2008 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit 6-20-2008 

# U SA v . M ari ano P r e c e de nt i al or N on-P r e c e de nt i al : N on-P r e c e de nt i al D ocke t N o . 06-3398

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____________ UNI TE D ST ATE S OF AM ERI CA

v. RI CH AR D M AR I ANO, A ppel l ant

____________ O n A p p ea l from the U n it ed S tat es D istri ct C o u rt f o r th e E a ste rn D istric t o f P e n n sy lv a n ia ( D . C . N o. 05- cr - 00614- 1) D i s tr i ctJ udge: H onor abl e Law r ence F. St engel

____________ Subm i t t ed U nderT hi r d C i r cui tL A R 34. 1( a)

J une 5, 2008 B e f o re : F IS H E R , J O R D A N a n d V A N A N T W E R P E N , C i r cui tJudges .

( Fi l ed: J une 20, 2008)

____________ OPI NI ON O F THE COURT

____________ F IS H E R , C i r cui tJudge . A j urycon vict ed R i chard M ari ano of o ne co un tof co nspir acyt o co m m i tho nest s ervi ces fr aud, el even c ount s of hones ts ervi ces m ai l and w i r e fr aud, tw o count s of m oney l aunder i ng, thr ee c ount s of br i bery , and one c ountof fi l i ng a fa l s e t ax r eturn. T he D i s tr i ct2

C our ts ent ence d hi m t o 78 m onths ’ i m pr i s onm ent , and he now appea l s . Forthe r eas ons th a t f o llo w , w e w ill a f

f irm th e ju d g m e n t o f

th e D istric t C o u rt. I. W e w r i t e exc l us i vel yforthe part i es , w ho ar e fa m i l i arw i th the fa ctual cont extand l egal hi s t oryof thi s cas e. T her efor e, w e w i l l s etfor th onl ythos e fa ct s nece s s aryt o our analy si s. I n 1995, R i char d M ar i ano w as el ect ed t o the C i tyC ounci l of Phi l adel phi a fort he Seventh D i s tr i ct . H e w as r e- el ect ed i n 1999 and i n 2003. A ttr i al , the governm ent p re se n ted e v id e n c e th a t M a ria n o a c ted to f u rth e r th e in ter e sts o f

E rie S tee l, L td . (“E rie S tee l”) , a s c ra p m e tal b u sin e ss in h is d istric t. In M a y2 0 0 2 , w h e n o f f icia ls f ro m th e A ir M a n a g e m e n t S e rv ice s D iv isio n o f th e C ityo f

P h ilad e lp h ia D e p a rtm e n t o f P u b lic H e a lth ( “A i rM anage m entSer vi ces ”) arr i ved t o conductan i ns pect i on of Eri e St eel , M ar i ano cal l ed the off

