety ] ag reed to jointly undertake.” U.S.S.G. § 1B 1.3, cmt. n.2.

There is evidence that L loy d and Keskem e t y were eng ag ed in the same ty

pe o f activity

. B oth used s i m i lar

scr ipts a nd materials obtained from Craft’s American I nformation Strateg ies. B u t L loy d and Keskemety did n o t pool customers, information, or other resour c e s

. I n this
resp e c t , K e skemety was like the drug dealer who g e ts the drug s h e sells from the same source as other dealers a nd knows about their work, but does not share drug s, customers,

or information with them. K eskemety a n d L l o y d both g ot lead lists and scripts from Craft, but they did not share information with each other.

At sentencing and on appeal, the g overnment mad e a number o f a r g uments to show that Keskemety was properlyU N I T E D S T A T E S V

. L L O Y D 22

held accountable for the fraud losses from the L os Ang e les a s well as the F lorida boiler room. T he g o vernment cited evidence that Keskemety received a commission check when L loy d reloaded Keskemety ’ s investors, even after Keskemety had stopped actively sol iciting investments himself. The district court properly rejected this arg ument b ecau se the
g overnment could not show that K eskemety “knew that L loy d

. . . [ w a s ] r eloading his investors other than the fact that he continued to g et paid[

. ] ” The d istrict court was “ not convince d that there [ was] sufficient evidence that [ Keskemety ] was aware of

. . . the [ reloading ] c o nference calls.” T he district cou r t ex pressly rejected the statement in the revised PSR that K eskemety p rofited from the conference calls L loy d used to reload investors:

I don’t see any evidence in this recor d t h at would support this defendant profited fr om the conference calls or that he p rovided his investor client list to .

. . L loy d for reloading

.

The record shows that Keskemety did not benef i t f r o m the solicitations a

nd sales made in L loy d ’ s L o s Ang e les b oiler

room and did not shar e the proceeds of his boiler-room solicitations with L loy d

.

The g overnme n t arg ues that Keskemety and L loy d were “acting in c oncert for the same purported g oal: to raise money fo r Sellers.” The fact that Keskemety and L loy d i n d ependently worked for Sellers does not mean that Keskemety and L loy d jointly undertook their criminal activity

. Similarly

, the g overnment urg es that b e c ause “ all [ telemar k eters] u sed the same materials to sell the deal,” all

were eng ag e d in jointly undertaken c r iminal activity

. A s Keskemety points out, using t h e same marketing materialsU N I T E D S T A T E S V

. L L O Y D 23

does not tie Kesk e m e ty ’s compensation to L loy d’s solicitations a

nd sales such that the California fr au d losses should be included in Keskemety ’s relevant cond u c t. The fact that Keskemety d ealt with some investors w ho complained a

nd “lulled” them does not show that h e did so for L loy d’s investors o r that L loy d shared in the benefits o f this w ork. Evidence that K e s k e mety eventually “went to a salary plus bonus pay

ment plan that was equal t o the commissions he would h a v e earned,” does not tie Keskemety ’s compensation to L loy d’s solicitations and sales sufficiently to include the Califor nia fraud loses in Keskemety ’s relevant conduct.

The g over n m ent cites evidence that Keskemety had an

a c t ing role in one of the Dolphin movies, b u t this doe s n o t show that he h ad an interest in the success of the operation a s

a whole that would justify including the f raud losses from the L o s Ang e les boiler room in his own relevant conduct. Keskemety had a very small role in the film, an d t h e re is no

e v i d en ce that it contributed to making the money L loy d raised throug h the California boiler room.

I n sum, the record support f or holding Keskemety accountable for L loy d’s similar criminal ac t ivity appears limited to Keskemety ’s knowledg e of L loy d’s operations a nd of Sellers’s o verall objectives a nd g oals. That is not enoug h,
g iven the e vidence that Keskemety operated the F lorida b oiler

room independently from L loy d’s California boiler room a nd did not share information, resources, or profits.

The g overnment contends that United Sta t e s v. B litz

, 151 F .3d at 1 012, supp o r t s holding Keskemety accountable f o r the losses attributable to the L os Ang eles–based boiler

room. The telemarketing scheme in Blitz was different fromU N I T E D S T A T E S V

. L L O Y D 24

the scheme the record discloses here. I n Blitz

, the “[ d] ialers and c losers strong ly relied on one a nother to make a sale,” “[ a] ll employ ees a ttended sales meeting s,” and t h e “employ ees did not w or k o n a pure commission basis” a nd i nstead “received a salary ,” thus making them “ depend [ ] o n the success o f the [ fraudulent] operation as a whole for their financial compensat i on.” 151 F .3d at 1013. I n holding the individual telemarketers a c countable for the money raised b y the other telemarketers as reasonably foreseeable jointly undertaken criminal activity

, the Blitz court disting u ished Studley

, in which the court r e f u s ed to hold one telemarketer
account a b le for the o ther telemarketers’ intended fraud losses. I n Studley

, the defendant “ did not desig n or develop the fraudulent scheme; did not work in any way to further the scheme outside of his own sales efforts; was paid on a pure commission basis, receiving n o p r ofits from the overall operation; did not assist other representatives with their sales, but rather competed w ith them for c o mmissions; did not pool

resources with other telemarketers; a nd had no interest in the

success of the operation as a whole.” B litz

, 151 F .3d at 1013.

The record shows that Keskem e t y i s much c loser to the d e fendant in Studley than to the telemarketers in B l i t z

. Keskemety di d n ot desig n o r develop the overall scheme; Sellers did. L lo y d j o i n e d the c o nspiracy to raise money for the Dolphin m o v ies long after Keskemety

. Keskemety ’s efforts to further the scheme related to the boiler room he
manag ed. He did not pool resour c e s with L loy d’s b oiler
room, a nd he w a s paid commissions based on the proceeds from the F lorida boiler room’s sales.

The other cases the g overnment ci t e s do not chang e the

a n aly sis. I n U

nited States v. Treadwell

, 593 F .3d 990 ( 9th Cir. 2010), “ [ b] oth defendants described the m s e lves a sU N I T E D S T A T E S V

. L L O Y D 25

‘founde r s ’ of the investment companies they w ere asking investors to support with funds,” “[ b] oth de f e n d a nts led conference calls with the c o mpanies’ nationwide sales force,” “[ b ] o th defendants traveled around the country selling their companies’ investment strateg y , ” “[ b] oth d efe n dants misrepresented the investments made by their c ompanies,” and “both defendants profited from the mutual efforts o f their coconspirators in selling n on-ex istent investments.” Id. at 1005. I n this c ase, by contrast, the d istrict court did not make similar particulariz ed finding s of jointly undertaken criminal activity

. 3 I nstead, the district c o u r t did not find, a

nd the present record does not show, that the solicitations made a nd
money o btained from L loy d’s L os Ang eles boiler room were within the scope of the c r i minal activity that Keskemety
ag reed to undertake for Sellers.

W e reverse the d istrict court’s judg ment on the amount o f fraud loss, vacate the r estitution o r der, and remand for resentencing

. W e need not and do not address Keskemety ’s other arg uments a

bout substantive re a sonableness o r restitution.

D. Lloyd’s Sentencing Appeal

L loy d pleaded g uilty to one count of w ire fraud in each o f the t w o c ases naming him as a defendant, and he does not

3 T h e g o v ern m en t also cites Un ited S ta tes v. Bo a tn er , 9 9 F.3 d 8 3 1 (7 th Cir. 1 9 96 ), in w

h ich th e co u rt h eld th at th e d ef en d an ts, co n sp irato rs in an in su ran ce- f rau d sch em e, w ere acco u n tab l e f o r th e en tire s c h em e’ s f

rau d lo sses d esp i t e th e f

act th at th ey

h ad n o t p o o led p ro f

its o r reso u rces. T h e

co u rt distin g u ish ed S tu d ley b ecau se th e Bo a tn er d ef en d an ts “ co n co cted a

co m m o n sto ry ; th ey f

eig n ed in j u ries to g eth er; th ey lied t o t h e p o l i ce to g eth er; an d th ey retain ed t h e sam e atto rn ey to p u rsu e a f rau du len t claim
ag ain st a sin g le v ictim .” Id

. at 8 3 7 . No su ch ev id en ce is p resen t h ere.U N I T E D S T A T E S V

. L L O Y D 26

challeng e his convictions. He does c halleng e the 156-month
sentence the district court imposed as both procedurally flawed and substantively u n reasonable.

“Procedural errors include, but are not limit e d to, incorrectly calculating the Guidelines rang e, treati n g the Guidelines a s mandatory

, f a iling to properly consider the [ 18 U.S.C.] § 3553(a) factors, using clear ly erroneous facts when calc u l a t ing the Guidelines rang e or d etermining the sentence, and f

ailing to provide a n a dequate ex planation for the sentence imposed.” United States v. Armstead

, 552 F .3d 769, 776 (9th Cir. 2008). The d i strict court’s 156-month
sentence was a downward variance from the Guidelines r ang e of 210 to 262 months. L loy d asserts—for the first time on this appeal—that the district court failed adequately to

e x plain why it d id n o t i m p o s e a n e v e n l o w e r below-Guidelines sentence. His arg ument is without merit.

The district court thoroug hly ex plained its reasons f or the
sentence in over 20 p ag es of transcript. A car e f ul review o f the record satisfies us that the sent e n ce was procedurally sound and that the district court did not a b u se its discretion, much le ss plainly err, in the below-Guidelines sentence imposed and the ex planation provided.

L loy d’s argu m ent that the district court erred in not departing further g oes to subst a ntive r easonableness. See United S tates v. Ellis

, 641 F

. 3d 411, 4 21 (9th Cir. 2011). The record shows t h at t he 156-month sentence, well below the bottom of the Guidelines rang e, was substantively reasonable in lig ht of the 18 U.S.C. § 3 553(a) sentencing factors and the totality of the circumstan c es

. See Gall v. United States
, 552 U.S. 38, 51 (2007).U N I T E D S T A T E S V

. L L O Y D 27

W e affirm.

II. The Appeals f

r om the Convictions: Baker and Nelson

A. The Indictm ents

B a ker, N e l s o n , and Greenhouse were indicted in United States v. Daniel Toll, et al

., No. 11

- cr-543, for soliciting investments in the Cinamour movies. Ba k e r was charg ed wi t h o ne count of conspiracy under 18 U.S.C. § 371, two counts of mail fraud u nder 18 U.S.C. § 1341, t w o c ounts o f wire f raud under18 U.S.C. § 1 343, and two counts o f offering and selling ( or aiding and a b et t i ng the o ffer and sale of) an unreg istered security under 15 U.S.C. §§ 77e and 77x a nd 18 U.S.C. § 2. Nelson was cha r ge d w i t h one count o f conspiracy under 18 U.S.C. § 371, two c ou n t s o f mail fraud under 18 U.S.C. § 1341, two counts o f wire fraud under 18 U.S.C. § 1343, and two counts of offering and selling (or aiding and abetting the offer and sale of) an unreg istered security u nder 15 U.S.C. §§ 7 7e and 77x and 18 U.S.C. § 2. Greenhouse was charg ed with o ne count of conspiracy under 18 U.S.C. § 371, three counts of mail fraud under 18 U.S.C. § 1341, and two counts o f o ffering and selling (or aiding a nd abetting the offer and sale of) an unreg istered under 15 U.S.C. §§ 77e and 7 7 x a n d 18 U.S.C. § 2. The three defendants were tried tog ether.

B a ker worked from his home in California as a closer from 2004 to 200 9
, soliciting investments in From Mexico with Love and in Red W

ater

. Nelson worked in Cinamour’s Sherman Oaks and E n cino, California, offices as a fronter a nd

c l o s er f rom October 2007 to May 2009, soliciting investments in R ed W

ater

. Greenhouse worked from hisU N I T E D S T A T E S V

. L L O Y D 28

home in F lorida from 2005 to 2 007, soliciting investments in partnership units for From Mexico with Love

.

The jury c onvicted B aker a n d N elson o n all the c ounts submitted ag ainst them. The jury acquitted Greenhouse o f conspiracy a

nd mail fraud b ut convicted him for offering a nd selling unreg istere d s ecurities and aiding and abetting a nd causing those sales, in violation o f 15 U.S.C. §§ 7 7e and 77x and 18 U.S.C. § 2.

At sentencing

, the district co u r t c alculated a 292 to 365 month Guidelines rang e f or B a k e r but varied downward, i m p o sing a 194-month prison term and a $12,043,678.25 restitution oblig ation. The district court ca l c ulated a 97 to 121 month Guidelines rang e for N elson but sentenced him to

serve 84 months in prison and to pay $1,860,000 in restitution. B aker and Nelson timely app e a l ed their convictions and sentences. Greenhouse was sentenced to 60 months in p rison, below the Guidelines r ang e of 63 to 78 months, and to pay $530,000 in restitution. He appeals only his sentence.

B. Baker’s and Nelson’s Challenges to Their Convictions

1. The Trial Evidence Against Baker

I n 2001, Hartford hired B aker as an “ associate producer”
at Cinamour. B aker was working as a telemarketer soliciting
money for Forbidd e n W a r rior when he was arrested a nd jailed in March 2003 for a p arole violation. B a ker went back
to working for Cinamour in J anuary 2004 and, with his partner, worked for Cinamour out of their home in Coachella Valley

, California until 2009.U N I T E D S T A T E S V

. L L O Y D 29

I n March 2004, B aker and his partner, doing business as I ndependent Essentials, entered into a written ag reement with Cinamour for a 2 0 percent commission on the m o n ey they raised working as telemarketers and closers solici t i ng investments in From Mexico W ith Love

. F rom J anuary 2005
to J anuary 2007, B aker closed $200,000 in From Mexico W ith Love investments. B aker also e a rned a commission for the investments that L loy d closed using B aker’s investor list from Forbidden W

a rrior

. L loy d used B aker’s investor information to reload those who had sent money for Forbidden W

arrior
, producing more money for F rom Mexico W ith Love

.

I n 2 007, C i n a mour stopped soliciting for From Mexico W ith Love and turned to soliciting money from investors for Red W a ter

. B a ker and his partner r a n the Red W ater fundraising

. B aker hired codefendant B art Slanaker, who h ad

ex p erience operating telemarketing bo i l e r r ooms. B aker’s partner manag ed the money , received inv es t o r checks, a nd
p a i d commissions. B aker g a ve Slanaker R ed W ater sales materials and paid him a 15 percent commission.

B a ker contacted prosp e c t i ve investors from lead lists. Diane Houseknecht testified that in a letter and conversations, B aker told her that investors would r e c eive 90 cents on every dollar the film earned until they g ot back all the principal they had paid plus 10 percent. B aker also promised her that the return would be fast. He did not reveal that he would earn a 15 to 20 percent commission. I nstead, he emphasiz ed that the investors would g et paid before the p romoters or salespeople received any

thing and that the invested funds would be used
to make and market the movies, n o t to pay promoters o r

s a l e speople. H ouseknecht, w ho had no investment

ex p erience, invested $25,000 in Forbidden W arrior
, $10,000U N I T E D S T A T E S V

. L L O Y D 30

in cash and $15,000 f

r om her retirement account. She g ot back $1,000. L loy d l a t e r convinced Houseknecht to invest another $20,000 in From Mexico with Love
, using $10,000 in cash and $10,000 from her retirement account.

Gary T ranter testified that B ake r c a lled him in 2002 to solicit an investment in Forbidden W arrior

. I n the telephone call, B aker compared Forbidden W a rrior to the well-known and comme rcially successful film Crouching Tiger, H idden Dragon

. B aker stated that a majority o f t he Forbidden W arrior units had already been sold and that Tranter needed
to act quickly

. B aker told T ranter that Forbi d den W arrior

was r eady for release in theaters in the near future; it was not. B aker also said that investors would be paid back first and that promoters and sales personnel would b e paid o nly a f ter th e i n v e s t o rs. B aker did not disclose the fact or amount o f commissions he and others were g etting

. Tranter worked as

a w holesale b roker of indoor housepla nts and had little financial or investment e x perience. He in v e s ted $10,000 in Forbidden W

a rrior and g ot back $800. B aker unsuccessfully tried to reload Tranter in From Mexico W ith Love b ut d id g et him to send another $5,000 for Red W a ter

. Tranter n ever g ot any of his investment in R e d W ater back.

