N O T FO R PUB L ICAT IO N UNITED STATES C OUR T OF APPEALS FOR THE NINTH C IR C UIT
UNITED STATES OF AM ERIC A,

Pla i ntiff-Appe lle e , v. GEOR GE LINDELL,

De fe nda nt-Appe l la

nt. No. 16-10418

D.C . No. 1:13-c r-00512-DKW -1
M EM O R ANDUM *

UNITED STATES OF AM ERIC A,

Pla i ntiff-Appe lle e , v. HOLLY HOAEAE,

De fe nda nt-Appe l la

nt. No. 16-10422

D.C . No. 1:13-c r-00512-DKW -2

Appe a l from

the Unite d

Stat e s Distric t C ourt for the Distric t of Ha

wa ii De rric k Ka

ha la W atson, Distric t Judge , Pre siding Argue d a nd Subm itte d Fe brua

ry 12, 2019 Honolulu, Ha

wa ii 

# FIL ED APR 01 2019 M OLLY C. DW Y ER, CLERK U

. S. CO URT O F APPEALS

* This disposition is not a ppropria te for public at ion a

nd is not pre c e de nt e xc e pt a s provide d

by Ninth C irc uit R

ule 36-3.B e fore : TALLM AN, B YB E E, a nd N.R . SM ITH, C irc uit Judge s. Ge orge Linde l l a

nd Holly Hoa e a e (“ De fe nda

nts” ) a ppe a l the ir c onvic tions
on m ultiplec ounts of m a il fra

ud, wire fra

ud, a nd m one y la unde ring a

rising from

a $28 m i llion fra

udule nt sc he m e the y

c a lle d the “ Parking Lot.” 1 Hoa e a e a l so a ppe a ls he r se nte n c e of 120 m onths im prisonm e nt. W e have jurisdic tion pursua nt to 28 U.S.C . § 1291 a

nd 18 U.S.C
. § 3742, a

nd we a ffirm
. 1 . R e ly ing on Luis v . Unite d State s , 136 S. C t. 1083, 1093 (2016) (plura lity opinion), De fe n d ants a

rgue that the gove rnm e nt viola t e d the ir Sixth Am e ndm e nt rights by im prope rly se iz ing Linde ll’ s e ntire IR A, c onta ining a

bout $220,000 a

t the tim e of the initia l se izure , the re by pre ve nting the m from

hiring priva

te c ounse l to
re pre se nt the m during the ir c rim ina l proc e e dings. De fe nda nts a lso a rgue that the distric t c o urt e rre d unde r Luis by fa iling to im

m e diat e ly re le a se som e of the IR

A funds for there m a ining post-tria l proc e e dings. De a ling first with the

pre -tria l re stra int of funds, De fe nda nts forfe ite d this
argum e nt, a s the y

fa ile d to obje c t to thegove rnm e nt’ s c ontinue d re stra int of
a lle ge dly unta inte d funds until afte r tria l. Puc k e t t v . Unite d

State s , 556 U.S. 129, 134 (2009); Unite d State

s v . Ripinsk

y , 20 F.3d 359, 365 (9th C ir. 1994). Thus, we

1 Only Linde l l wa s c onvic te d of m one y la unde ring. 2re vie w for pla in e rror. U nite d State

s v . Pe re z , 116 F.3d 840, 845 (9th C i r. 1997) (e n ba nc ). W e e xe rc i se our disc re tion to re m e d y a pla i n e rror only

if four c onditions a

re
satisfie d: (1) “ the re m

ust be an e rror or de fe c t” ; (2) the e rror “ m u st be c le ar or obvious, ra

the r tha n subje c t to re a s ona

ble dispute ” ; (3) “ the e rror m ust ha ve
a ffe c te d the a

ppe lla nt’ s substa

ntia l rights” ; a

nd (4) the e rror m

u st “ se riously
a ffe c t[] the fa irne s s, inte grity or public re puta

tion of judic ia l proc e e d ings.” Puc k e tt , 556 U.S. a

t 135 (inte rna l c ita

tions a nd quota tion m arks om itte d). De fe nda nts ha ve fa ile d to de m onstra

te pla in e rror, a s it is not c l e ar or obvious tha

t the gove rnm e nt withhe ld “ innoc e nt funds ne e de d to pa y for c ounse l.” Luis , 136 S. C t. at