i ci al s , and the i ns pect i on di d nott ake pl ace unt i l the fol l ow i ng day . M ar i ano s ubs equent l yfol l ow ed up w i th t he off i ci al s , and Eri e St eel di d notful l ycompl yw i th t he ai rpol l ut i on r egul at i ons thatA i rM anage m entSer vi ces enfor ces unt i l 2006. I n Sept ember2002, M ar i ano as ked V i ncentD ougherty , the A s s i s t antC om m er ce D i r ect orand K ey s t one O ppor tuni tyZ one ( “K O Z ”) A dm i ni s tr at orforthe C i tyof Phi l adel phi a, t o pr ovi de a l ett erdes cr i bi ng the r eas ons w hyE r i e St eel coul d notT he ow ner s of r eal pr opertyi ncl uded i n the K O Z pr ogr am re cei ve s i gni fi cantt ax 1 ben efi t s, as w el l as vari ou s ot her ben efi t s. 3 part i ci pat e i n t he K O Z pr ogr am. D oughertydi d s o, expl ai ni ng thatthe bac k t axes that 1 E r i e St eel ow ed pr ecl uded i tfr om the K O Z pr ogr am. O n N ovember13, 2002, M ar i ano, D o u g h e rty , an d P h ili p C h a rto c k , the o w n e r o f E rie S tee l, m e t at M a ria n o ’s o f f ice to fur therdi s cus s the mat t er . Shor t l yther eaf t er , on N ovember25, 2002, L oui s C hart ock, Phi l i p C hart ock’ s father , faxe d a l ett ert o M ar i ano as ki ng hi m t o i ntr oduce l egi s l at i on t hat w oul d al l ow E r i e St eel t o part i ci pat e i n the K O Z pr ogr am. I n February2003, M ar i ano r ecomm ended Er i e St eel ’ s pr opertyt o be i ncl uded as one of the new pr opert i es i n the K O Z p ro g ra m . O n th e b a sis o f th a t re c o m m e n d a tio n , E rie S tee l’s p ro p e rtyw a s a d d e d to th e b ill , an d in M a y2 0 0 3 , M a ria n o tw ice v o ted in f a v o r o f th a t b ill . T he evi dence fur therdemonstr at ed thatPhi l i p C hart ock pai d M ar i ano over $23, 000 betw een the mont hs of M ay2002 and D ece m ber2002. O n M ay10, 2002, C hart ock gave M ar i ano a c heck pa y abl e t o Fl eetC r edi tC ar d Ser vi ces i n the amountof $5, 873. 75. O n A ugus t26, 2002, C hart ock gave M ar i ano a c heck pa y abl e t o W i l l i am B u rn s in th e a m o u n t o f

$ 6 ,6 7 2 . M a ria n o th e n to o k th e c h e c k to Jo se p h a n d R o sa lia M att i oni Pel l ecc hi a, w ho s har ed a ba nk acc ountw i th B urns , and theydepos i t ed the che ck and gave M ar i ano a c as hi er ’ s chec k i n the s ame am ountpay abl e t o A T & T U ni ver s al C ar d. Fi nal l y , on D ece m ber6, 2002, C hart ock gave M ar i ano a c heck pa y abl e t o R econ I nt ernat i onal , I nc. i n the amountof $10, 900. M ar i ano then t ook the che ck t o V i ncentMa r i a n o h a d c r e d i tc a r d a c c o u n t s wi th F l e e tC r e d i tC a r d S e r v i c e s , AT &T 2 U niver sal C ard, and C apit al O ne, and these t hree check s pai d M ari ano ’s deb t s. 4 D i Pent i no, the ow nerof R econ I nt ernat i onal , I nc. , and D i Pent i no gave M ar i ano a c heck pay able t o C apit al O ne in the am ou nt of $1 0, 90 0. M ari ano fai l ed to di scl ose t hese 2 paym ent s on hi s 2002 and 2003 s t at ement s of fi nanci al i nt er es tforthe C om m onw eal th of Penns y l vani a and f

orthe C i tyof Phi l adel phi a. A s a r es ul tof the above and otheri nci dent s , a gr and j uryi ndi ct ed M ar i ano for s ever al offe ns es , and a j urytr i al fol l ow ed. O n M ar ch 17, 2006, the j uryconvi ct ed M a ria n o o f

th e f o llo w in g : C o u n t 1 , co n sp ira c yto c o m m it h o n e st s e rv ice s f ra u d in v io latio n o f

1 8 U .S .C . § 3 7 1 ; C o u n ts 2 , 3 , 4 , 5 , an d 8 , h o n e st s e rv ice s m a il fra u d in viol at i on of 1 8 U . S . C . §§ 13 41 and 13 46 ; C ou nts 10 , 13 , 14 , 15 , 16 , and 17 , ho nest s ervi ces w i r e fr aud i n vi ol at i on of 18 U . S. C . §§ 1343 and 1346; C ount s 18 and 19, m oney lau n d e rin g in v io latio n o f 1 8 U .S .C . § 1 9 5 6 (a )(1 )(B )(i); C o u n ts 2 3 , 2 4 , an d 2 5 , b rib e ryin v io latio n o f