A n o t her investor, Thomas B eacham, an office manag e r for a paint shop, testified that B aker cold-called h im in 2002 about investing in Forbidden W a rrior . B aker told B eacham that Forbidden W

arrior w ould be a “big money maker” because it was co m p arable to Crouching Tiger, H idden Dragon

. W hen B eacham said that he did not have the money to invest, B aker emphasiz ed that this was a limited-time offer and asked if B eacham had r etirement saving s he c ould u se. W h e n B eacham pointed out that he did not meet t h e requirements for an accr e dited investor—including that hisU N I T E D S T A T E S V

. L L O Y D 31

net worth was far bel ow the $1 million minimum—B aker
urg ed h im not to “worry about that

. I t ’ s j u st in there for formality . W e can make an ex ception in y our case.”

B e acham invested $5,000 from his retirement a ccount in Forbidden W

arrior

. B aker successfully convinced B eacham
to i n v e s t another $ 10,000 f rom his retirement account in From Mex i c o W

i th Love after B eacham participated in a reloading conference call run b y L loy d and Ag ler. B eacham lost all the money he investe d e x cept “a hundred bucks o r so.” B eacham testified tha t he had lost his job in 2 008 a nd had to cash out his r etirement account, which was “15 g rand shorter than it probably

should have been.”

F B I Special Ag ent S ean Sterle, who worked u ndercover posing as a F lorida businessma n interested in investment opportunities, also testified. After a cooperating witn e s s introduced B aker to Sterle, five or s i x telephone conversations followed in which B aker trie d to convince Sterle to invest in Red W ater

. Ster l e recorded his conversations with B aker and the jury heard them a t trial. The recording s included B aker’s statements that Red W ater had secured $5.4 million in presale commitments to distribute the film in 31 countries; that the presales revenues w ould pay investors a 110 percent return; that Sterle would receive a 110 percent return in eig h t to ten months, g et his full investment back wi t h i n t he y ear, and triple his money in two y ears; a nd that the sales personnel received no commissions.

The evidence showed that the p romises B aker repeatedly made were either false or made w ithout any reasonable basis to believe that they

were true.U N I T E D S T A T E S V

. L L O Y D 32

2. The Trial Evidence Against Nelson

David Nelson worked f

or Ci n a m o ur as a fundraising telemarketer f

rom October 2007 to May 2009. Nelson had a sad p e r s o n al history

. He beg an drinking at ag e 11. He dropped out of hig h sc h o o l

. Hi s d rinking and drug use lost him job after job. He tried to rehabilitate himself by joining the Marines, which trained h im as a software eng in e e r, but

even the M a r i nes c ould not g et him to stop drinking

. He received a ge n e r al discharg e. Althoug h the training helped him g et jobs, he lost them every f ew months. N elson became homeless in 2001. I n 2005, after four y ea r s of living on the
streets a nd j u mping from one job to another, Nelson g ot treatment for his alcoholism at a halfway house that r equired its clients to have jobs. Nelson found work as a telemarketer selling industrial equipment

, b u t lost this job. Nelson ag ain became homeless, living b e h ind a d u mpster. On March 30, 2007, paramedics f

ound N elson behind the d

u mpster and took him to the hospital.

Nelson readmitted himself to the halfway house for a third time in 2007 and g ot an o t her telemarketing job. Nelson’s supervisor there, B art Slanaker, later c onvinced him
to follow h im to Cinamour’s boiler r o om to work soliciting
money for a new movie, Red W

ater

.

Several victims testified a bout talking to Nelson. Melvin B itikofer w a s a r etired stove salesman who had owned his

own store. Nelson cold-called him in October 2007. Nelson described the R ed W

ater inve s t ment as a once-in-a-lifetime opportunity and promised B itikofer that he would b egin to receive r e t u r n s a s early as the first quarter of 2008. Nelson told B itikofer that investors would g et a 110 percent return, that the movie was already bei n g f i lmed, that presaleU N I T E D S T A T E S V

. L L O Y D 33

distribution contrac t s worth $ 5.9 million were already in place, and that nothing could g o wro ng

. Nelson touted Cinamour’s previous movie, From Mexico W ith L o v e , as a proven commercial succe s s that had r ewarded its investors well. Nelson omitted his commissions f rom the discussions

a nd d ownplay ed the investment risks. B itikofer invested $50,000.

Nelson and his colleag ues successfully reloaded B itikofer several times. I n F ebruary 2009, B itikofer participated in a reloading conference call led by B art Slanaker. B itikofer testified that the other persons participating in the c all
appea r ed to be potential investors and that they enthusiastic a l ly endorsed the Red W ater investment opportunity

. T hese other participants were, in fact, Cinamour telemarketers. During the call, B itikofer stated that he did not have more money and that any investm e n t w o uld have to

come from his wife’s I RA. A fter the call, Ne lson a nd Slanaker persuaded B itikofer to g et $ 100,000 from his wife’s I RA.

B itikofer a

nd his w ife invested a total of $250,000, which they repeatedly told Nelson was from their r e t i r ement a nd I RA funds. They lo s t a l l they invested. B itikofer testified that this l o s s resulted in a “[ t] e rrible” financial hardship for the couple. They could “hardly keep up with the bills coming in” and faced the prospect of “tak[ ing ] out bankruptcy .”

Richard Clark was a farmer w i t h no investment

ex p erience. He wanted a conservative investment that could provide some income to help h im stop farming because of its phy sical demands. Nelson cold-called Clark in Apri l 2 0 09U N I T E D S T A T E S V

. L L O Y D 34

and solicited h im to invest in Red W ater. 4 Clark told Nelson what he did f

or a living and that he h ad no investment

ex p erie n c e

. N elson told Clark that very few units were left and that the investment w as t he “best thing ” he h a d seen in his career. Nelson told Clark t h a t he would start to receive distributions by the summer of 2009. Nelson assured C lark that there were already en o u gh presale contracts to cover production and marketing costs and ensure him a fast profit.

Clark also participated in a conference call with Slanaker, Ne l s o n , and p eople he understood to be other investors. Clark testified that Nels o n a c t ively participated in this call. Clark invested $15,000, which he lost; he described the loss as “a bad lick for me.”

Dennis Eliassen was retired when Nelson cold-called him in J u n e 2 008. Nelson told him that Cinamour already had $6 million in p resale contracts, twice the amount needed to cover all the film production and marketing costs. Nelson sent Eliassen an email assuring him that investment “security is in place throug h o ur p re-sales distribution.” Nelson t o l d Eliassen that every

thing was o n trac k t o beg in filming Red W ater i n December 2008, and that the investors would be paid first a n d quickly

. Nelson also told him that From Mexico W

ith Love and F

orbidde n W

a rrior had been successful for the investors. Eliassen invested $50,000 from his I RA and lost it all, a “pretty ” big hardship.

4 Clark at f

irst testif ied t h at N elso n called h im in A p ril 2 0 05 to r aise

m o n ey f o r Red W a ter , b u t o th er ev id en ce an d C lark ’ s testim o n y t h at h e

w as “ a little ru sty ” ab o u t t h e p recise d ate sh ow s th at it w as actu ally A p ril 2 0 0 9

.U N I T E D S T A T E S V

. L L O Y D 35

Connie Hurd testified that w hen Nelson cold-called h er in early 2008, she told h i m t h at she and h e r husband owned a tool company and h a d very little investment e x perience. Nelson assured her that the R ed W ater investment presented min i m al risk and that the investors w ould be paid back
every thing b efore the promoters and sales personnel received
any thing

. Nelson assured h er that Cinamour already h ad presale contracts projected to b e worth $5.9 million, which
g uaranteed a secure and profitable investment. N el son did
not disclose the ex istence or amount of his or others’ commissions. Hurd lost her $5,000 investment.

T he jury heard from Stephanie Alarcon, a Cinamour telemarketer hired by Slanaker to w o r k as a fronter coldcalling potential investors and p assing the names o f those

ex p ressing interest to closers, who would follow u p to finaliz e the sale. She made the calls from a lead list and read a script. Nelson listened to make sure she did it properly and g ave her tips. Nelson asked her to w rite down p e r s o n a l information
p otential investors g ave her in the calls for him to use in his closing pitches. Alarcon followed this instruction. F o r

ex a mple, when she talked to Richard Clark, she n oted that he

was a Christian and that N elson should emphasiz e “ Christian
t h i n gs” in try ing to finaliz e h is investment. Alarcon ’s
account of what she was told to say when she called potential investors w as consistent with their testimony about what they were promised.

Nadav Shimoni, another fron t e r, testified that he participated with Nelson in some of the reloading conference calls. Nelson would read a s ales p itch from a script, a nd Shimoni woul d pretend that he was an investor who h ad decided to invest more money

. His testimony was consistentU N I T E D S T A T E S V

. L L O Y D 36

with wh a t the investors who participated in these calls described.

N e lson testified and told the jury about h is backgr o u n d

. He testified that in April 2007, just after he became sober, he
g ot a job as a telemarket e r working under B art Slanaker. N e l s on testified that Slanaker was so domineering a n d abusive that Nelson feared him and was int i m idated into doing whateve r S l anaker told him to do. H is fear of losing
y et another job contributed to his unquestioning obedience.

Nelson testified t

hat when he beg an working at Cinamour, he believed it was leg itimate. Slanaker took N e l s o n to the production l o c a t ion f

or From Mexico W

ith Love

. Nelson testified that he recog niz e d Cinamour’s log o and some of the
actors in the film. Nelson looked at Cinamour’s website a nd

saw that it w as a production and d is t r i b u tion company working in film and television. Nelson read that th e Be t ter B usiness B ureau rated C inamour Triple A, with no complaints

. N e lson learned that Cinamour was r aising
money f o r Red W ater

. I n October 2 0 07, Nelson followed Slanaker to Cinamour and b eg an soliciting invest m e n t s in Red W ater

.

Nelson testified that Slana ker prohibited him from associating w i t h any one else at Cinamour. The office
manag er testified that Slanaker often screamed at N elson, who remained quiet and k ept to himself, away from the other telemarketers.

Nelson testified that at Cinamour, he w a s g iven lead sheets and a script. I f a call was met with interest, Nelson fi l l e d o ut a sheet and g ave it to Slanaker, who sent an information packag e to the potential investor. Nelson wouldU N I T E D S T A T E S V

. L L O Y D 37

then call and g o over the p ackag e using a p r eset script,

answer questions, and try to persuade the prospect to sig n the papers and send a check made out to Red W ater F ilms.

Nelson testified that h e did not know that the representations he mad e w ere false and insisted that he did
not intend to defraud investors. He believed that the purpose of the script was to keep the telemarketers honest about what they told potential investors, not to g ive the telemarketers lies
to tell. He also believed that C i n a m o u r had $5.9 million in presale distribut i on contract commitments. Nelson acknowledg ed that he w as g etting paid for the sales he made but testified that he d i d n ot lie w hen he stated that no commissions were b eing paid, because what he received was

a “manag ement fee.” Nelson d id admit, however, that the Re d W a ter private placement memorandum he sent to potential investors provided a misleading description of h ow and when the promoters and sales people would be paid.

Nelson testified that he thoug ht the confe r e n c e calls he participated in were to g ive status reports to people who h ad already invested. Nelson denied knowing that the calls were to “reload” investors or that Cinamou r e mploy e es were p l ay ing the role of happy investors. Nelson was shown a script fo r a r e loading conference c all. The script identified him as the V ice President of Technolog y at Vi e w Partners. Nelson denied havi n g s e e n o r used the script or having read

or heard that false d e scription o f his job and title

, b u t the script was found on Nelson’s office c omputer at C i n a mour. The g overnment pointed out that the script made c lear the
purpose of the call and the presence of the fak e “ o t her investors.” The scrip t contained a list of the Cinamour employ e es w h o participated in a t least one reloading conference call play ing the role of investors. The script alsoU N I T E D S T A T E S V

. L L O Y D 38

had handwritten notes about some of the v i c t i m s who took
p art. Nelson denied that the notes were his. B ut anoth e r

ex h ibit, which Nelson admitted to writing

, had very similar handwriting

. The g ove r n ment arg ued that the similarity between the two document s provided additional support for inferring that Nelson was l y ing a b o ut his role in the Red W ater conference calls, about not k no w i n g that Cinamour employ e es w ere acting as shills, and about n ot hav i n g s e e n scripts for the calls.

C. Baker’s and Nelson’s Challenges to Their Convictions

B a ker and Nelson chal l e ng e the trial court’s evidentiary ruling s and jury instructions, the p rosecutor’s comments at closing

, and the sufficiency of the evidence. They contend that if no o ne error justifi e s vacating their convictions, the cumulative effect d oes. We identify several errors, find them harmless as to B a ker, but conclude that Nelson’s conviction must be reversed.

1. The Challenges to the Evidentiary Rulings

W e review the distric t court’s evidentiary ruling s for abuse of discretion. See United States v. Pineda-Doval

, 614 F .3d 1019, 1031 (9th Cir. 2010).

a. The Victim s’ Testim ony

B a ker and Nelson arg ue that the district court should not have allowed victims to testify about their financial situations and the impact of losing the money they invested. B aker a nd Nel s o n a rg ue that the district c ourt e r red in admitting the vi c tims’ testimony because the risk of unfair prejudiceU N I T E D S T A T E S V

. L L O Y D 39

substantially outweig hed the probative value. See F e d. R. Evid. 403. W e disag ree.

B e cause Nelson objected to Eliassen’s testimony

, we review its a dmission as to b o t h Nelson and B aker for an abuse of d iscretion. See United States v. O r m Hieng
, 679 F

. 3d 1131, 1141 (9th Cir. 2012). 5 W e review testimony elicited without objection f or p lain e r ror. See United States v. Lopez , 762 F .3d 852, 859 (9th Cir. 2014).

“A d istrict cou r

t’s Rule 403 determination is subject to g reat deference, because ‘the considerations arising under Rule 403 a

re susceptible only to c ase-by -case determinations,

r e q u i r i n g e x a m i n a t i o n o f t h e s u r r o u n d i n g f a c t s , circumstances, and issues.’” Hinkson

, 585 F .3d at 1267 (quoting R.B. Matthews, Inc. v

. Transamerica Transp. Serv., Inc.
, 945 F .2d 269, 272 (9th Cir. 1 991)). Eliassen’s testimony that he told Nelson that he had no cash to in v e s t and would have to use h is retirement money was re l e v ant to r ebut the d e f e n d a n t s ’ a r g u m e n t t h a t t h e y b e l i e v e d t h e i r investor-victims to be accredited in v estors. Eliassen also testified that losing his investment was a “very big ” h ardship. Any error in admitting this li m i t e d and brief victim-impact testimony was harmless. Th e thrust of Eliassen’s testimony

5 A lth o u g h o n ly Nelso n o bj ected to E liassen ’ s t estim on y , th e g o v ern m en t co n ced es th at “ [a]b u s e- of

- d i scretio n rev iew a p p l ies to [B ak er’ s] c l aim reg ard in g Eliassen .” S ee Un ited S ta tes v. Orm Hien g , 6 7 9 F.3 d 1 1 3 1, 11 4 1 (9 th Cir. 2 01 2 ) (rev iew i n g th e d ef en d an t ’ s claim of

ev id en tiary erro r f

o r ab u s e o f d iscretio n ev en th o u g h h e d i d n o t o b j ect b ecau se h is co d efe n d a n t did an d “ th e m atter w as su f f icien tly bro u g h t to th e atten tio n

o f th e d istrict co u

rt”).U N I T E D S T A T E S V

. L L O Y D 40

was relevant to show not only what Nelson said, but also what he knew and intended. 6

F or similar reasons, the d is t r ict court did n ot plainly err by allowing B itikofer, B eacham, and Clark to testify a b o u t how they described their financial situations to Nel s o n o r B aker. B oth Nelson and B aker a rg ued a t t r i al that they believed each person they successfully persuaded to invest in partnership units was a w ealthy and ex perienced investor w ho could afford to lose the money

. The testimony was relevant
to rebut this defense, and there was no e rror, much less plain

erro r , in allowing it. Althoug h these victims also briefly descr i b ed t he impact of losing the money , that limited testimony did not affect the defendants’ substantial rig hts. There was no plain error.