1095. Eve n a ssum ing the re we re unta inte d funds in the IR A during thec rim ina l proc e e dings, De fe nda nts ha ve fa ile d to c le a

rly de m onstra

te tha t those funds we re ne e de d to pa y for c ounse l of c hoic e . Whe n De fe nda nts originally
c ha lle nge d the gove rnm e nt’ s a l le ge dly im prope r re stra int of untainte d IR A funds (thre e m onths a fte r De fe nda nts we re c onvic t e d), the y argue d tha t the y ne e de d those funds “ to c ove r re a sona

ble live lihood e xpe nse s for [Linde ll’ s] wife and c hild,” and did not m e ntion or indic ate that the funds we re ne e d e d to re ta i n priva

te c ounse l. Howe ve r, a fte r Luis wa s issue d (and a y e ar a fte r the ir c o nvic tion), De fe nda nts for the first tim e a sse rte d the y ha d a c tua lly

ne e de d those funds to hirepriva te c ounse l
3to re pre se nt the m at tria l a nd for post-trial proc e e dings. The tim ing of this re que st sugge s ts tha

t De fe nda nts ne ve r inte nde d to hire c ounse l with a ny a lle ge dly unta inte d IR A funds, but inste a d m e re ly sa w a prom ising a

rgum e nt for va c ating the i r c o nvic tions a fte r Luis wa s ha nde d down. Nothing in the re c ord ne c e ssita

te s a
c ontra ry c onc lusion. In the s e c irc um sta nc e s, it is not c le ar or obvious tha t the IR A funds we re a c tua lly

ne e de d to pa y for c ounse l at a

ny tim e . 2 For the sa m e re a son, we like wise c onc lude tha t e ve n re vie wing le ga l
c onc lusions denovo a

nd fa c tua l findings for c le ar e rror, se eUnite d State s v . He rnande z-Esc obar , 911 F.3d 952, 955 (9th C ir. 2018), thedistric t c ourt prope rly de nie d De fe nda

nts’ re que st for im

m e diate re le a se of IR

A funds for there m a ining post-tria l proc e e dings. As a re sult, De fe nda

nts ha ve fa ile d to sa

t isfy the i r burde n
on a ppe a l
. 3 2 . De fe nda

nts a rgue tha t the jury instruc tions c onstruc tive ly am e n de d the indic tm e nt by

a llowing the

jury to c o nvic t ba se d on a

n unc ha rge d fra udule nt nondisc losure the ory . Howe ve r, the c ourt provide d “ jury instruc tions re quiring the

2 Inde e d, e ve n a s he c h a lle nge d the gove rnm e nt’ s re stra i nt of theIR A funds on Luis grounds, Linde ll c ontinue d to sim ulta ne ously a sse rt tha t the IR A funds should bere le a se d to c o ve r his fa m ily ’ s re a sona

ble live lihood e xpe nse s. 3 B e c a u se we c onc lude tha

t Linde l l’ s Sixth Am e n dm e nt right to c ounse l of c hoic e wa s not viola

te d by the re stra int of the e ntire IR A a c c ount, a

ny pote ntia l c la im Hoa e a e a sse rts re late d

to thosefunds a lso ne c e ssa rily fa ils. 4jury

to find thec onduc t c ha

rge d in theindic t

m e nt be fore it m a

y c o nvic t.” U

nite d State s v . W ard, 747 F.3d 1184, 1191 (9th C ir. 2014); se ealso United State s v . Flore s , 802 F.3d 1028, 1040 (9th C ir. 2015) (“ W e pre sum e the jury followe d the se instruc tions . . . .” ). M ore spe c ific a lly , the c ourt told the jury that it m

ust find “the
c ha rge d sc he m e .” The jury

instruc tions “ a ssur[e d] tha t the jury c onvic te d the [De fe n da nts] ba se d sole ly

on the c onduc t a c t

ua lly c ha rge d in theindic tm e nt.” W ard, 747 F.3d a

t 1191. The c o urt did not spe c ific a lly c ha ra c te riz e the c ha

rge d
sc he m e a s a

“ Ponz i” sc he m e , but its failure to do so did not e m bolde n the jury

to disre ga rd the c ourt’ s instruc tions a nd c onvic t ba se d on a

n unc h arge d sc he m e , e spe c ia l ly be c a use the unde rly ing indic tm e nt wa s a lso pre se nte d to thejury to
c onsult during de libe rations. Ac c ordingly , we re je c t De fe nda