1 8 U .S .C . § 6 6 6 (a )(1 )(B ) a n d (b ); a n d C o u n t 2 6 , filin g a f a lse tax re tu rn in v iolati o n o f 2 6 U . S . C . § 7 2 0 6 (1). O n J u ly 6 , 2 0 0 6 , th e D is tr ic t C o u rt c o n d u c te d M a ri a n o ’s s e n te n c in g h e a ri n g . U s i ng the appl i cabl e U ni t ed St at es Sent enci ng G ui del i nes ( “G ui del i nes ”) , the D i s tr i ct C our tconcl uded thatM ar i ano’ s bas e off ens e l evel forhi s hones ts ervi ces fr aud c o n v i c t i o n s wa s 1 4 . I ti n c r e a s e d th a tl e v e l b ytwo p o i n t s p u r s u a n tt o U. S . S . G. § 2 C 1 . 1 (b)(1 ) be ca u se itfo u n d that C h artoc k ’s pa ym en ts t o M arian o co n sti tuted m o reM ar i ano has notpr ovi ded us w i th evi dence i n the r ecor d demonstr at i ng thathe 3 rai sed t he is sue t hat the ev i den ce w as i nsuff i ci ent as a m at t er of l aw for the h on est s ervi ces m ai l and w i r e fr aud convi ct i ons befor e the D i s tr i ctC our t . E ven i f he ha d, and w e w ere to co n d u ct a p lena ryrev iew o f th e D istri ct C o u rt ’s de cisi o n p er U ni t ed Stat es v. Sm ith , 294 F. 3d 473, 478 ( 3d C i r . 2002) , ourconcl us i on w oul d be the s ame forthe r eas ons des cr i bed her ei n. 5 than one br i be, and i tfur theri ncr eas ed M ar i ano’ s bas e off ens e l evel due t o addi t i onal s peci fi c off

ens e cha r act er i s t i cs . I tthen det erm i ned the off ens e l evel s forthe convi ct i ons of m oneyl aunder i ng, br i bery , and fi l i ng a fa l s e t ax r eturn, and found thatM ar i ano had a t ot al offe ns e l evel of 28 and a C r i m i nal H i s t oryC at egoryof I , r es ul t i ng i n a G ui del i nes range o f 78 t o 9 7 m on ths’ i m pri sonm ent. T he D i stri ctC ou rtsent enced him t o 7 8 m on ths’ im p ri s o n m e n t, a tw o -ye a r t e rm o f s u p e rv is e d re le a s e , a n d a s p e c ia l a s s e s s m e n t o f $ 1 ,8 0 0 . T hi s t i m el yappea l fol l ow ed. II. T he D i s tr i ctC our thad j ur i s di ct i on pur s uantt o 18 U . S. C . § 3231, and w e have ju ri s d ic tio n o v e r t h is a p p e a l p u rs u a n t to 2 8 U .S .C . § 1 2 9 1 a n d 1 8 U .S .C . § 3 7 4 2 (a )( 1 ). W here, as here, a def

end ant has not r ai sed t he is sue t hat the ev i den ce w as i nsuff i ci ent as a m att er o f law b ef

o re the D istri ct C o u rt , w e re v iew the issu e f o r plain e rror. See U

ni t ed 3 Stat es v. G uadal upe , 402 F. 3d 409, 410 n. 1 ( 3d C i r . 2005) . T o be s ucce s s ful , the defe ndantm us tdemonstr at e: “( 1) the courterr ed; ( 2) the err orw as obvi ous underthe l aw atthe t i m e of r evi ew ; and ( 3) the err oraff ect ed s ubs t ant i al r i ght s - the out come of t he pr ocee di ng. ” I