B a ker a n d Nelson contend that Rao’s testimony that Greenhouse refused to return the money he and his g irlfriend invested, even after Greenhouse was told t h a t i t was needed for her cancer treatment, was plain err or. Rao’s testimony d iscussed only Greenhouse and Ag ler and did not ment i o n either B aker or Nelson. At o ral arg u ment, Nelson’s counsel
ag reed that this test i m o n y prejudiced only Greenhouse. B aker, however, contends that Rao’s testimony “was unfairly prejudicial to all the trial defendants beca u s e they were char ge d i n Count One with a conspiracy ” and the district

6 T h e p arties d o n o t cite Nin th C ircu it case law o n u sin g sim ilar v i ctim

im p act testim on y to sh o w

in ten t to d ef

rau d . Oth er circu its h av e allo w ed it u n d er lim ited circu m stan ces. S ee, e.g

. , Un ited S ta tes v. Clo ud

, 6 8 0 F.3 d 3 9 6
, 4 0 2 (4 th Cir. 2 0 1 2 ) ( d i strict co u rt d id n o t ab u se its d iscretio n in

a d m ittin g v i ctim

- im

p act testim o n y b ecau s e it “ m et th e l o w b a r o f

r e l e v a n cy , g iv en [th e def en d an t’ s] d ef

en se th at th e [v ictim s] w ere g u ilty

o f b an k f rau d .”). T h e case law also reco g n izes lim its o n su ch t estim on y

. S ee, e.g

. , Un ited

S ta tes v. Co

p p le , 2 4 F.3 d 5 3 5 , 5 4 4

– 4 6 (3 d Cir. 1 9 9 4 ).U N I T E D S T A T E S V

. L L O Y D 41

court d id n ot spe ci f

ically instruct the jury to consider the testimony only ag ains t G reenhouse. T he record shows that
any error in failing to g ive the limiting in s t r u c t i o n was not plain a nd did n ot affect B aker’s or Nelson’s substantial rig hts.

B a ker separately arg ues that because he had no duty to tell potential investors about the commissions h e w as paid, the district c ourt erred in allowing the victims he solicited to testify t h a t t h e y would n ot have invested had they known about the commissions. B a ker relies on cases st a t i n g that “[ a] bsent an independent duty

, such as a fiduciary duty or an

ex p licit statutory duty

, failure to disclose cannot be the basis of a fraudulent scheme,” United States v. Ali

, 620 F .3d 1062, 1070 n.7 (9th Cir. 2010) (internal quotat ion marks omitted), and that “otherwise truthful statements mad e by [ a b roker] about the merits of a particular in vestment are not transformed into misleading ‘hal f -t ruths’ simply by the broker’s failure to reveal that he is receiving added compensation for promoting a p articular investment,” United States v. Skelly

, 442 F .3d 94, 97 (2d C i r. 2006). B aker’s
arg ument fails to take into account the evide n c e t h a t he affirmatively told victims that he, other sales personnel, a nd promoters would not receive any commissions or other
pay ments until after the investors had received a 110 percent return. B aker’s arg ument also fails to take into account that the Red W ater private placement memorandum, which B aker sent to Gary

Tranter and to the undercover F B I ag ent posing

as an i n v e stor, included the false statement that no commissions would be paid unt i l t he investors had received

a profitable r eturn on their investments. The ju r y h eard recorded conversations of Ba k er telling the undercover F B I
ag ent posing as an investor that he received no commissions. B aker a dmitted that he lied to the ag ent about commissions. “[ A] broke r cannot affirmatively tell a misleading half-truthU N I T E D S T A T E S V

. L L O Y D 42

about a material fact to a potential investor

. . . [ because] the duty to disclose in these circumstances arises from the telling of a ha l f-truth, independent of any responsibilities a rising from a truth relationship.” United S tates v. Laur i e n t i
, 611 F .3d 530, 541 (9th Cir. 2010).

B a ker’s affirmative misrepresentations that he would receive no commissions until the investors r e ceived a profitable return supported h is fraud conviction w ithout the need to prove a f

iduciary r elationship. See United Stat es v

. Benny
, 786 F .2d 1 4 1 0
, 1418 (9th Cir. 1986) (“Proof of an affirmative, material misrepresentation supports a conviction of mail f raud without any a dditi o n a l proof of a fiduciary duty .”). The district court did not err in allowing the v ictims to testify about B aker’s representations and omissions about commissions.

b. The Lay Opinion Testim ony

B a ker and Nelson arg ue that the district court er r ed in allowing Allen B r

uce Ag ler, 7 w ho had worked in several movie telemarketing boiler rooms ( including for Cinamour during the fundraising for From Mexico W ith Love b e t w e en 2005 and 2007), to testify about b oiler-room manag e men t , activity

, and str a t e gy

. Ag ler’s testimony included his opinions about the information and knowledg e telemarketers have w hen they cold-call potent i a l i nvestors and when they close a deal. Ag ler’s testimony w as not admiss i b l e u n der Rule 702 of the F ederal Rules o f E vide n c e b e cause the
g overnment did not g ive the d e f e n dants the notice r equired under Rule 16 of the F ederal Rules of Criminal Pro ce d u r e

. See F ed. R. Crim. P. 16(a)(1)(G) (requi r i ng , at the

7 A g ler also u sed th e n am e P au l Kin g m an

.U N I T E D S T A T E S V

. L L O Y D 43

defendant’s reque s t , pretrial disclosure of ex pert w itnesses and a written summary of their testimony ). B aker a nd Nelson
arg ue that this l i m i t could n ot be avoided by a dmitting Ag ler’s testimony as lay

opinion testimony

under Rule 701.

“The admis s i bility of lay opinion testimony under Rule 701 is committed to the sound d iscretion of the trial judg e a nd his decision will be overturned only i f it constitutes a clear abuse of d i scretion.” United States v. Gadson

, 763 F .3d 1189, 1 209 (9th Cir. 2014) (quoting Nationwide Transp. Fin. v. Cass Info. Sys., Inc. , 523 F

. 3d 1051 (9th Cir. 2008)). The
g overnment contends that p lain-error review applies because B aker objected on other g rounds, not raised on appeal, before moving to strike Ag ler’s testimony as unnoticed ex pert testimony

, and Nelson d id n o t specifically adopt B aker’s objections. B ut B aker’s attor n ey repeatedly objected to Ag ler’s testimony about whether i n v es tors ever read the private placement memoranda they were sent. The o bjections

w e r e t hat Ag ler was g iving “an ex pert opinion without foundation,” as well a s hearsay

. “[ T ] h e matter was sufficiently broug h t to the attention o f the d istrict court” throug h B aker’s objections for us to r eview for a b use o f discretion. Gadson

, 763 F .3d at 1201 n.3 ( quoting United States v. Orm Hieng , 679 F

. 3d 1131, 1141 (9th Cir. 2012)).

Under F e der al Rule o f Evidence 701, a lay witness may testify “in the form of an opinion” if it is “(a) rational l y based on the perception of the witness; (b) helpful to a clear understanding of the w itness’ testimony or the determination of a fact in issue; and (c) not based on scientific, technical, o r other specializ ed k n o w l e d g e .” F ed. R. Evid. 701. “ Rule 701(a) contains a personal knowledg e requirement.” United States v. Lopez
, 762 F .3d 8 52, 864 (9th Cir. 2014). “I n presenting lay opinions, the personal knowledg e r equirementU N I T E D S T A T E S V

. L L O Y D 44

may be met if the witness can d emonstrate fi r s thand knowledg e or observation.” Id. “A lay witness’s opinion testimony necessarily draws on the witness’s o wn understanding

, including a wealth of personal informat ion,

ex p erience, and education, that cannot be placed before the jury .” Gadson , 763 F .3d at 1208. B ut a lay opinion witness “may not testify based on speculation, rely on hearsay o r interpret unambi gu o us, c lear statements.” U nited States v

. Vera , 770 F .3d 1232, 1242 (9th Cir. 2014).

Ag ler testified a b out his ex perience in working in telemarketing boiler rooms selling investments. He testified that:

• “[ e] very

body that I ’ v e ever worked with will alway s stretch the truth and make out—outrig ht lies especially in certain techniques”;

• “[ i] n my ex perience, the vast majority of people w ho i n v e s t d o n o t r e a d t h e p r i v a t e p l a c e m e n t memorandum or if t h e y d o they read it on a limited basis, and they

have no idea what it say s”;

• this was “absolutely ” a “well-known f ac t ” in the boiler rooms that he worked in; and

• investors relied on what telemarketers told them.

O n c r oss-ex amination, Ag ler testified that “ m o s t i n v e s t o r s

never g ave me an indication that they read the private placement memoranda” an d h e never b roug ht “the subject up” when “he talked to them.” W hen pressed on the b asis for
t h i s o pinion, Ag ler testified that he relied on his ex perienc e and the assumption that only those investors who asked a lotU N I T E D S T A T E S V

. L L O Y D 45

of questions about a memorandum had read it. On redirect, the g overnment asked w hether the fact that “investors did not read” private p lacement memoranda was “something that was openly discussed among closers that y ou worked with? ” A gl e r responded, “ sure.” W hen a sked if “it was a top i c o f discussion that invest o rs don’t read the [ private placement memoranda] ,” he responded, “absolutely .”

At the end of Ag l e r ’ s testimony

, the prosecutor asked whether, “in all y our own per s o nal ex p erience and all the closers who have worked in these rooms that y ou’ve spoken to, have y ou ever heard of any investor making any money on any of these investments? ” Ag ler r esponded, “ [ n ] o , I have not.”

B a ker and Nelson a rgue that Ag ler’s testimony i m p e r m i s sibly opined on what the telemarketers who solici t e d and closed investments, including th e m s elves, knew about what they were selling and about what the investors were doing and thinking

. They arg ue that to th e e x t e n t Ag ler

ex p ressed a lay opinion, he relied on speculation and hearsay

, and to the ex tent he ex pressed an e x pert o p i n i on based on specializ ed knowledg e g a ined from w orking in boiler rooms, the g overnment failed to g ive the notice required under Rule 702 o f the F edera l R u l e s of E vidence and Rule 16 of the F ederal Rules of Criminal Procedure.

Ag ler had ex tensive p e r sonal ex perience working as a t e lemarketer in boiler rooms soliciting and closing investments, including in Cinamour films. B ut his testimony tha t investors did not understand the risks, that all telemarketers knew of a

n d took advantag e of this ig norance, and that telemarketers knew that investors n ever made any money , was larg ely b a s e d on statements he heard fromU N I T E D S T A T E S V

. L L O Y D 46

u n i d e n tified telemarketers and investors, well bey ond his o w n personal ex p erience with investors. Our cases make clear that Rule 701 prohibits o pinions based on such a foundation. See,
e.g. , United States v. F

reem a n , 4 9 8 F .3d 893, 904 (9th Cir. 2007) ( “I f Shin relied upon or c o nvey ed hearsay evide n ce when testify ing as a lay w itness or if Shin based his lay testimony on matters not within his personal knowle d ge, he

ex c e eded the bounds of properly admissible testimony .”). 8

Ag ler’s testimony is different from the lay testimony that

we have permitted law-enforcem ent officers to g ive. See,
e.g. , G a d s o n , 763 F .3d at 1208; United States v. Simas
, 937 F .2d 459 (9th Cir. 1991). I n those cases, the officers did
not base their lay opinions on he ar s a y statements made b y unidentified individuals. See Simas
, 937 F .2d at 464 (no abuse o f discretion in allowing F B I ag ents to inter pret the defenda n t ’ s own “vag ue and

. . . incomprehensible”

8 T h e g o v ern m en t d id n o t arg u e th at A g ler’ s testim o n y ab o u t w h at o th er clo sers h ad to ld h im w as ad m issib le u n der th e co co n sp irato r ex cep tio n to t h e h e a rsay ru le u n t il o ral arg u m en t in th is co u rt. T h e arg u m en t is b oth

u n tim ely an d u n

p ersu asiv e. A g ler d i d n o t id en t if y th e C in am o u

r clo sers

w h o m ad e th e h earsay s tatem en t s. A lth o u g h Ru le 8 0 1 (d )(2 )(E) p ro v i des th at statem en ts m ad e b y a “ p arty ’ s co co n sp i rato r d u rin g an d in f u rth eran ce

o f t h e co n sp iracy ” are “ n o t h earsay ,” F ed

. R. Ev id

. 80 1 (d )(2 )(E), m ore in f o rm atio n ab o u

t w h o m ad e th e statem en ts w o u ld b e n eed ed t o estab lish th at th e p e r s o n s w ere co co n sp irato rs an d th at th e statem en ts w ere in f u rth eran ce o f th e co n sp iracy

. S ee, e.g

. , Un i ted S t

a tes v. Mo u z in
, 7 8 5 F.2 d 6 8 2
, 6 9 2 (9 th C ir. 1 9 86 ) (“ [B ]ef o re a statem en t is th at o f a ‘ co

co n sp irato r’ th ere m

u st b e in d ep en d en t pro o f o f th e d ef en d an t’ s an d th e d eclaran t’ s statu s as m em b ers o f t h e sam e o n g o in g co n sp iracy

. In o rd er to co rro b o rate or ref

u te t h is statu s, th e l itig an ts m

u st k n o w th e id en tity of th e d eclaran t .”). B ec au se A g ler’ s t estim on y ab o u t th ese o th er

u n id en tif i ed t elem ark eters w a s b o t h v ag u e an d g en eral, w e can n o t

co n clu d e o n th is reco rd th at th e statem en ts w ere m ad e by Cin am ou r

co co n sp irato rs o r in f

u rth eran ce o f

th e Cin am o u r co n sp iracy

.U N I T E D S T A T E S V

. L L O Y D 47

statements). I n Gadson

, we held that the district court did not abuse its discretion in admitting lay opinion testimony that
t he defendant’s coconspirator “made these admissions to u s [ the p o lice] ” because the officer “did not testify as to the
nature of ‘these admissions,’ repeat any assertion ma d e b y [ the coconspirator]

, o r sug g e st that the jury should consider
any admission made by [ the coconspirator] to be tru t hful.” 763 F .3d at 1211–12. W e emphasiz e d that “an officer’s interpretation of intercepted phone calls may meet Rule 701' s ‘perception’ requirement when it is an interpretation ‘of ambig uous c onversations based u p o n [ the officer’s] direct knowledg e of the investig ation.’” Id. at 1207 (quoti n g Freeman
, 498 F .3d a t 904–05). H e r e , by contrast, A g ler’s opinions that all telemarketers knew that investors rarely —if ever—read any private placement memoranda and never received a return on their investments were based p r i m a r i ly

on the statements of unidentified t e l e marketers and o f unidentified investor-victims. And, u nlike the record we considered in Gadson

, A g ler testified a bout the n ature o f
statements by other, unidentified telemarketers and investors. Ag ler’s testimony was not admissible as lay opini on testimony under Rule 701.

During closing a

r g u ment, the prosecutor urg ed the jury to consider the statements Ag ler testified he heard to be truthful and encourag ed the jury to rely on them:

L adies and g e ntlemen, do y ou r emember when Allen Ag ler testified and he told y ou that he committed fraud in this case a n d he pled g uilty

, and he stated that in all his

ex p erience as a telema r keter in boiler rooms

r a i sing money for movies, and in all h i s discussions with other people who were boilerU N I T E D S T A T E S V

. L L O Y D 48

room closers, not one sing le inv estor that he knew of in a movie investment from cold c all telemarketing

ever made a cent, not one?

. . . .
Remember, all the closers knew that no in v e stor makes money from an independent movie where the money is raised by cold call telemarketing

. Ag ler testified that all victims ig nored the written materials—including a

ny risk-dis closure statements in the
p r i v a t e p l a c e m e n t m e m o r a n d a

— a n d i n s t e a d r e l i e d

ex c lusively o n what the telemarketers orally promised in their

sa les pitches, and that all telemarketers knew and relied on victims following this pattern. Ag ler based his testimony on taking as true the contents of statements made by unidentified telemarketers and victims. The r ecord is inadequate to allow

us to conclude that a h earsay e x ception o r ex clusion a pplies.