nts’ argum e nt. 3. De fe nda

nts a rgue tha t the distric t c o urt a

buse d its disc re tion by

a dm itting
e vide nc e tha

t the y sold unlic e nse d se c uritie s a n d by de c lining to strike

re lat e d
a lle gations from

the gove rning indic tm e nt. Howe v e r, De fe nda nts fa il to c ontra dic t (or e v e n a c knowle dge ) the distric t c ourt’ s ultim ate finding tha t “ [w] he the r the de fe nda nts we re lic e nse d to se ll the se se c uritie s, whe the r the se se c uritie s we re in fa c t not re giste re d, [a

n d] whe the r the y

we re re q uire d to be re giste re d by

la w is highly probative . . . e v ide nc e of whe the r the de fe nda nts we re ope rat ing a

sc he m e to de fraud a

nd [is] highly

re le va nt to thec ha

rge d c rim e s of wire and m a il fra ud.”
5Ac c ordingly , De fe nda nts ha ve fa ile d to de m onstra

t e this finding wa s c le arly
e rrone ous. In tha

t light, it wa s within the distric t c ourt’ s disc re tion to de te rm ine that the high proba

tive va l ue of the e vide nc e to show the ir inte nt to de fra ud wa s not substa ntia lly outwe ighe d

by the risk of pre

judic e tha t would re sult from

its
a dm ission. Se eUnite d State s v . Espinoza-Baza , 647 F.3d 1182, 1189 (9th C ir. 2011) (giving substa

ntia l de fe re nc e to the distric t c o urt’ s R ule 403 rulings, “

unle s s it ‘ lie s be y ond the pa le of re a sona ble justific ation unde r the c irc um sta nc e s ’ ” (quoting Unite d State

s v . Pine da-Dov al , 614 F.3d 1019, 1035 (9th C ir. 2010))). 4. De fe nda

nts a rgue tha t the distric t c o urt a

buse d its disc re tion by

pe rm itting Ke ith C unningha

m to te s tify a s a fa c t witne ss. The y

a s se rt tha t C unningha

m
a c tua lly provide d e xpe rt te stim o ny , be c a use he disc usse d his fina

nc ia l e xpe rtise
and his opinion—

whic h he e xpre sse d to Linde ll y e a rs be fore the c rim ina l proc e e dings—

that the “ Parking Lot”inve stm e nt progra m run by De fe nda nts wa s a Ponz i sc he m e . Lay te stim ony

is a dm issibleif it is (1) “rationa lly ba se d on thewitne ss’ s pe rc e ption” ; (2) “ he lpful to c le arly unde rsta nding thewitne ss’ s te s tim ony or to de te rm i ning a

fa c t in issue ” ; a

nd (3) “ n ot ba se d on sc ie ntific , te c hnic a l, or othe r spe c ia liz e d knowle d g e within the sc ope of R

u le 702.” Fe d. R . Evid. 701.

6He re , C unningha m ’ s te stim ony

wa s re le va

nt in e s ta blishing how he

kne w Linde l l— the two m e t through C unningha m ’ s busine ss se m i na

rs— and the c onte x t in whic h Linde ll disre ga

rde d C unningha

m ’ s a dvic e by

c ontinuing to run the Parking Lot sc h e m e in the sa m e m anne r. This wa s pe rm issible fa c t te s tim ony tha t
wa s “ he lpful to”the jury

in de te rm ining Linde ll’ s knowle d ge of his potentia l wrongdoings a

nd his intent to de fraud his c lie nts. Se eUnite d State s v . Gadson , 763 F.3d 1189, 1207–09 (9th C i r. 2014). M ore ove r, the distric t c ourt prope rly instruc te d the jury

tha t C unningha

m
wa s not a n e xpe rt witne ss, tha

t his opinion wa s not de t e rm i native or substa ntive
e vide nc e , a

nd tha t the jury m ust c onside r the te stim ony “ only for the lim ite d purpose of de m onstra

ting M r. Linde ll’ s knowle dge , inte nt a n d sta te of m i nd following his disc

ussions with M

r. C unningha

m .” T hus, e ve n

if it we re e rror to
a dm it C unningha

m ’ s te stim ony , tha

t e rror wa s ha

rm le ss. Unite d

State s v . C hriste nse n , 828 F.3d 763, 800 (9th C ir. 2015) (“ W e routine ly trust jurie s to follow limiting instruc tions whe n e vide nc e is e rrone o usly a dm i tte d.” ) (inte rna l