d. T o det erm i ne i f the evi dence w as i ns uffi ci entt o s us t ai n a convi ct i onB as ed on thi s ar gum ent , M ar i ano i s chal l engi ng hi s convi ct i ons forC ount s 1- 5, 8, 4 1 0 , an d 1 3 -1 9 . H is c o n v ictio n s f o r m o n e ylau n d e rin g , C o u n ts 1 8 a n d 1 9 , are in c lu d e d in th is c h a lle n g e b e c a u s e 1 8 U .S .C . § 1 9 5 6 re q u ir e s a p re d ic a te a c t o f “ u n la w f u l a c tiv ity,” w hi ch, i n the pr es entcas e, w as hones ts ervi ces m ai l fr aud. 6 s uch thatthe courterr ed, “w e mustvi ew the evi dence i n the l i ghtm os tfavor abl e t o the governm ent , and w i l l s us t ai n t he ver di cti f anyr at i onal tr i erof fa ctcoul d have f ound the es s ent i al el ement s of the cr i m e bey ond a r eas onabl e doubt . ” U n itedS ta tes v . Sm ith , 294 F . 3 d 4 7 3 , 4 7 8 (3d C ir . 2 0 0 2 ). W e exe r ci s e pl enaryr evi ew overthe D i s tr i ctC our t ’ s i nt erpr et at i on of the G u id e lin e s , b u t r e v ie w its f a c tu a l f in d in g s f o r c le a r e rr o r. U

ni t ed Stat es v. G r i er , 475 F . 3d 55 6, 57 0 (3d C i r. 20 07 ) ( en b anc). T he D i stri ctC ou rt ’s bu rden of proof for these f in d in g s is a p re p o n d e ra n c e o f th e e v id e n c e . I

d. at568. III . A. M ar i ano ar gues thatther e w as i ns uffi ci entevi dence t o s uppor thi s convi ct i ons for hones ts ervi ces m ai l and w i r e fr aud. H ones ts ervi ces m ai l and w i r e fr aud ar e fe der al 4 offe ns es under18 U . S. C . §§ 1341, 1343, and 1346. “To prove m ai l orw i r e fr aud, the evi dence m us tes t abl i s h bey ond a r eas onabl e doubt( 1) the def endant ’ s know i ng and w ill f u l p a rticip a tio n in a sc h e m e o r a rtific e to d e f ra u d , (2 ) w ith th e sp e c if ic in ten t to defr aud, and ( 3) the us e of the mai l s ori nt er s t at e w i r e comm uni cat i ons i n fur ther ance of the s cheme. ” U

ni t ed Stat es v. A nt i co , 275 F. 3d 245, 261 ( 3d C i r . 2001) . “H ones ts ervi cesM a ria n o c h a llen g e s th e su f f icie n c yo f

th e e v id e n c e b a se d u p o n th e f a ilu re to 5 d iscl o se th eo ry , im p li cit lyarg u ing that the g o v ern m en t did n o t adv an ce the b ri b erytheo ry o f h o n e st s e rv ice s m a il an d w ire f ra u d . T o th e c o n tra ry , the g o v e rn m e n t ad v a n c e d b o th theor i es thr oughoutthe cour s e of the pr ocee di ngs . Fi r s t , the i ndi ctm entw as s uffi ci ent beca us e i tcont ai ned the el ement s of the off ens e and e xpl ai ned the fa ctual bas i s foreac h c o u n t. S e e Un i t e d

S ta t e s v . Ke mp , 500 F. 3d 257, 280 ( 3d C i r . 2007) ( “[N ] o gr eat er s peci fi ci tythan the s t atut oryl anguage i s r equi r ed s o l ong as ther e i s s uffi ci entfac tual or i ent at i on t o perm i tthe def endantt o pr epar e hi s defe ns e . . . . ”) . Second, the D i s tr i ct C our tpr ovi ded j uryi ns truct i ons , w hi ch M ar i ano does notcont es t , thati ncl uded a c har ge as t o the br i berytheory . T her efor e, hi s i m pl i ci tar gum entthatthe governm entdi d not adv ance the bri berytheo ryfai l s. 7 fra u d typ icall yo cc u rs i n tw o sce n arios: (1) b ri b ery , w h ere a leg isl ator w as p aid f o r a p a rticu lar d e c isio n o r a c tio n ; o r (2 ) f a ilu re to d isc lo se a c o n f lict o f in ter e st re su lti n g in per s onal gai n. ” I

d. at262- 63. Suffi ci entevi dence exi s t ed fora r at i onal tr i erof fa ctt o fi nd thatM ar i ano co m m itted th e o ff