The g o v ernment a

rg u es that a

ny error in a dmitting Ag ler’s testimony under Rule 701 was harmless becau se he would have qualified as an e x p e rt u nder Rule 702. The
g overnment cites United States v

. Mendoza

, 244 F .3d 1037 (9th Cir. 2 0 01), and United States v. Figueroa-Lopez
, 125 F .3d 1241, 1246–47 (9th C i r

. 1 997). B oth c ases a re disting uishable. I n Mendoza

, the d efendant was t r i ed a nd convicted f

or endang ering the safety of an ai r craft in flig ht after he called in a bomb t h r e a t t o d elay a flig ht so that his
g irlfriend would not miss it. See 2 44 F .3d at 1042–43. The
g overnment h a d orig inally g iven notice that the flig ht captain would testify but instead p resented lay testimony from the first officer to show that the bomb threat endang ered theU N I T E D S T A T E S V

. L L O Y D 49

a i r c raft’s safety

. See id. at 1043, 1047. On appeal, th e d e f e ndant arg ued that the first officer was a n undisclos e d

ex p ert witness and that admitting his testimony made the trial unfair. See id. at 1046. W e f ound that “ the g overnment had gi v e n n otice that the captain of the flig ht would testify t o emerg ency procedures, what occurred on [the flig ht]

, a nd endang erment,” a nd “[ f] or the p u rposes of a fair trial it was immaterial that the captain was not available, and that an equally q ualified witness who had ex perienced the same factual circumstances, was substituted.” Id. Unlike N elson, the d efendant in Mendoza had been gi v e n n otice of the challeng ed testimony and its ba s i s before trial and could
prepare.

I n Figueroa-Lopez
, a special ag ent with the D ru g Enforcement Administration t e s tified about “the means utiliz ed by drug traffickers to detect certain th i n gs , . . . a nd their patterns and other activities.” F igueroa-Lopez
, 125 F .3d
at 1247. The officer did not rely on h earsay statements made by unidentified traffickers or others, taken as true. The record contained ex tensive evidence o f the o ff i cer’s training a

nd

ex p erience in d

rug traffickers’ methods, a common subject o f

ex p ert opinion. Id. T he reco r d i n this case, by contrast, provides less suppo r t t o find Ag ler qualified as an ex pert o r that his o pinions w e re reliable, and what telemarketers “know” is not a common subject for Rule 7 0 2 ex pert testimony

. The record does n ot present a basis to ex cuse the fa i l ure to provide the d efense timely notice of Ag ler’s Rule 702 ex pert testimony by holding it admissible as lay opinion testimony under Rule 701.U N I T E D S T A T E S V

. L L O Y D 50

W e consider below whe ther this error and others were harmless in lig ht of the ex tensive evidence that was properly admitted. 9

c. The Rule 404(b) Evidence

Nelson testified that he believed C i namour was a leg itimate company , that he never knowing ly lied to an investor, and that he w ould not have worked at Cinamour h ad h e known about the false representations made by o th e rs working there. On cross-ex amination, the g overnment introduced e vidence that shortly after law

- e n f o r c ement ag ents raided Cinamour, Nelson went to work in a movie telemarketing boiler room for B ig Gunn Productions. During his employ

ment there, Nelson received a check from Slanaker with the n otation f

or “leads.” The g overn ment offered the evidence of Nelson’s subsequent employ ment as a telemarketer for B ig Gunn Productions, 1 0 his work there with Slanaker, and the check from Slanaker, as evidence o f subsequent bad acts under F ederal Rule of Evidence 404(b). Outside the jury ’s presence, the district cou r t found that the evidence was admissible. The c ourt found that the evidence

9 W h en w e f

in d ev id en t iary erro r, w e ty p ically rev iew f

o r h arm lessn ess b ef o re co n sid erin g o th er i ssu es, rev ersin g “ o n ly if su ch n o n co n stitu tio n al

erro r m ore lik ely th an n o t af f ected th e v erd ict.” Un ited S t a t e s v. Tra n , 5 6 8 F.3 d 1 1 56
, 1 1 6 2 (9 th Cir. 2 0 0 9 ). Bu t “ [w ]h ere, as h ere, th ere a r e a

n u m b er o f e r ro rs at trial, ‘ a b alk an ized

, issu e- b y

- issu e h arm less erro r

rev iew ’ is f

ar less ef f ectiv e th an an aly zin g th e o v erall ef f ect o f a l l th e

erro rs in t

h e co n tex t o f th e ev id en ce in tro d u ce d a t trial ag ain s t th e d ef e n d a n t

. ” Un ited Sta tes v. Fred erick

, 78 F .3 d 1 3 7 0
, 1 38 1 (9 t h Cir. 1 9 9 6 ) (q u o tin g Un ited S ta t es v. Wa l l a c e , 8 4 8 F.2 d 1 4 6 4
, 1 4 7 6 (9 th Cir. 1 9 8 8 )).

10 B ig Gu n n

w as p rev io u sly

k n o w n as First T ak e P ro d u ctio n s.U N I T E D S T A T E S V

. L L O Y D 51

showing that Nelson subsequently worked in a similar b oiler

room d o i n g very similar work tended to disprove his testimony that h e did n ot know Cinamour’s fundraising efforts were fraudulent. T h e court reasoned that the subsequent employ

ment occurred shortly after the even t s at issue, involved acts s i m ilar to the offense c harg ed, and so supported finding that N elson had committed the uncharg ed
acts. Th e court concluded that the evidence was “hig hly probative of [ ] Nelson’s intent an d knowledg e, and any prejudice [ could] be mitig a ted throug h the ag reed-upon jury instruction.”

E v i d ence o f a subsequent bad act is admissible un d e r Rule 404(b) to sh o w “motive, o pportunity

, intent, preparation, plan, knowledg e, identity

, absence of mistake, o r lack of accident.” F ed. R. Evid. 404(b); see also United States v. Hinostroza
, 297 F .3d 9 2 4
, 9 28 (9th Cir. 2 002) (“[ O] u r precedent has squarely resolved in the g overnment’s favor the issue that subsequent Rule 404(b) evidence may be relevant and admissible.” ( citing United S t a t e s v. BiboRodriguez

, 922 F .2d 1 3 9 8
, 1400 (9th Cir. 1991)). The
g overnment must show that “ (1) the evidence tends to prove

a material point; (2) the o t h er act is not too remote in time; (3) the evidence is sufficient to support a f inding that defendant committed the other act; and (4) (in certain cases) the ac t i s s i milar to the offense charg ed.” U nited States v

. Ramos-Atondo

, 732 F .3d 1113, 1123 (9th Cir. 2013) (internal quotation m a r k s omitted). “[ T] he probative value of the evidence must not be ‘substantially outweig hed by the d a ng er of unfair prejudice.’” Blitz

, 151 F .3 d at 1008 (quoting F ed. R. Evid. 403).

Nelson d o e s n o t dispute that he beg an working at B ig G u n n l ess than a y ear after the F B I raided Cinamour or t h atU N I T E D S T A T E S V

. L L O Y D 52

he received the check from Slanaker 19 months after the raid. He arg ues that the g overnment failed to show that B ig Gunn

was fraudulent or that it hired telemarketers to sell fraudulent

or unreg istered securities, that h e made fraudulent mis representations while working for B ig Gunn, o r that Slanaker paid him for leads. At trial, Nelson testified that he left B ig Gunn after he learned that the c ompany was chang ing the movie’s sche duled distribution date, because F B I ag ents had told him a fter the Cinamour raid that Cinamour had done the same thing

.

Nelson’s B ig Gunn employ ment and the check he received from Slanaker were “not too remote in time,” see Johnson

, 1 32 F .3d at 1282, and were “ introduced to disprove [ Nelson’s] claim th a t h e did not know [ Cinamour] was a fraud,” Blitz

, 1 51 F .3d at 1008. B ut the record does not show “sufficient e vidence from w hich the jury could c onclude that [ Nelson] was involved in fraudulent telemarketing at [ B ig Gunn] ” to justify admission u nder Rule 404(b). B l i t z , 1 51 F .3d at 1008. The g overnment points to a F orm 302 report o f an F B I ag ent’s interview with a telemarketer, Amanda Pay

ne, who overlapped with Nelson at B ig Gunn. 1 1 Pay ne called investors from le a d lists to raise money for a movie called Baby O
, u sing a script stating that investments in the film would re turn three to f ive times the amount invested and omitting a

ny reference to using invested funds
to pay the fundraisers. Pay ne a lso worked as a secretary ,

11 A f ter FB I ag en ts co n d u ct a f o rm a l i n t e r v i ew , th ey “ in co rp o rate[]” th eir h an d w

ritten n o tes “ in to a m o re co m p lete rep o rt o f th e in terv i ew on th e FB I’ s In terv iew Rep o rt Fo rm FD- 3 0 2,” k n o w n co l lo q u ially as a “ 3 0 2 .” S ee Un ited Sta tes v. Ha rris
, 5 43 F .2 d 1 2 4 7
, 1 2 4 9 (9 th Cir. 19 7 6 ); see a l so Un ited S ta tes v. Rewa ld

, 88 9 F.2 d 83 6, 8 6 6 (9 th Cir. 1 9 8 9 ) (“ A 3 0 2 rep o rt is an FB I ag en t’ s f

o rm al acco u

n t o f a w itn ess in terv iew f iled o n t h e FB I’ s In terv iew Rep o rt Fo rm

FD– 3 0 2 .”).U N I T E D S T A T E S V

. L L O Y D 53

fielding investor follow-up calls, purchasing leads, and doing

a c c o u n t i ng work. She told the ag ents that of the 10 to 2 0 investors she spoke w ith daily

, only a few were disg runtled and most wanted an upd a t e on Baby O ’s status. Althoug h Pay ne testified that she would n ot recommend that her mother i n v e s t in the movie, that was because of some p roduction
p roblems. She would be c omfortable having her mothe r invest in other B ig Gunn productions under the rig ht circumstances. Pay

ne told the ag ents that she d id not think that investors had been misled and that those c losers w ho h ad lied to investors no long er w orked for the company

. She also told t h e FBI that B ig Gunn’s p resident had stopped taking a salary a nd had sold personal property to help cover overhead

a n d m a x imiz e returns to investors. Pay ne told the F B I th at Slanaker and Nelson wo r k e d for B ig Gunn for only “a few months.” B y

the time N elson joined B ig Gunn, Baby O was already completed and his fundraising work on the movie was l imited. The district court repeatedly

, and correctly

, n oted that the Pay

ne interview did n ot show that Big Gunn was fraudulent. ( “Amanda Pay ne, the problem with her 302 is she concludes by say

ing that she didn’t believe that any of the investors of B ig Gun[ n] were misled. ” ) ; ( “ I don’t have the evidence in front of me, that there was something fraudulent about the—about the Baby-O raise. I d on’t seem to h ave that in my notes.”); (“I need some better evidence that it was a boiler r oom and that there w as a raise g oing on for Baby-O .”).

Th e g overnment also points to a F orm 302 report o f the F B I ’s interview with L e ig h Clark, who invested $120,000 in Baby O after investing $100,000 in another B ig G u n n f ilm. Clark had N elson’s n ame and contact information o n a n ote in his B ig Gunn files, b ut h e c ould not recall whet h e r h e

a ctually spoke with N elson. To the contrary , Clark thoug ht he talked to someone named “Arnold,” not Nelson, before heU N I T E D S T A T E S V

. L L O Y D 54

i n v e s t e d

, a n d B i g G u n n ’ s r e c o r d s s h o w e d t h a t

“ G a r y /B a rt/Dave” c losed Clark’s investment. Clark d id n o t state that N elson made any misrepresentations to him or that B ig Gunn’s solicitation was fraudulent.

Similarly

, apart f

rom the check Nelson received from Sla n a ker with the word “leads” written in the memo line, there w a s no evidence that N elson provided Slanaker with leads at Cinamour or at B ig Gunn. According to Nelson, the check was to r epay a long -outstanding loan. Nelson testified that h e w rote the word “leads” i n the check at Slanaker’s request. W hen the d istrict court asked the g overnme n t outside the jury ’s presence what e v idence “o t h e r than the

ex istence of the check” s h o wed that Nelson sold Slanaker leads, the g overnment cited “[ t] he f a c t that Slanaker was eng ag ed in unlawful telemar k e t ing

, so leads w o uld be an

ex tremely appropriate thing for h i m to be buy ing .” No evidence showed that Nelson had the means or the ability to g enerate a lead list. 1 2 The e vidence did not show that Nelson supplied Slanaker or others with leads a t C i n amour or B ig Gunn.

1 2 T h e g o v ern m en t resp o n d s w i th an arg u m en t th at it n ev er m ad e t o th e d istrict co u rt: th e ch eck w as ad m issib le t o reb u t Nelso n ’ s p u r p orted testim o ny t h a t h e w o u ld n ev er b e dish o n est b ecau se it sh o w s h e w as

w illin g to lie an d w

rite “ lead s” o n th e ch eck at Slan ak er’ s b eh est. S ee Blitz

, 15 1 F.3 d at 1 0 0 8 (“ [W ]h en th e ev id en ce o f

o th er acts is o f

f ered to p ro v e k n o w led g e, th e oth er acts n eed n ot be sim ilar to th e ch arg ed acts as lo n g as th ey t en d to m ak e th e ex isten ce o f th e d ef en d an t’ s k

n o w led g e

m o re p ro b ab le th an

it w o u ld b e w i th o u t th e ev id en ce.”). B u t Nelso n did

n o t t estif y th at h e w o u ld n ev er b e d ish on est i n h is p er s o n al d ealin g s. In stead

, h e t estif

ied th at h e w o u l d n o t lie in th e co u rse o f h is em plo y m en t,

w h eth er t o a cu sto m er o r to an in v esto r

. An d in an y ev en t, th e risk of

u n f air p r ej u d ice o f su

b m ittin g th e ch eck to th e j u ry su b stan tially

o u tw eig h ed its m in im al relev an ce to im p each in g N e l s o n ’ s claim s of h o n esty

.U N I T E D S T A T E S V

. L L O Y D 55

The g overnment arg u es t hat “if [ the B ig Gunn] scheme

was ind eed leg itimate, [ Nelson] cannot assert that it prejudi c e d t h e jury

, or that it was inadmissible evidence o f other b ad acts.” Melvin

, 91 F .3d at 1222; see also Bl i tz , 1 5 1 F.3d at 1008. B ut in neither Melvin nor Blitz di d t h e prosecution introduce lay or ex p e r t testimony

and arg ue that all companies eng agi n g i n a ty pe of business similar to the charg e d scheme were fraudulent. See id. I n Melvin, the defendant “himself introduced the evidence relati n g to the [ other acts] scheme, in order to hig hlig ht its leg itimacy a s compared to the [ charg e d] sche m e s

. ” 91 F .3d at 1222 n.2. And in Blitz

, “the g overnment presented substantial evidence
to establish that the [ the business w here the uncharg ed conduct occurred] was eng ag ed in fraudulent telemarketing

. ” 151 F

. 3d at 1008. I t was a “ty pical scam” in w hich “victims

were told that they were ‘ g uaranteed winners’ o f a big priz e,” which they would never receive, “but also were t o l d that in order to quality for it, they had to buy a pr o d u c t , such a s cosmetics, perfumes, pens or p encils” and “[ t] hose products

were sold at g rossly inflated p rices ra ng ing from $250 to a couple of thousand dollars.” I d

. Th e d efendant “ conceded th a t h e sold pen sets, vitamins, and makeup f or $ 299 to $999,” that “he never heard of a c ustomer who g ot one of the promised larg e priz es,” and that h is prior w ork included “trying to g et money bac k f o r people who felt that they h ad been defrauded by

[ the other company] .” Id.

Unlike the record in Melvin a n d Blitz

, which included specific e v i d ence showing the fraudulent nature of the uncharg e d scheme, the g overnment here relied heavily on lay opi nion testimony based on statements by unidentified telemarketers to show th at all movie telemarketing operations

are f raudulent. The g overnment then used that conclusion a s evidence that B ig Gunn’s telemarketing w as f r audulent.U N I T E D S T A T E S V

. L L O Y D 56

W h en cross-ex amining Nelson about his telemarketing work for B ig Gunn, the prosecutor asked if it was “[ j] u st as crooked

a s Cinamour, just as crooked as all the movie boiler ro o m s that Mr. Allen Ag ler told us about, correct? ” During closing
arg uments, the p rosecutor told the jury that the “cle arest evidence” t h a t Nelson intended to defraud investors at Cinamour was that he went to work at a nother “ movie investment boiler room” shortly a fter the F B I r a ided Cinamour’s of

f i c e s

. The p rosecutor arg ued that if the jury believed Nelson’s testimony that the check w as for a loan
repay ment, then N e lson “ a ccepted money from a fraudulent
company that was telemarketing and raising m o n e y from investors.” F inally

, the g overnment told the jury that Slanaker, who too k N el son to B ig G unn, was a “convicted felon in a [ prior] movie boiler room case.”