7c ita

tion omitte d ). Unde r the se c irc um sta nc e s , the c o urt did not a

buse its disc re tion in pe rm itting C unningha

m to te stify
. 4 5. Hoa e a e argue s tha

t the distric t c ourt e rre d in e nha nc ing he r se nte nc e pursua nt to two se

pa rate provisions of the

Unite d State s Se nte nc ing Guide line s. She a sse rts tha

t the c ourt utiliz e d the wrong le ga l sta nda rd for the sophistic ate d
m e ans e nha

nc e m e nt. Se e U.S.S.G. § 2B 1 .1(b)(10)(C ). She a lso a sse rts tha t the
c ourt e rre d in c onc luding sheoc c upie d a position of trust. Se e U.S.S.G. § 3B 1.3. The c ourt use d the c orre c t le ga l sta n da rd unde r U.S.S.G. § 2B 1.1, a s it
e xpre s sly note d tha t the e nha nc e m e nt a

pplie s to “ inte ntiona lly

e m ploy ing” sophistic ate d m e ans. Additiona lly , the c ourt found tha

t Hoa e a e “ pa

rtic ipate d in the pre p aration a

nd de live ry

of [the diplom a -like prom issory ] note s to he r c lie nt inve stors.” This finding is not c le a rly e rrone ous, a s it is c o nsiste nt with the undispute d fa c t

tha t Hoa e a e “ signe d a

nd de live re d the note s.” C onse que ntly ,

4 In c ha lle nging C unningha m ’ s te stim ony , De fe nda

nts a lso a rgue that the gove rnm e nt viola

te d the ir Sixth Am e ndm e nt rights to c onfront witne sse s re ga rding te stim onia l sta

t e m e nts. On tha

t ba sis, the y

c la im tha t the gove rnm e nt should not have que s tione d

C unningha

m re ga rding sta te m e nts c onta i ne d in a

n e -m a il se nt to Linde l l by

Frank C l ark. Howe ve r, C la rk’ s e -m a i l wa s a

re sponse to Linde ll’ s de c ision to re sign from

a busine ss a dvisory

c o unc i l run by

C unningha

m , a nd it wa s se nt we ll be fore any

c rim ina l proc e e dings we re initia te d . The re is no indic ation that C la rk be lie ve d

the sta te m e nts would be

pa rt of a future c ourt re c o rd. Ac c ordingly , the sta

te m e nts we re not te stim onia l, but we re a d m itte d a nd a dm issiblea s busine ss re c ords. Se e C raw ford v . W ashington , 541 U.S. 36, 51–52, 55 (2004). 8be c a

use Hoa e a e c onc e de s tha

t the c re ation a

nd use of the prom i ssory note s
c onstitute d sophistic ate d m e ans, the c ourt did not err in c onc luding tha t she inte ntiona lly

e nga ge d in theuse of sophistic ate d m e ans. The c ourt a lso did not err in c onc luding tha t Hoa e a e he ld a

position of trust pursua nt to U.S.S.G. § 3B 1.3. It is c le ar from the re c o rd tha

t Hoa e a e wa s intim ate ly aware of a ll of he r c lie nts’ fina nc i a l ne e ds a

nd goa ls, a

nd tha t she use d that fam ilia rity to build persona l re lationships with he r c lie nts in fre que nt one -onone m e e tings a s the ir fina nc ia l a dvisor. B a se d on the se re lationships, a re a sona ble
c lie nt would trust he

r to disc lose a ll inform ation in her posse ssion, public and nonpublic , be aring on he r re c om m e nde d fina

nc ia l inve stm e nts. Se eUnite d State s v . Laurie nti , 731 F.3d 967, 973–74 (9th C ir. 2013). Thus, Hoae a e he ld a position of trust, a nd the distric t c ourt did not err in a pply ing a n e nha nc e m e nt ba se d on he r
a buse o f that

position. S

e eid. AFFIRM E D.

9