en ses o f h o n est serv ices m ail an d w ir e f rau d u n d er e ith er the b ri b ery theoryorthe fa i l ur e t o di s cl os e theory . A s t o the br i berytheory , C hart ock gave M ar i ano 5 thr ee s epar at e paym ent s , eac h of w hi ch occ urr ed i n cl os e pr oxi m i tyt o M ar i ano ac t i ng on b e h a lf o f E ri e S te e l. See Un i t e d S ta t e s v . Ke mp , 500 F. 3d 257, 281 ( 3d C i r . 2007) ( hol di ng thatbr i beryr equi r es “‘ a s peci fi c i nt entt o gi ve orr ece i ve s om ethi ng of val ue in exc hange foran off

i ci al act , ’ ” and e xt ends t o agr eement s t o pr ovi de a “ s tr eam of benef i t s ” i n excha nge foroffi ci al act s ( quot i ng U ni t ed Stat es v. Sun- D i am ond G r ow ers of C a l. , 526 U . S. 398, 404- 05 ( 1999) ( emphasi s i n or i gi nal ) ) . T hus , a r at i onal tr i erof fa ct coul d have c oncl uded thatM ar i ano ac cept ed the “s tr eam of benef i t s ” i n excha nge fort he8

offi ci al act s he t ook t o benef i tE r i e St eel , i ncl udi ng hi s as s i s t ance on the A i rM anage m ent S ervi ces and K O Z program m at t ers . A s t o the fa i l ur e t o di s cl os e theory , the evi dence demonstr at ed thatM ar i ano t ook act i ons i n an ef

for tt o benef

i tE r i e St eel and di d notdi s cl os e hi s fi nanci al i nt er es tas re q u ir e d b yc ity a n d s ta te la w . S e e U n itedS ta tes v . P a n a re lla , 2 7 7 F . 3 d 6 7 8 , 6 9 4 (3d C ir . 2 0 0 2 ) (h o ld in g th a t “a p u b lic o f f icia l w h o c o n c e a ls a f

in a n c ial in ter e st in v io latio n o f sta te c rim in a l law w h ile ta k in g d isc re tio n a rya c tio n th a t th e o f f icia l k n o w s w ill d ire c tlyb e n e f it thati nt er es tcomm i t s hones ts ervi ces fr aud”) . Forexampl e, he ca l l ed A i rM anage m ent Ser vi ces ’ offi ci al s on behal f of Er i e St eel , and as a r es ul t , E r i e St eel w as abl e t o t ake a d d itio n a l tim e to c o m p ly w ith th e re g u la tio n s th a t A irM a n a g e m e n t S e rv ic e s e n f o rc e s . A ddi t i onal l y , he w as i nvol ved i n t he ent i r e pr oces s of try i ng t o i ncl ude Eri e St eel i n the K O Z pr ogr am. A l though E r i e St eel ’ s ul t i m at e s ucce s s i n thes e ventur es m aynothave c o m e to f

ru iti o n , itd o e s n o t alte r th e f a c t th a t M a ria n o ’s a c tio n s w e re m a d e in a n e f f o rt to benef i tE r i e St eel . T hus , a r at i onal tr i erof fa ctcoul d have c oncl uded thatM ar i ano conce al ed hi s fi nanci al i nt er es t s i n E r i e St eel , namel ythe paym ent s E r i e St eel ’ s ow ner m a d e to p a yM a ria n o ’s c re d it ca rd d e b ts, w h ile ta k in g a c tio n s in a n e f f o rt to b e n e f

it E rie S tee l. Forthes e r eas ons , s uffi ci entevi dence exi s t ed fora r at i onal tr i erof fa ctt o fi nd t hat M ar i ano comm i t t ed the off ens es of hones ts ervi ces m ai l and w i r e fr aud.M arian o cit es U . S . S . G . § 2 C 1 . 2 (b)(1 ) i n m ak ing h is argu m en ts. M arian o ap p ea rs 6 t o u s e th i s s e c t i o n d u e t o s o me c o n f u s i o n i n th e P r e s e n t e n c e Re p o r t( “ P S R” ) . Th e P S R, up on w hich the D i stri ctC ou rtrel i ed, i den t i fi ed the app l i cable G uidel i ne fo r honest se rv ice s f