W e conclude that the district c ourt a b u s e d its discretion in admitting this evidence o f N elson’s subsequent employ ment at B ig Gunn. W e consider below w hether this error was harmless. See Frederick , 78 F .3d at 1381.

d. The Testim ony A bout Nelson’s Involvem ent in the Conf

erence Calls “ Reloading” P rior Investors

Nelson asserts that the district court committed reversible

error in admitting Stephanie A larcon’s testimony a b out conference c alls encourag ing victims to reload. Alarcon testified not o nly about reloading co n f e r ence calls she participated in, but also about conference calls Nelson participated in, even thoug h sh e w as not on those calls or in
t h e room when they occurred. Her information came f r o m what another telemarketer, Verna Capelli, then worki n g a s

one of the closers, told her abo u t conference calls that sheU N I T E D S T A T E S V

. L L O Y D 57

was on with N elson and Slanaker. Nelson raised a hearsay objection at trial. W e review the district court’s ruling for an abuse of d iscret i o n

. See United States v. Orm Hieng
, 679 F .3d 1131, 1141 (9th Cir. 2012).

Alarcon’s t estimony about w hat Capelli told her is not hearsay if both Capelli and A larcon were coconspirators o f Nelson’s and the statement was offered ag a i n s t him. “A
statement is not hearsay if

. . . [ t] h e s t a tement is offered
ag ainst a party

and is . . . a statement by a coconspirator of a party during the course and in furtherance of the conspiracy

. ” Bourjaily v. U

nited States
, 483 U.S. 171, 173 (1987); accord F ed. R. Evid. 801(d)(2)(E). Nelson arg u es that Alarcon was not his coconspirator be c ause after the F B I a nd the U.S. Attorney ’s O ffice w e r e involved, “the case ag ent a nd
pr o s e cutors told Alarcon that she was not in trouble a nd did
not have to worry about being arrest e d

. ” N elson cites no authority f

or h is arg ument, and our cases provide no support. “I t is not necessary that the statement b e m ade to another member of the conspira c y for it to come under [R] ule 801(d)(2)(E),” United States v. W illiams

, 989 F .2d 1061, 1068 (9th Cir. 1993), and “[ a] c o c o n s p i rator’s statement is admissible upon proof that it was m ade in f urtherance of a conspiracy ,” e ven if “the indictment does not contain a conspiracy count” ag ainst that coconspirator, United States v

. Manning
, 56 F .3d 1188, 1197 (9th Cir. 1995). “The question is mere l y wh e t her there was proof of a sufficient concert o f action to show the individuals to have been eng ag ed in a joint venture.” Manning , 56 F .3d at 1197.

B o th Capelli an d Alarcon were working at Cinamour when Capelli took part in the calls with N elson and described them to A larcon. B ot h A l a rcon a nd Capelli worked a s fronters, and Capelli also worked as a closer. Their work a sU N I T E D S T A T E S V

. L L O Y D 58

fronter s e nabled closers, like Nelson, to g et potential investors to sig n and return the investment a g reements to Cinamour with the checks. There is ample evidence that both Alarcon and Capelli were Nelson’s c oconspirators when C apelli and Nelson took part in r e loading c onference c a l l s and when Capelli told Alarcon about Nelson’s p artici p a tion in the calls.

The record also supports f inding that Capelli’s statements kept Alarcon “abreast of an ong o ing conspiracy ’s activities” and w er e therefore made “in furtherance of” the conspiracy

. See United States v

. Y

arbrough

, 852 F .2d 1522, 1536 (9th Cir. 1988). F or ex am p l e , C a pelli told Alarcon about the participants in, and the substance o f, the con f e r e n c e calls in which she took part. Capelli ex plained the strateg y b ehind the c onference calls: to “g et all the investors tog ether” so that i f one decided to invest, the others would be more likely t o follow suit “ because [ of] their e g os.” A n d C a p elli warned Alarcon that she thoug ht the calls were not “a g ood idea” a nd that if the F B I was recording them, the co m p a n y would be shut down. Altho u g h “[ m] ere conversations b etween coconspirators, or merely narrative declarations among them,

are not made ‘in furtheranc e’ of a conspiracy ,” the evidence is sufficien t t o f

ind by a preponderance that Capelli’s
statements “were m a d e with the intent to keep [ Alarcon] abreast of what [ Cinamour] had done, was doing

, or would do in the future.” See id. at 1535–36.

The district court did not abuse its discretion in a dmitting Alarcon’s testimony about Nelson’s par t i c i p a t i o n in reloading conference calls.U N I T E D S T A T E S V

. L L O Y D 59

e. The Em ail Evidence About Baker

B a ker a sserts that the district court erred in admitting an email containing hearsay statements that he had been warned
to stop g iving potential investors f alse information about the invest m e nts. The email was admitted during the
g overnment’s e x amination o f Je n n i f e r N a k a m o r i

, Cinamour’s L os Ang eles office manag er during the time B aker worked for that office. Nakamori wrote the email to Glen Hartford in Aug ust 2002. I t included the following statements:

Paul [ B aker] bring s in money because he’s gi v ing investors false information. W e’v e g i v en him 5 w arning [ s] already and he still can’t g et it rig ht.

. . . You [ Hartford] are the

one who t o l d me that Paul [ B aker] would be let go a f t er one more warning

. You told me this morning that we are accepti n g money from investors w h o ’ve b een g iven false
prom ises. I t sounds like we' re just taking
money f r o m a ny one. How can we make a movie this w ay ? W hat’s g o i n g to happen in the f uture? They may come back and y ou will be held liable. Pau l

, E v an, Matt, a nd
every one else will just walk away happy with their commission monies in their pockets.

Na k a mori’s information that B a ker g ave potential investors an d victims f

a lse information came o n ly from “[ t] hing s I heard in the o f f i c e ” a n d was “[

j] ust rumors that I heard.” Nakamori could not r emember who said the “ thing s”

or spread the “rumors.” Hartford told h er that he had warned B aker not to g ive f

alse i n fo r m a t ion or make false promisesU N I T E D S T A T E S V

. L L O Y D 60

about the investments. Nakamori could not remember hearing Hartford warn B aker.

B aker objected to the email and Nakamori’s testimony

a b o u t it. His objection was overruled and the email a n d related testimony were admitted. B aker renews his objection

on appeal. W e find a n abuse of discretion in admitting the email and related testim o n y

. Nakamori had no personal knowledg e a

bout whether B aker was making false statements to g e t victims t o invest. Nor did she have personal knowledg e about whether B aker had b e e n repeatedly warned not to do this.

The g over n m e n t arg u es that the email and Nakamori’s testimony about it a

re admissible because they w ere of fered
to show B a ker’s state of mind— h i s knowledg e that what he

was telling investors was f alse—rather than for the truth o f the matter stated. T he problem is t h a t u nless the email
contents and related testimony were true, they are not relevant
to show B aker’s state of mind. The email does not show that B aker knew he w as making false represent a t ions unless the
statements that he was doing so and had b e en warned about it are accepted as true. The evidence was hearsay

.

W e consider below whether the error was harmless i n lig ht of the o ther evidence properly submitted to the jury

. See Frederick

, 78 F .3d at 1381.

f

. Nelson’s P rof

f ered Testim ony A bout His Daughter’s Birth

Nelson arg ues that the d istrict court erred in ex c luding his testimony about his daug hter’s birth and the role it play e d in motivating him to stay sober, law-abiding

, and employ ed.U N I T E D S T A T E S V

. L L O Y D 61

N e l s on arg u es that he followed Slanaker’s instructions no t b e cause he intended to v iolate the law, but because he w a s determined to kee p h i s job. I n his opening statement, Nelson’s counsel stated:

[ B ] ehind [ an] alcohol soaked haz e, behind [ a] dumpster, [ Nelson] realiz ed that he was about
to be a father. He realiz ed that his g irlfriend

was about to g ive birth to his daug hter.

. . . [ he found out] that his g irlfriend [ w a s ] g oing to g ive the bab y u p for adoption [ a nd that] he’s
g oing to l o se his parental r ig hts, and there is something that h e can do about that, a nd he does something about that. H e was unable to contest the adoptio n , but he [ was] able to somehow retain his parental rig hts.

T h e n e x t day

, a juror asked to be ex cused b ecause he “mig ht h ave a problem being completely objective in reg ards
to the prosecution’s case ag ainst [ Nels o n] because o f the far-reaching r amifications [ another prosecution] had on my

own family .” The juror remained as an al t e r n a te, but the
g overnment asked the d istrict court for a limine order

ex c luding evidence about the birth of Nelson’s daug h ter. The
g overnment arg ued that this e vidence was int en d e d o nly to elicit sy mpathy

, was irrelevant to the leg al and factual issues before t h e jury

, and would encourag e jury nullification. Nelson responded that the evidence was relevant to show his lack of mens rea.

The court denied the g overnment’s limine request in part and g ranted it in part, allowing Nelson to t e s t i f y a bout his history of alcoholism, ho m e l essness, and joblessness. The
court allowed Nelson to testify that during this period, “someU N I T E D S T A T E S V

. L L O Y D 62

thing s [ were] happening ” that motivated him to become and stay sober, out of jail, and employ ed. The court refused to let Nelson identify those “thing s” or provide details. The court reasoned that the evide n c e a bout N elson becoming a father and achieving a relationship with his daug hter was “desig n ed
to imprope r l y appeal to the sy mpathy of the jury ,” a

nd concluded that “the probative value is substantially outweig hed by

the risks of unfair prejudice.”

Nelson arg ues that the court’s r uling prevented him from presenting a complete and meaning ful defense, violating the Due Process Clause, see California v. Trombetta

, 4 67 U.S. 479, 485 ( 1984), and F ederal Rule of Evidence 401. Nelson contends that thi s testimony w as crucial to ex plain his “history a nd state of mind in the time p eriod leading up to his employ ment at Cinamour.” W e disag ree.

As the ex perience with the juror who remained as the alternate d emonstrates, this testimony carried a hig h r i s k o f evoking an emotional response. T he jur y h e a rd undisputed evidence that Nelson stay ed sober, out of jail, and employ ed throug hout his time a t Cinam o u r

. The jury a lso heard undisputed testimony that Nelson w as so determined to keep his job at Cinamour that he continued to wo r k d e s pite the abuse he took from Slanaker. Giv e n t he testimony the jury did hear, the additional testimony about the birth of Nelson’s daug hter was only marg inally relevant to show his mens r ea and was cumulative of other evidence. B ecause the prejudicial impact outweig h e d t h e p r o bative value, the district
court did not abuse its discretion in e x cluding this testimony

.U N I T E D S T A T E S V

. L L O Y D 63

2. The Jury Instructions

a. B a k e r ’ s C l a i m t h a t t h e I n s t r u c t i o n s Constructively Am ended the Indictm ent

“A constructive amendment occurs when the charg ing
terms of the indictment are altered, either literally o r in effect, by the prosecutor or a court after the g rand jury h a s l a st passed upon them.” United S t a t e s v

. W ard

, 747 F .3d 1184, 1190 (9th Cir. 2014) (internal quotation marks omitted). The mail- and wire-fraud counts al l e ge d that B a ker “knowing ly and with the intent to defraud” participated in and ex ecuted

a scheme “ to o b t a i n money from [ ] investors by means o f
mat e r ially f

a lse and fraudulent p retenses, representations, a nd promises, and the concealment of material facts.”

The district court instructed the jury that

[ a] statement or representation i s “false o r fraudulent” f

o r p urposes of mail and wire frau d i f known to b e untrue, or made with reckless disregard as to its truth or falsity

, a nd

m a de or c aused to b e made with the intent t o deceive.

The c ourt g ave a similar instruc t i o n o n B aker’s g ood-faith defense:

The defen d a n t does not have the burden o f proving he acted in g o od faith. The
g overn ment must prove b ey ond a reasonable doubt that the defendant acted with the intent
to defraud a

n d did not act in g ood faith. Proof that a defendant acted with reckless disregardU N I T E D S T A T E S V

. L L O Y D 64

as to the truth or falsity of material misrepresentations he may h ave made i s inconsistent with g ood faith.

B aker arg u es that the d is t rict c o urt constructively amended the indictment by using the term “reckless disreg ard,” which permitted the jury t o co n vict on a lesser mental state than “knowing .”

W h en a defendant makes a constructive-amend m e nt objection at trial, our review is de novo. W ard

, 7 4 7 F. 3 d at 1190. T he g overnment arg ues that plain-error review applies because althoug h B aker objected to the instruction, it was on the basis of an improper variance, not a constructive amendment. Our prece d e n t does not support the
g overnment’s a r gu ment. I n W ard

, we reviewed the defendant’s c onstructive-amendment arg ument on appeal de

novo d espite h is failure to u se specific words, including “the
term ‘F ifth Amendment,’” when he objected a t t r i a l. W e reasoned that “the substance of the objection”—the fear that the jury would convict on the basis o f conduct not alleg e d in th e i n d i ctment—“was p a tently clear.” 747 F .3d at 1189. Similarly

, althoug h B aker did not use the words “ constructive amendment” in objecting

, h e did st at e that “the g overnment i n n o way alleg ed a theory of reckless indifference as a mental state on any defendant’s part in the indictment.” The substance of B aker ’s o b

j e c tion was clear. Our review is de

novo.

“[ A] constructive a mendment occurs w hen ‘the crime charg ed [ is] substantially chang ed at trial, so t h at it [ is] impossible to know w hether the g rand jury would ha ve i n d i c t e d f or the crime actually proved.’” United S tates v

. Pisello

, 877 F

. 2d 762, 7 6 5 ( 9 th Cir. 1989) (quoting UnitedU N I T E D S T A T E S V

. L L O Y D 65

States v

. Von Sto l l

, 7 2 6 F .2d 5 84, 5 86 ( 9th Cir. 1 984)). I n U nited States v. Love
, 535 F .2d 1152 (9th Cir. 1976), “t h e indictment charg ed [the defendant] with certain fraudulent representations while ‘well knowing ’ that the representations

w e re falsely made.” Id. at 1157. The defendant appe al ed

, arg uing that the d istrict c ourt impermissibly varied from the indictment by

instructing the jury that

[ a] statement or representation is false a nd fraudulent within the meaning of the statute if known to be untrue or made with reckless indifference as to its truth or falsity and made

or caused t o b e made with the intent to deceive.

Id. (emphasis added). Apply ing de n o v o review, the court rejected the arg ument, reasoning tha t i n a mail-fraud prosecution, “‘[ o] ne who acts with reckless indifference as to whether a representation is true or false is charg eable as if he had k nowledg e of its falsity .’” I d. at 1 158 (quoting I

rwin v

. United States , 338 F .2d 770, 774 (9th Cir. 1964)). 1 3

The instruction at issue h ere was clearer than the instruction in Love in t h at it required the jury to find the
statement “known to be un t r u e, or made with reckless d isreg ard as to its truth or falsity

, and made or caused to be made with the intent to deceive.” A n indictme n t charg ing th a t a defendant knowing ly participated in a scheme to defraud does not necessarily c harg e t h a t defendant with making specific false statements. See United States v. W oods

,

13 A lth o u g h L ove w as a v arian ce ch allen g e, co u rts h av e ap p l i e d i t s

reaso n i n g to co n stru ctiv e- am en d m en t ch allen g es sim ilar t o B ak er’ s

. S ee Un ited S ta tes v. Ha th a wa

y , 7 9 8 F.2 d 9 0 2 , 9 1 1 (6 th Cir. 1 9 8 6 ).U N I T E D S T A T E S V

. L L O Y D 66

335 F .3d 993, 999 (9th Cir. 2003) (“[ A] scheme to defraud

. . . may or may n ot involve a n y specific false statements.”).