ra u d a s U .S .S .G . § 2 C 1 .1 . H o w e v e r, th e P S R th e n id e n tifie d § 2 C 1 .2 (b )(1 ) in s t at i ng that“the off

ens e i s i ncr eas ed tw o l evel s beca us e the off ens e i nvol ved more than one br i be t o C ounci l m an M ar i ano. ” The use of § 2C 1. 2 appea r s t o be a typogr aphi cal erro r i n that the P S R init ial lyiden ti fied the a p p li ca b le G u ideline, an d itu sed the w o rd “br i be. ” C om

pa re U . S . S . G . § 2 C 1. 1(b)( 1) ( app l y i ng the incr ease “[i ]f the o ffen se in v o lv e d m o re th a n o n e b ri b e ” ), w i th i d. § 2C 1. 2( b) ( 1) ( appl y i ng the i ncr eas e “[ i ] f the o f f e n se in v o lv e d m o re th a n o n e g ra tu ity ” ). A s a re su lt, w e w ill c o n d u c t o u r a n a ly sis usi ng § 2 C 1. 1, w hich i s the ap pli cable G uidel i ne fo r the ch arged o ffen ses. 9 B. M ar i ano ar gues thatthe D i s tr i ctC our terr ed i n i ncr eas i ng hi s bas e off ens e l evel by tw o lev e ls p u rsu a n t to U .S .S .G . § 2 C 1 .1 (b )(1 ) b e c a u se E rie S tee l’s p a ym e n ts to h im d id no ti nv olve m ore than on e bri be. S ect i on 2C 1. 1(b)( 1) provi des fo r s uch an incr ease 6 w her e “the off

ens e i nvol ved more than one br i be. ” “Rel at ed paym ent s that , i n es s ence , co n sti tute a sin g le i n cide n t of b ri b ery. . . (e.g., a n u m b er o f in stal lm en t pay m en ts fo r a sin g le a c tio n ) a re to b e tre a ted a s a sin g le b rib e o r e x to rtio n , ev e n if c h a rg e d in se p a ra te count s . ” U . S. S. G . § 2C 1. 1( b) ( 1) , A ppl i cat i on N ot e 2. In th e p re se n t ca se , the e v id e n c e d e m o n stra ted th a t C h a rto c k m a d e th e p a ym e n ts to M a r i a n o o n d i f

f e r e n td a t e s w i th s e v e r a l m o n th s i n b e tw e e n e a c h p a ym e n t . A d d i t i o n a l l y, th e e v id e n c e d e m o n stra ted th a t ea c h o f C h a rto c k ’s p a ym e n ts to M a ria n o w e re m a d e in cl ose prox i m i tyt o M ari ano t aking som e dis t i nct act i on on beh al f of E ri e S t eel . T he fir st paym entoccurr ed w i thi n fourday s of M ar i ano cont act i ng A i rM anage m entSer vi ces . T he se c o n d p a ym e n t o c c u rre d a p p ro x im a telytw o w e e k s b e f o re M a ria n o c o n tac ted D o u g h e rty10

aboutthe K O Z pr ogr am and E r i e St eel ’ s el i gi bi l i tyfori t . Fi nal l y , the thi r d paym ent o c c u rr e d th r e e we e k s a f t e rM a r i a n o me twi th Do u g h e r tya n d Ch a r t o c k , a n d o n l ytwo w eeks aft erM ar i ano r ece i ved a f ax fr om L oui s C hart ock r eques t i ng M ar i ano’ s fur ther as s i s t ance i n the K O Z pr ogr am m att er s . T hus , the D i s tr i ctC our t ’ s fi ndi ng thatthe p ay m en ts w ere sep ara te pa ym en ts m ad e u n d er d iffe ren t ci rcu m stan ce s, an d thu s w ere separat e bri bes, w as not cl earl yerr on eou s. I V. F o r th e se re a so n s, w e w ill a f f irm th e ju d g m e n t o f

th e D istric t C o u rt.