W e conclude that the district court’s instruction did not constructively amend the indictment.

b. Nelson’s Claim that t he District Court Erred in R e j e c t i n g H i s D e f

i n i t i o n o f “ R e c k l e s s Disregard”

Nelson arg ues that the district court erred by not including h i s t i m e l y s u b m i t t ed i n s t r u c t i o n d e f i n i n g r ec k l e s s indifference. “I n re viewing jury instructions, the relevant inquiry is whether the instructions as a whole are misleading

or inadequate to g uide the jury ’s d eliberation.” United States

v. Dixon
, 201 F .3d 1223, 1230 (9th C i r. 2 000). “A sing le instruction to a jury

may not be judg ed in artificial isolation, but must be viewed in the c ontex t of the overall charg e.” Id. De n ovo review applies to determining “whether the district court’s instructions adequately present e d the defendant’s theory of the case” or “misstate[ ] the elements of a statutory crime.” Id. ; United States v. F r e g a , 179 F .3d 793, 807 n.16 (9th Cir. 1999). Review for abuse of discretion applies to the district court’s “precise f ormulation” of the instructions. D i x o n , 201 F .3d at 1230 (quoting United S tates v. Knapp
, 120 F .3d 928, 930 (9th Cir. 1997)).

Nelson asked the court to instruct the jury that

a person acts with reckless indiffere n ce a s used in these instructions if h e consci o u sly disreg ards a substantial and unjustifiable risk
t h a t h i s s t a t e m e n t s a r e f a l s e o r mi s l e ading

—that is, if he d eliberately closesU N I T E D S T A T E S V

. L L O Y D 67

his ey e s t o what would otherwise h ave been obvious to him. The g overnment h a s the burden o f showing reckless indifference bey o nd a reasonable doubt.

The district court instead told the jury that

[ a ] statement or representation is “false o r fraudulent” f

or pu r p o s es of mail and wire fraud if k nown to be untrue, or made with reckless disreg ard as to its truth o r falsity

, a nd made or ca u sed to be made with the intent to deceive.

The court did not define “reckless disreg ard.”

Nelson contends that the district court erred in f ailing to include the deliberate-blindness or d e liberate-ig norance instruction h e submitted because leaving t h e m eaning to lay understand i n g could lead the jury to convict based on neg lig ence. W e have repeatedly h eld that similar “reckless indifference” or “reckless disreg ard” instructions sufficiently protect ag a inst this risk. See, e.g. , United States v

. Munoz
, 233 F .3d 1117, 1135–36 (9th Cir. 2 000), supers ed e d by
statute o n other grounds

, 1 8 U.S.C. § 1341; United S tates v

. Gay
, 967 F

. 2d 322, 326–27 (9th Cir. 1992). Recklessness in this c o n t e x t is “ within the comprehension of the a verag e juror” and needs no special definition. United S t a t es v

. Tirouda

, 394 F .3d 683, 688–89 ( 9 th Cir. 2005) (“‘[ C] riminal recklessness und e r Alaska law relates essentially to the

common-sense definition o f r ecklessness, which the a verag e juror could u nderstand and apply without an instruction.’” (quoting W

alker v. Endell

, 850 F .2d 4 7 0, 475 (9th Cir. 1987)).U N I T E D S T A T E S V

. L L O Y D 68

The court’s instructions, considered as a w h o l e , clearly
t o ld jurors that they could not convict Nelson unless th e y unanimously found t h at the g overnment had p roven bey ond

a reasonable d oubt that h e a c t e d with intent to defraud—the intent to deceive or cheat—and did not act in g ood faith. The instructions told the j u ry that they could not convict on the basis of neg lig ence.

W e find no basis for reversal on this g round.

c. Nelson’s C laim that the District Court Erred in Instructing on the Alleged Securities-Law Violations

Nelson arg ues that the district court erred i n instructing the jury on the counts alleg ing that he vi olated 15 U .S.C. § 77e, which forbids the offer o r s a le of unreg istered securities, and § 77x
, which punishes “ willful[ ] ” violations o f the securities laws.

i. The Instruction on Aiding or Abe t t i ng the Of f er or Sale of

Unregistered Securities

T h e p a rties ag r eed to, and the court g ave, the followi n g instruction on15 U.S.C. § 77e and 18 U.S.C. § 2:

I n o rder for a defend a n t to be found g uilty o f the illeg al sale o r distribution of unreg istered securities as charg ed in the I ndictment, the
g overnment must prove each o f the following elements bey o nd a reasonable doubt:

Fi rst, that the securities which the de fe n dant sold were not reg istered withU N I T E D S T A T E S V

. L L O Y D 69

t h e [ S ] e c u r i t i e s a n d E x c h a n g e Commission;

Second, t hat the securities sold were required to be reg i s t e red with the Se c urities a

nd Ex chang e Commission— that is, that the transactions were not

ex e mpt from reg istration;

Third, that, knowing the securities were not reg istered and not ex empt , the defendant willfully sold or caused them to be sold to the public; and

F ourth, that the defendant used or caus ed
to be used the mails or the means a nd instrumentalities of inters t ate commerce to sell the securities.

Nelson contends that this instruction failed to convey the
go v e r nment’s burden to prove that he knew that t h e unreg istered securities he was s e l ling had to be reg istered. Nelson contends that it was not enoug h f or the g overnment to prove his knowledg e that the securities were not ex empt from the reg istration r equire m e n t

. B ecause Nelson ag reed to the instruction without objection, plain-error review a pplies. See United States v. Feldman

, 853 F .2d 6 48, 652 (9th Cir. 1988).

Nelson cites no authority f o r his argument, and we have found none. I n contex t, the difference between k nowing that the law required reg istering the securities in order to sell them and knowing that the unreg istered securities were not e x empt from the reg istration requirement is n ot material. W e find no reversible error.U N I T E D S T A T E S V

. L L O Y D 70

ii. The Instruction on Willf ully V iolating t h e F ederal Securities Law s

The court g ave the following instruction of “willfully ” in instructing the jury on the a lleg ed 15 U.S.C. § 77x violation:

A p erson acts “willfully ” under the federal securities laws by i n t e n tionally u ndertaking an act that one knows to b e wrong ful. “W illfully ” does not require that the person know sp e c ifically that the conduct was unlawful.

Nelson re n ew s the o b

jection he made at trial that the instruction would allow c on v i ction without proof that he knew his conduct violated the securities laws. He c o n t en d s that because 1 5 U.S.C. § 77e forb i d s offering or selling
unreg istered securities, which is n ot inherently wrong ful, this proof is required to show a “willful[ ] ” violation of 15 U .S.C. § 77x

.

W e rejected a similar arg ument in U nited States v

. R e

yes , 577 F .3d 1069 (9th Cir. 2009), an a p p e al from a conviction for knowing ly f

als ify ing “book[ s]
, record[ s]
, and account[ s]
, ” in violation o f 15 U.S.C. § 78m(b)(5). T he defendant a rg u ed that because “the knowing falsification o f books, records, a nd
accounts is not ‘inevitably nefarious,’” she could not be convicted without proof that s h e knew her conduct v iolated the law. Id. at 1080. We held that h e r a r gu m ent was “foreclosed” by United S

tates v. Tarallo

, 380 F .3d 1 174 (9th Cir. 2004), and other cases “reject[ ing ] the arg ument that, in the contex t of the securities fraud statutes, willfulness requires a defendant know that he or she was b reakin g t h e l a w

. ” Reyes
, 577 F

. 3d a t 1080 (citing Tarallo

, 380 F .3d atU N I T E D S T A T E S V

. L L O Y D 71

1187–88 ; Un i ted States v. Charnay

, 537 F .2d 341, 351–52 (9th Cir. 1 976)). The district c ourt “correctly instructed the jury that it had to find that” the defendant “was aware of the falsification and did not falsify thr o u gh ig norance, mistake,

or accident,” but “[ t] h ere is no hig her standard for a willful

v i o l a t ion of the securities laws.” Id. (quotation marks omitted).

Nelson attempts to d isting uish Reyes by arg uing that it involved “ se curities fraud” under § 78m, not “reg ulatory violati o n s” under § 77e that are not “inherently bad acts.” B ut both § 78m and § 7 7 e use the scienter standard under 15 U.S.C. § 77x
, which allows conviction if a per s on “wi l l f u lly violates” the securities laws. There is no basis in the statutory lang uag e o r in our cases to read a h ig h er level o f scienter into § 77x when the alleg ed violation is under § 77e. The d istrict court did n ot commit reversible error in instructing the jury on the counts al leg ing that Nelson violated the securities laws.

d. The Rule 404(b) Instruction

Nelson arg ues, without citing authority

, that the district
court e rred in instructing the jury on the Rule 404(b) evidence of his telemarketing work at B ig G u n n after the F B I raided the Cinamour office where he worked. Although w e find it

error to a dmit the e v idence, we find no error in the instruction, which tracked the N i n th Circuit model jury instruction for Rule 404(b) evidence:

You h a ve h eard the evidence that defendant Nelson committed other acts not charg ed h ere. You may consider this evidenc e for its be ar ing

, if any , on the question of defendantU N I T E D S T A T E S V

. L L O Y D 72

Nelson’s intent, knowledg e, absence o f mistake and absence of accident and f o r no other purpose. You may n ot consider this evidence ag ainst a

n y other defendant on trial.

S e e N i n th Cir. Crim. Model J ury I nstructions § 4.3 (2010 ed.).

Accor d i n g to Nelson, the lang uag e “not charg e d here” implies that the uncharg ed a c t s could have been charg ed. W e find that the instructio n , considered a s a whole, accurately and clearly stated the law. W e have recently cited this model i n s t r uction with approval. United States v

. Hardick

, 766 F .3d 1 0 5 1
, 1054, 1056 ( 9th Cir. 2014) (the district court did no t a b u s e its discretion in admitting Rule 404(b) evidence in part because the c ourt “ ga v e a limiting instruction at the close of evidence” describing “‘other acts not charg e d here’” that mirrored the “leg ally c orrect model instruction.”). The di strict court did not abuse its discretion in g iving the Rule 404(b) instruction.

3. Nelson’s Claim of

P r o secutorial Misconduct

Nelson asserts that the prosecutor’s statements about the victims’ testimony

, made in c losing a rg ument, requires reversal. “To obtain a reversal b ased on prosecutorial misconduct, [ Nelson] must e stablish both misconduct a nd prejudice.” United S

tates v. W r i ght

, 625 F .3d 583, 609–10 (9th Cir. 2010), superseded b y statute o n other grounds as recognized by United S

tates v. Brown
, 785 F .3d 13 3 7
, 1 3 51 (9th Cir. 2015). Nelson d id not “object[ ] at trial to a cts o f all ege d prosecutorial misconduct.” Our review is for plain

error. See United States v. Hinton
, 31 F .3d 817, 824 (9th Cir. 1994).U N I T E D S T A T E S V

. L L O Y D 73

Nelson arg ues that the prosecutor intentionally misstated the testimony Melvin B itikofer g a ve at trial. B itikofer testified that Slanaker, not Nelson, asked him to participate in the F ebruary 2 009 reloading conference call in which h e was persuaded to invest another $100,000 in a Cinamour movie, this time using money from his wife’s I RA. B itikofer testified that he did not know if Nelson was on the call or not. During c losing

, however, the prosecutor told the j u ry that Nelson “g ot Mr. B itikofer on a c o n f e rence call—look at Ex hibit 289—and he took a hundred thousand dollars more.” The prosecutor also incorrectly attributed to Melvin B itikofer the testimony g iven by another victim, Richard C lark, that “Mr. N elson told [ him] that he w asn’t just a s a l es m a n, but

was also involved in the technolog y a spect of the company a s well.”

The g overnment concedes that the p ro s e cutor’s closing
arg ument contained both statements a nd that both were wrong

. Our review o f the record shows no basis for finding that the prosecutor’s errors were intentio n ally made or that
t hey substantially affected Nelson’s rig ht to a fair trial. T h e prosecution accurately described the testimony about the reloading conference call b ut inaccurately attributed the c all
to Nelson rather than Slanaker. T h e re w as n o error in the prosecutor’s description o f what the victim-witness said, only that Clark, not B itikofer, was the victim who said it. I n contex t, these mistakes appear to have been inadvertent.

A prosecutor’s inadvertent mistakes or misstatements a re not misconduct. See United States v. Del- T o r o Barboza

, 673 F .3d 1136, 1 153 (9th Cir. 2 0 12) (a prosecutor’s
att ri bution of one defendant’s statement to both defendants was “an honest mistake and not prosecutorial misconduct”); Downs v. Hoyt
, 232 F .3d 1 031, 1 0 3 8 (9th Cir. 2000) (aU N I T E D S T A T E S V

. L L O Y D 74

prosecutor’s passing reference to a statement not in evidence

w a s not misconduct when the prosecutor was “confused a bo u t which p o rtions of the v oluminous medical records had been ad m i t t ed into evidence”); U nited States v. Carrillo

, 16 F .3d 1 0 4 6, 1050 (9th Cir. 1994) (a prosecutor’s “misstatem e n t ha[ d] earmarks of inadvertent mistake, not misconduct”).

Nor were the misstatements “so g r o s s as probably to prejudice” Nelson. United States v. Navarro , 608 F .3d 529, 536 ( 9th Cir. 2011). That is particularly so in lig ht o f Clark’s testimony that Nelson play e d a substantial ro l e in his

co n f e r e n ce call a

nd the district court’s r epeated instructions
t h a t t h e j u r y ’ s r e c o l l ec t i o n s

— n o t t h e p r o s ecuto r’ s summation—controlled.

The p rosecutor’s misstateme n t s during closing are not a basis for reversal.

4. Cum ulative Error

“Even if n o error i n dividually supports reversal, the cumulative effect of numerous errors may support reversal.” United States v. I

nzunza , 638 F .3d 1006, 1024 ( 9th Cir. 2 009) (citing United States v. Fr e d e r i c k

, 7 8 F .3d 1 370, 1381 (9th Cir. 1996)). “ W here, as here, there are a number of errors at trial, ‘a balkaniz ed, issue-by -issue harmless error review’ is far less e ffective than analy z ing the overall eff

e c t of all the

errors in the contex t of the evidence introduced at trial ag ainst the defendant.” United State s v

. F rederick

, 78 F .3d 1370, 1381 (9th Cir. 1996) (quoting United State s v. W allace

, 848 F .2d 1464, 1476 (9th Cir. 1988)). “I n those cases where the g overnment’s case is weak, a d efendant is more likely to be prejudiced by the effect of cumulative errors.” Id. “This is simply the log ical corollary of the harmless error doctrineU N I T E D S T A T E S V

. L L O Y D 75

which requires us to a f f i rm a conviction if there is overwhelming evidence o f g uilt.” Id. (internal quotation marks omitted).

a. Baker

Althoug h the district judg e erred in admitting Ag ler’s lay opinion testimony a

bout what telemarketers know a nd intend, and in admitting the Nakamori email and related t e s t imony

, the errors were harmless in lig ht of the overwhelming evidence ag ainst B ake r. The evidence included voice recording s of B aker’s c alls with an undercover ag ent posing

as a potential investor in Red W ater. I n the calls, B aker repeatedly lied. H e told the ag ent that Cinamour had already secured $5.4 million presales contracts to distribute the film in 31 c ountries, g uaranteeing a ri s k-free and profitable investment. He told the a g ent that there was a lready enoug h

revenue from the presale contracts to g uarantee a 110 percent return to the investors. He told the ag ent that investors would receive the 110 percent return in 8 to 1 0 months a nd triple their money in 2 y ears. H e told the a g ent that the film’s promoters and sales p ersonnel would receive no money until the investors had received their money back with a profit, a nd
t hat none of the fundraisers w ere receiving commission s

. B aker’s victims testified that he made the same statements to them. B aker’s coconsp irators testified about his false
stateme nts and role in the conspiracy

, including his role in including false statements a bout c o m missions in the Red W ater pri v at e placement memorandum. F inally

, the jury heard that after the raid, B aker confessed to law-enforcement
ag ents that he had lied in the ca l l with the undercover ag ent about the presale contracts and the commissions.U N I T E D S T A T E S V

. L L O Y D 76

I n lig ht o f the overwhelming admissible evidence ag ainst him, the e rrors we have found do n ot r e q u i r e r eversing B aker’s c onviction. S

ee United States v. Ruiz
, 710 F .3d 1077, 1080 n.1 (9th Cir. 2013 ) ( “ F inally

, since the errors that

occ u r r e d at trial were isolated, reversal for cumulative error is not warranted.”). B aker’s conviction is affirmed.

b. Nelson

There was certainly evidence a g ainst Nelson, but it w a s not overwhelming

. Nelson’s vi c t i m s testified that he too misrepresented the ex istence of presale distribution contracts, the resulting profit g uarantee and the a bsence of risk, and the absence o f commissions o r other pay ments to promoters a

nd sales personnel. Althoug h Nelson d enied these alleg ations at trial, he admitted using a script with those statements. Nelson also sent an email to one victim, E liasse n , promising that presales distribution contracts made the inve s t ment secure. Nelson testified that some unidentified p erson at Cinamour had told him at some u nidentified time tha t the presales
contracts described in the script did ex i s t

. Nelson told his victims that investors in Cinamour’s p r i or movies had been successful even thoug h his c o conspirator, Stephanie A larcon, testified that she and N e l s o n had talked about the f act that prior investors were unhappy b ecaus e they had not made

mone y

. The evidence showed that Nelson told prospective investors and the victims who i n v e sted that filming on Red W ater had beg un or was about to beg in. He admitted on the stand that filming had not started a n d was not about to start. Nelson testified t h a t h e did n o t r eveal his 12.5 percent commission to the prospective investors or victims he talked to, and the evidence, including Nadav Shimoni’s tes timony and scripts, showed that Nelson was involved in the reloading conference calls.U N I T E D S T A T E S V

. L L O Y D 77

T h e re was also evidence favorable to Nelson’s defen s e theory that he lacked the intent to d efraud necessary to show that he willfully violated the securities laws. Nelson joined Cinamour much later than his codefendants, g iving him less

ex p osure to the fraudulent p ractices before the F B I ’s 2 009 raid. He t e s tified that he w as only involved in a few reloading c onference calls and then only for a b r i e f period, and that he was unaware of the use of “shills” like Shimoni. Althoug h we c onclude that there was sufficient ev i dence to support each count of conviction

, see infra Part I I .C.5, the
g overnment has no t m et its burden to show that the evident i a r y errors we have found were harmless. United States v. Vizcarra-Martinez
, 66 F .3d 1006 (9th Cir. 1 995) (evidence properly admitted was s u fficient to support the conviction b ut the e r r o r in admitting evidence was not harmless, requiring reversal and remand). The inadmissible evidence of Nelson’s subsequent e m p l o y ment at B ig Gunn and the check he wrote to Slanaker, especially when refracted throug h the l e n s of Ag ler’s testimony that all movie telemarketing operations are fraudulent and tha t a l l fronters and closers knew this, may have “ subs t a ntially sway ed” the jury in concluding that the g overnment had met its b urden o f proving Nelson’s knowledg e a nd intent. See Freeman
, 498 F .3d at 905.

The risk that the impr o p e r ly admitted evidence affected the verdict is increased because the g overnmen t ’ s closing
arg ument repeatedly encourag ed t h e j u r y to rely o n this evidence. The g o v e rnment a rg ued during closing that Nelson, B aker, a

nd Greenhouse “knew” that “ there was no way these investors would ever make a dime” and that “they lied in order to g et the people to invest t h e i r m o n ey .” The
g overnment emphasiz ed Allen Ag ler’s testimony that “ all the closers knew t h a t no investor makes money from anU N I T E D S T A T E S V

. L L O Y D 78

independent movie where the money is rais e d by cold c all telemarketing .” And the g overnment told the jury that “the clearest evidence” that N elson had the intent to defraud while working a t Cinamour wa s t h a t h e went to w ork at another “movie investment boiler r oom”—B ig Gunn—after the F B I raided Cinamour.

Our review of the record leaves us without a “ fair assurance” that the “jury was not substantially sway ed by the error[ s] ” in convicting Nelson. See Freeman
, 498 F

. 3d at 905. W e conclude that the errors were not harmless and that they require us to reverse Nelson’s conviction

, v acate his sentence, and remand.

5. Nelson’s Claim t hat the Evidence Is Insuf ficient t o Sustain His Convictions

Nelson a rg ues that the g overnment presented insufficient evidence to convict him of violating 1 5 U.S.C. §§ 77e a nd 77x by selling unreg istered securities. 1 4 W e address this question even thoug h we reverse the conviction and remand because a retrial may implicate doub l e j e o p ardy

. “‘I t has long b een settled

. . . that the D o uble J eopardy Clause’s
g eneral prohibition ag ainst successive prosecutions does not prevent the g overnment fr o m retry ing a defendant w ho succeeds in g etting h i s f irst c onviction set aside, throug h direct appeal or collateral attack, because of some error in the proceeding s leading to conviction.” United States v. P reston , 751 F .3d 1 0 0 8
, 1028 (9th Cir. 2 014) (en banc) (quoting Lockhart v. Nelson

, 4 88 U.S. 33, 38 (1988)). “B ut the Supreme Cou r t has recog niz ed a n ex ception to the

14 Nelso n d oes n o t arg u e th at th e ev id en ce w as in su f f icien t to su

p po rt h is

co n v ictio n s f

o r co n sp i racy , m ail f

rau d , o r w ire f

rau d

.U N I T E D S T A T E S V

. L L O Y D 79

g overnment’s rig ht to retry a defendant without offending the Double J eopardy Claus e where the conviction is overturned for insufficient evidence.” Id. (citing B u rks v. United States
, 43 7 U .S. 1, 11 (1978)). “This ex ception recog niz e s that the ‘Double J eopardy Clause forbids a second trial for the
purpose of affording t h e p rosecution a nother opportunity to supply evidence w h i c h it failed to muster in the first proceeding

. ’” Id. (quoting Burks

, 437 U.S. at 11). We “must address t h e s u f

ficiency of the evidence question” on the securities-fraud convictions “even thoug h we are remanding for a new trial.” Id.

A “two-step inquiry for considering a challeng e to a conviction based on sufficiency o f t h e evidence” a pplies. United States v. Nevils , 598 F

. 3d 1158, 1164 ( 9th Cir. 2 010) (en banc). “ F irst, a revie w i n g court must consider the evidence presented a t t r i al in the lig ht most favorable to the
p rosecution.” Id. (citing Jackson v. Virginia
, 443 U.S. 307, 319 (1979)). The reviewing court “ may not usurp the role o f the finder of f

act by considering how it would have resolved the conflicts, made the inferences, or considered the evidence
at trial.” Id. “Rather, when faced with a record of historical facts that supports c o n flicting inf e r e n ces,” the reviewing
court “must presume—even if it does not affirm a t i v ely appear in the record—that the trier of fact resolved any such confl icts in favor of the prosecution, and must defer to that resolution.” Id. (internal quotation marks omitted).

“Second, after viewing the evidence in the lig ht most favorable to the p rosecution, the r eviewing court must determine whether this evid e n c e , so viewed, is adequate to allow ‘ any rational trier of fact [ to find] the essential elements

o f t h e crime b ey ond a reasonable doubt.’” Id. (quoting a nd emphasiz ing J

ackson

, 443 U.S. at 319). “More than a ‘mereU N I T E D S T A T E S V

. L L O Y D 80

modicum’ of evide n c e i s required to support a v erdict.” Id. ( q u o ting Jackson

, 4 43 U.S. at 320). “At this second ste p , however, a reviewing court may not a sk itself whether it believes that the evidence a t the trial established g u ilt bey ond

a reasonable doubt, only wheth er ‘any ’ rational trier of fact could have made that finding .” Id. (internal quotation marks and citations omitted).

Nelson arg ues that the g overnment f ailed to show that he had the required intent to violate § 77e and § 77x

. He points
to the statemen t in the private placement memorandum for Red W ater that the partnership u n i ts w ere ex empt from the
reg istration requirement, a nd h e arg ues that the evidence failed to show he “had a

n y information to the c ontrary .” The record undercuts his arg

ument.

The e vidence included a copy of the p r i v a te placement

m emorandum found in N elson’s office. The memorandum clearly stated that “[ n] o g eneral solicitation or advertisement in any form may be utiliz ed reg arding t h e o f f ering

. ” The

ex h ibit contained handwritten notes matching a s a mple o f Nelson’s known handwriting

. A h ig hlig hted section discussing the reg istration e x e mption clearly stated that if a security was unreg iste r e d

, solicitations and sales had to be limited to “accredited investors,” and handwritten notes on an accompany

ing subscription document contained annotations about t he meaning of that term. Stephanie Alarcon testified that Nelso n told her w hat it meant for an investor to be accredited. T here was ample evidence that Nelson knew a nd understoo d the accredited-investor limitation on soliciting and selling the unreg istered securities and what b e ing an accredited investor meant. There was also ample ev i d e n c e that Nelson pursued the leads he was provided withou t any inquiry about whether the investors he successfully solicitedU N I T E D S T A T E S V

. L L O Y D 81

were accredited. The evidence showed t h a t he sold units to investors who g ave him information showing that they failed to meet the accreditation standards.

Viewing the evidence in the l i gh t most favorable to the
g overnment, a rational j u r o r could conclude b ey ond a reasonable d oubt that Nelson knew that the securities h e was selling had to be r eg istered unless he and others limited offers and sales to accredited investors, an d that the investors he

so licited—some successfully —included many who were clearly not accredited. Th e evidence was sufficient f o r the jury to convict Nelson for viol a t i n g 1 5 U.S.C. §§ 77e a nd 77x

. 1 5 Nelson may be retried on these counts, as wel l a s on the counts he does not chall eng e o n the basis of insufficient evidence, without violating the Double J eopardy Clause. 1 6

15 Nelso n ’ s relian ce o n Un ited S t a tes v. Cro sb

y , 2 9 4 F.2 d 9 2 8 (2 d Cir. 1 9 6 1 ), is u n av ailin g

. In th at case, th e d ef en d an t s h ad o p in io n letters f ro m atto rn ey s statin g th at th e secu rities th ey w ere sellin g th ro u g h so licitatio n s

w ere ex em

p t

. S ee id

. at 93 9

– 4 1

. Nelso n h ad n o sim ilar o p i n io n o r b asis f o r b eliev in g th at th e secu rities h e so ld w ere ex em p t.

16 A lth o u g h w e n eed n o t co n sid er w h eth er t h e ev id en ce w as su f

f icien t to s u stain N e l so n ’ s co n sp iracy

, m ail- f rau d

, an d w ire- f

rau d co n v ictio n s b ecau se h e d o es n o t raise th at issu e o n ap p eal, w e n o te th at, v i ew in g th e

ev id en ce i n th e lig h t m o st f av o rab le to th e g o v ern m en t, a ratio n al f actf in d er co u ld f

i n d t h e essen t ial elem en ts o f th o se crim es b ey on d a

reaso n ab le d o u

b t.U N I T E D S T A T E S V

. L L O Y D 82

III. Baker’s Sentencing Challenge 1 7

The district court calculated B aker’s Guidelines rang e a s 292 to 365 months, based on a total offense level of 35 and a criminal history categ ory o f VI
, and sentenced him to serve

a 194-month prison term a n d p a y $ 12,043,678.25 in restitution. B aker a

r g ues that the court committed procedural

error in apply ing a two-level enhancement f o r targ eting vulnerable victims and increasing his c riminal history points based on two prior sentences. The increase in p oints put him in criminal history

categ ory VI instead of V.

“Procedural errors include, but are not limited t o , incorrectly calculating the Guidelines rang e , treating the Guidelines a s mandatory

, failing t o properly consider the [ 1 8 U.S.C.] § 3553(a) factors, using clearly erroneous facts when calculating the Guidelines r an ge or d etermining the sentence, and f

ailing to provide an adequate ex p lana t i o n for the sentence imposed.” United States v. Armstead

, 552 F .3d 769, 776 (9th Cir. 2008). “ W e r eview t he district court’s interpretation of the [ G] uidelines de novo,” its “application o f the [ G ] uidelines to the facts for a n abuse of discretion,” a

nd “the substantive reasonableness o f the sentence for an abuse

17 N elso n also ch allen g es h is s en ten ce, b u t b ecau se w e rev e rse h is

co n v ictio n s f

o r s ellin g u n reg istered secu rities, w e n eed n o t ad d ress th at ch allen g e h ere.U N I T E D S T A T E S V

. L L O Y D 83

o f d iscretion.” 1 8 United States v. Hurtado

, 760 F .3d 10 6 5
, 1068 (9th Cir. 2014).

A. The Vulnerable-Victim Enhancem ent

A two-level enhancement “applies to offenses involving

an unusually v ulnerable victim in which the defendant k nows

or should have known o f the victim’s unusual vulnerability

. ” U.S.S.G. § 3A1.1(b)(1), cmt. n.2. A “vulnerable victim” is “a
person

. . . who is unusually vulnerable due to ag e, p hy s ical

or mental c ondition, o r w ho is o the r w i s e p a rticularly susceptible to the criminal conduct.” Id.

, cmt. n.2. W e r eview the district court’s “finding s that the victims were v ulnerable . . . for clear error.” U

nited S tates v. Randall , 162 F .3d 557, 560 (9th Cir. 1998).

B a ker contends that the district court erred in apply ing the vulnerable-victim e nhancement because targ e ting victims for reloading and successfully reloading them did not make them “vulnerable” under § 3A1.1(b)(1). The district c ourt correctly found, and we have twice held, th a t w h e n, as here, a defendant “reloads” victims by soliciting m o re money from those who have already p roven susceptible to an investment fraud, inclu d i n g in the telemarketing contex t, the vulnerable-victim enhancement is appropriate

. See, e.g. , United States v. Ciccone
, 219 F .3d 1078, 1086 (9th Cir. 2 000) (“[ V] ictims o f a ‘reloading ’ scheme

. . . are vulnerable for the

1 8 “ T h ere is an in tracircu i t sp lit as to w h eth er th e stan d ard o f rev iew f or ap p licatio n o f t

h e Gu i d e l i n e s t o th e f

acts is d e n o v o o r ab u se of d iscretio n .” Un ited S ta tes v. Ta n ke

, 7 4 3 F .3 d 12 9 6
, 1 3 0 6 (9 th Cir. 2 0 1 4 ). T h is issu e is cu rren t ly th e su b j ect o f en b an c rev i ew

. S

ee U n ited S t a tes v. Ga sca -Ru iz , No . 1 4

- 5 03 4 2 , 2 0 1 5 W L 7 0 6 7 8 7 3 (9 th Cir. No v . 1 2 , 2 0 1 5) (m em .). W e w o u ld reach th e sam e resu lt u n d er eith er stan d ard

.U N I T E D S T A T E S V

. L L O Y D 84

purpose of enhancing a convic ted person’s sentence.”); Randall

, 162 F .3d at 560 (“[ W ] hether these persons a re described as g ullible

, o v e r ly trusting

, o r just naive[ ,] their readiness to fall for the telemarketi n g r i p-off, not once but
t w ice[ ,] demonstrated that their personalities made t h e m vulnerable in a way and to a deg ree not ty pical of the g eneral population.” (emphasis orig inal)).

Not only does our precedent mak e c l e ar that a reloaded investor-victim of a telemark et ing scheme is a v ulnerable victim, see, e .g. , Ciccone
, 219 F .3d at 1086; Randall

, 162 F

. 3d at 560, but the record also shows t h at B aker intentionally targ eted several of his investo r

- v i c tims for reloading b e cause they had a “track record of f a lling for fraudulent schemes,” Randall

, 162 F .3d at 560. The district
court specifically identified three i ndividuals, Tranter, B eacham and Houseknecht, a s vulne r a b l e victims. B aker solicited investments from e a ch f or Forbidden W

arrior. F ive
y ears after Tranter’s first investment in Forbi d de n W a rrior
, B aker successfully reloaded him to invest in Re d W a ter

. B aker tried to reload B eacham to invest in From Mexico with Love a few y e ars after convincing him to invest in Forbidden W arrior

. A lthoug h B a ker did n ot initially succeed, his efforts, combined with those of L l o y d and Ag ler, convinced B eacham to make t he additional investment. B eacham was convinced in part because of B aker’s representations that he would soon see returns on his earlier investment in Forbidden W arrior

. L loy d a

nd A g ler h ad a lready reloaded Houseknecht when B aker later tried to reload her ag ain, t h i s time without

success. B aker r e c e ived commissions for each successful reloading

, including Houseknecht’s reloading by L l o y d a nd Ag ler. The record a mply suppo r t s the district court’s

vu l n e rable-victim e nhancement. There was no procedural

error.U N I T E D S T A T E S V

. L L O Y D 85

B. The Claim of Erro r in Calculating Baker’s Crim inal History Category

B a ker arg ues that the district court erred in calculating his criminal history by d ouble-counting the sentences he received when his probation for two prior convictions was revoked. I n September 1990, B aker was a r rested for forg ery , g r and theft, and passing bad c hecks. I n J anuary 1 991, while on bond for that offense, Ba k e r was a r rested f or committing g rand theft

on five separate occasions. On O ctober 9, 1991, B aker was sentenced on both convictions. I n the September 1990 c ase, B aker w a s s entenced to serve six months on one count o f forg ery , to be followed by probation. I n the J anuary 1991 case, B aker was sentenced to serve six months on one count of g rand theft, to be followed by probation for two additional
counts. B aker served the c u stodial sentence, was r e l eased, and violated his probation. I n Aug ust 1992, his p robation

was revoked in both c ases and h e was sentenced to serve two 18-month prison terms, to run concurren t l y with each other and consecutively to his current term of incarceration.

The district court followed the presentence report’s recommendation to increase B a k e r’s c r iminal history score b y six points for the sentences impos e d i n t he September 1990 and J anuary 1991 c ases. B aker objected that o n ly three points should have been assessed for the two prior sentences. He objects on appeal as wel l

, b u t n ot for the reason he identified at sentencing

.

At sentencing

, Ba ker p ointed to U.S.S.G. § 4A1.2(a)(2)
to arg u e that the September 1990 and J anuary 1991 sentences should h ave been treated a s a sing le sentence. B ecause the
two sentences were separa t ed b y an intervening arrest, the district court reasoned that they counted as two sepa rateU N I T E D S T A T E S V

. L L O Y D 86

sentences under the Guidelines. See U.S.S.G. § 4A1.2(a)(2) (“Prior sentences alway s are counted s e p arately if the

s e n tences were imposed for offenses that were separated b y an intervening

arrest . . . .”).

On appeal, B aker arg ues that adding six rather than three criminal history points w as incorrect u n der Application Note 11 to U.S.S.G. § 4A1.2(k). The Note provides that “[ w] here

a revocation a

pplies to multiple sentences, and such sentences

are counte d separately under § 4A1.2(a)(2), add the term o f imprisonment imposed upon revo c ation to the sentence that will result in the g reatest increase in criminal history points.” U.S.S.G. § 4A1.2(k), cmt. n.11. The Note g ives the following

ex a mple:

A defendant was serving two probationary sentences, each counted separately un d e r § 4A1.2(a)(2); p robation was revoked on both
sentences as a res u lt of the same violation cond u c t; and the defendant was sentenced to

a total of 45 day s of imprisonmen t. I f o ne sentence had been a “straig ht” probationary
sentence and the othe r h a d b e e n a probationary sentence that had r equired service of 15 day s o f impr i s onment, the

revoc a tion term of imprisonment (45 day s) would be added to the probationary sentence that had the 15-day term of imprisonment.

Id.

“The effect of this ap p l ication note would be to a dd the additiona l term of incarceration to only one of [ the defendant’s] f

irst two disputed convictions.” United States v

.U N I T E D S T A T E S V

. L L O Y D 87

Flores

, 93 F .3d 587, 592 (9th Cir. 1996). Althoug h “‘the sentencing c ourt can tack the probation revocation sentence to any one’” o f the de f

e n dant’s underly ing sentences, the others would “‘remain unaffected.’” I d. (quoting United States v. Streat , 22 F .3d 109, 111 (6th Cir. 1994)).

On a ppeal, the g overnment concedes that “when multiple probationary sen t ences are revoked at the same time for the

same violation co n duct, only one of the new sentences imposed at the revocation hearing can be added to the underly ing sentences for purposes of U.S.S.G. § 4A1.2(a).” I f Note 11 a

pplies, B a ker arg ues that one of his prior
sentences would be 24 months, consisting of 6 months for the orig inal prison term, plus 18 months for the term imposed on revocation. T he other prior sentence, B a ker contends, would be limited to 6 months under Note 11. B ecause the revocation applied to b oth the Septe m b e r 1990 and J anuary 1991 p robations, the court would “add the additional term o f incarceration to only one o f [ B a ker’s] first two disputed convictions.” See Flores

, 9 3 F .3d a t 592. O ne of these two prior sentences would e x ceed 13 months, and 3 points, not 6, would be added to B aker’s criminal history score. See U.S.S.G. § 4 A1.1(a); § 4 A1.2(e). Ba k er’s criminal history categ ory would be V, not VI
, and his Guidelines rang e would be 262 to 327 months, not 292 to 365 months.

The g overnment arg ues that p lain-error review ap p l i e s because B a ker failed to object o n the basis of the Application Note d uring sentencing

. 1 9 B ut “i t is claims that are deemed

19 T h e g o v ern m en t g oes o n to arg u e t ha t a n y e r ro r w o u ld b e h arm less b e c a u s e B a k e r r e c e i ve d a b e l o w -G u i d e l i n e s s e n t e n c e

. A b elo w

- G u id elin es se n t e n c e d o es n o t av o i d o r m ak e h arm less an erro r in th e Gu id elin es calcu latio n

. S ee Un i ted S ta tes v. Bo n illa -Gu i z a r , 7 2 9 F.3 dU N I T E D S T A T E S V

. L L O Y D 88

waived or forfeited, not arg u m e n t s.” United States v

. Pallar es -Galan

, 359 F

. 3d 1088, 1095 (9th Cir. 2 004) (applying de novo, r ather than plain-error, review). Althoug h B aker arg u ed at sentencing that the September 1990 a nd J anuary 1991 sentences should be treated as a sing le sentence under U .S.S.G. § 4A1.2(a)(2), a nd o n appeal that Application Note 11 meant that the sin gl e revocation trig g ered only a three-point increase, his arg ument here is “an alt e r n at ive
arg ument to support what has been his c onsistent claim from the beg inning .” Pallares-Galan

, 359 F3 d at 1095. The consistent claim is that “ f

or the two sentences imposed on the

cases reported in parag raphs 99 and 102 of the P r e s e n tence Report, only one 3 point assessment should have been made.” “Once a federal claim is p roperly presented, a party can make
any arg ument in support of that claim; parties are n ot limited
to the precise arg uments they made below.” Pallares-Galan

, 359 F .3d at 1 095 (quoting Y ee v

. Esc o n d i d

o , 503 U.S. 519, 534 (1992)).

The record does not provide an adequate basis fo r u s to determine whether B a k er’s criminal hi s t ory score should be increased by three rather than six points in lig ht of Note 11 to U.S.S.G. § 4A1.2(k). The g overnment arg ues that be ca use the revised presentence r eport referred to t h e r evocation sentencing a s taking p lace on both Aug ust 21 and A ug ust 24, 1992, it w as unclear whether he was sentenced for the two revocations at the same time or on two different dates. There is no requirement in either F lores or the § 4A1.2(k) A p p l ication Note that the underly ing revocations be sentenced on the same day

, a n d t h e record makes clear that there was o ne motion to revoke and a sing le rev ocation,

1 1 7 9
, 1 18 8

– 8 9 (9 th Cir. 2 0 1 3 ); Un ited Sta tes v. Kilb y , 4 4 3 F.3 d 1 1 3 5
, 1 1 4 0 (9 th Cir. 2 0 0 6 ).U N I T E D S T A T E S V

. L L O Y D 89

which occurred on Aug ust 24, 1992. Read i n c ontex t, the reference in the presentence report to Aug ust 2 1 is likely a scrivener’s error. T he report’s prior parag raph identifies the revocation sentence a s “08/24/92: 18 mos.” Two parag raphs in t h e presentence report refer to the sentencing in the other

r evocation as taking p lace on “08/24/92,” and that “[ o] n Aug ust 24, 1992, B aker admitted v iolating probation and the 18 month prison sentence was imposed.”

I t is, however, not clear that both of the proba t ion terms imposed for B a ker’s p rior sentences w ere revoked because o f the “same v iolatio n c o nduct.” Althoug h the record shows that probation in both cases was revoked and both sentences imposed o n the same day

, that does n ot mean that both revocations resulted from the same c o nduct. See U.S.S.G. § 4A1.2(k), cmt. n.11.

B e cause the district court understandably d id not account for Note 11 in calculating B a ker’s c riminal history score, a nd because the r ecord does not allow us to determine whether the
correct score is based o n a three- or a six -p o i n t i ncrease, we vacate B aker’s sentence a n d remand to the district court for resentencing

, so that the d i s t r i ct court can consider whether Note 11 applies, an d correctly calculate the criminal history categ ory and Guidelines sentencing rang e.U N I T E D S T A T E S V

. L L O Y D 90

IV. Albert G reenhouse’s Sentencing Appeal 2 0

G reenhouse worked from his home in F lorida from 2005
to 2007, soliciting investments in partnership units for From Mexico with Love

. His work succeeded in g e tting victims to send Cinamour approx imately $1,340,000. Greenhouse was i ndicted on one count of conspiracy under 18 U.S.C. § 3 7 1
, three counts of mail fraud under 18 U.S.C. § 1341, a n d two counts of offering and selling (or aiding and abetting the offer and sale o f

) a n unreg istered security under 15 U.S.C. § 7 7e and 77x and 18 U.S.C. § 2. He w as tried and convicted on two counts o f willfully eng ag in g i n the offer and sale o f

u nreg istered securities and aiding and abetting and causing those sales. The jury acquitted him on the remaining charg es. The district court calculated his Guidelines r ang e as 63 to 78 months, including enhancem e n t s under U.S.S.G. §§ 2B 1.1 and 3A1.1 for the fraud-loss amou n t , f o r the number o f victims (10 or more), and for the v ictims’ vulnerability

. The

c o u r t o v e r r u l e d G r e e n h o u s e ’ s o b j e c t i o n s t o t h e enhancements. The g o v ernment recommended a 78-month
sentence a

nd an $8,981,676.68 r estit u tion oblig a tion, based

on the total loss for a ll investo r s i n both the F lorida a nd California boiler r oo m s d u ring the time Greenhouse was involved. Greenhouse arg ued f o r a $10,000 fine and no restitution. The district court sentenced Greenhouse to serve

a below-Guidelines 6 0-month prison term an d t o pay $530,000 in restitution.

2 0 Green h o u se d id n o t ch allen g e h i s co n v ictio n in h is o p en in g b rief

. In h is rep ly b r i ef

, h e so u g h t rev ersal of h is co n v ictio n b ased o n an SEC
p ro p osal to lif

t th e Reg u latio n D b an o n g en e r a l so l icitatio n s an d ad v ertisin g in l im ited certain circu m stan ces. A t o ral arg u m en t, h o w ev er, Green h o u se ab an d o n ed th at ch allen g e to h is co n v ictio n

. W e co n sid er o n ly h is ch allen g e to h is sen ten ce.U N I T E D S T A T E S V

. L L O Y D 91

W e review Greenhouse’s sentencing challeng es to the district c ourt’s interpretation of the Sentencing Guidelines de
novo, to the factual finding s d uring sentencing for clear error, and to the a

pplication of the Sentencing Guidelines for abuse

o f discretion. United States v. Lynn
, 636 F .3d 1127, 1 1 3 8 (9th Cir. 2011). “The l ega lity of an order of r estitution is reviewed de novo, a n d f

a ctual finding s supporting the order

are reviewed for clear error.” United States v. Brock-Davis

, 504 F .3d 991, 996 (9th Cir. 2 007) ( emphasis r emoved).

“ P r o v ided that it is w ithin the bounds of the statut o r y fr a m e work, a restitution order is reviewed for abuse o f discretion.” Id.

Greenhouse f

irst arg ues that the district court should not have increased the offense level based on the loss amount. Citing no a

uthority

, h e ar gu e s t hat the district court i mproperly a

pplied § 2B 1.1(b) because it require s a conviction involving f

raud or moral t u rpitude, and he was acquitted of fraud and convicted only of selling unreg istered securities. Greenhouse ig nores the fact that he was convicted of violating 1 5 U

. S.C. §§ 77e a n d 77x
, which a

re cross-referenced with § 2 B 1.1 in the S t a t utory I ndex

. See U.S.S.G

. A pp. A-Statutory I ndex ; U.S.S.G. § 2B 1.1, cmt. Statutory Provisions; United States v

. McEntry
, 659 F .3d 893, 897 (9th Cir. 2011) (“W hen deciding w h i c h g uideline to apply

, a district court must determine the g uideline section in Chapter Two (Offense Conduct). . . . To do this, the c ourt is
to refer to the Statutory I ndex

, A ppendix A of the Guidelines,
to f ind the offense of conviction

. . . .” ( citation omitted)). He also ig nores the relationship between the sale of unreg istered securities and the absence of disclosures about, o r review of, those securities, desig ned to prevent a nd address fraudulent misrepresentations. The district court did not err in a pply ing the 16-level enhancement under § 2B 1.1(b).U N I T E D S T A T E S V

. L L O Y D 92

Greenhouse also arg ues that even if § 2B 1.1(b)’s loss enhancement does appl y t o his securities convictions, the distric t court erred in concluding that he caused $1,340,000 in investor losses. Greenhouse stipu l a t ed that he personally

s o l icited $1,340,000 f

rom victims and that they all l o s t every thing they invested. Greenhouse arg ues that the failure
to r eg ister the securities and the way they were marketed did
not cause these losses. I n stead, he asserts, the investors lost
money bec a u s e t he movie “bombed at the box office.” The district c ourt rejected Greenhouse’s a r g ument that he was not responsible for any of the i n vestors’ losses. W e review the district court’s loss-causation finding f o r c l e ar error. See Miller v. Thane Int’l, Inc.
, 6 15 F .3d 1095, 1 1 0 4 ( 9 t h Cir. 2010).

The evidence showed that the victim s i nvested a fter Greenhouse made promises that their money w as safely i nvested, with no risk of loss, and they would g et a g uaranteed and fast r eturn on their invest m e n t

. Greenhouse specifically promised victims that the money they invested would g o to making and distributing the movie, not to pay ing the promoters or sales personnel

. C o n trary to his promises,
most o f the investments went to pay the telemarketers a nd
p r o m o t ers and very little went to make or distribute t h e movie, contributing to the box -office disaster Greenhouse identifies as the only reason f or h is losses and as unrelated to his acts or omissions. The evidence showed that Greenhouse sold unregistered securities when h e “ knew or, under the circumstances, reasonably should have known,” that “pecuniary

harm” was at least “a potential result.” U.S.S.G. § 2B 1. 1
, c m t. n.3(A)(iv). I t was reasonably foreseeable to Greenhouse that making the s e misrepresentations in selling

u n r eg istered securities would cause investors to lose their

m o n ey

. These losses were not “caused by the interven i n g,U N I T E D S T A T E S V

. L L O Y D 93

indepen d e n t , and unforeseeable criminal misconduct of a third party ,” United S

tates v. Hicks

, 2 17 F .3d 1038, 1049 (9th Cir. 2000), or by

the vag aries of the movie-watching public. The record supports the district c ourt’s conclusion that Greenhouse was a causal factor in his victims’ losses and did not err in apply

ing the loss enhancement.

Nor did t he district court err in apply ing either the two-level increase under § 2B 1 .1(b)(2)(A)(i) for ten o r more victims or the two-level incr e a s e under § 3A1.1(b)(1) for vulnerable victims, or in imposing $530,000 in restitution a s

a condition of supervised release. G reenhouse admits that he sold p artnership interests in From Mexico with Love to ten o r twelve investors who lost a total of $1,340,000. Greenhouse admits that he sol i c i t e d some victims who had already invested money in From Mexi co with Love

. These v ictims

were vulnerable under the applicable law. Ciccone
, 219 F .3d
at 1086; Randall

, 162 F

. 3d at 560. F inally

, the res t i t u t i o n amount d id no more than compensate for the loss caused b y the specific conduct that was the basis o f Gree n house’s “offense[ s] of c onviction.” United States v. Batson
, 608 F 3d 630, 636 (9th Cir. 2010).

W e affirm Greenhouse’s sentence.

CONCLUSION

W e (1) affirm L loy d ’s sentence; (2) vacate Keskemety ’s
sentence a

nd r emand for resen t e n c i n g ; (3) reverse Nelson’s convictions, vac a t e his sentence, and remand; (4) affirmU N I T E D S T A T E S V

. L L O Y D 94

Ba k e r’s convictions but vacate his sentence and r e mand fo r resentencing ; and (5) affirm Greenhouse’s sentence.

AF F IRMED in pa r t , REVERSED in part, V ACATED in part, and REMANDED in part.