FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA, 

No. 10-30056 Plaintiff-Appellee,

D.C. No. v. 

2:08-cr-00404-

RAYMOND ERIKSEN,

JCC-1

Defendant-Appellant. 

UNITED STATES OF AMERICA,  No. 10-30057

Plaintiff-Appellee, D.C. No.

v.  2:08-cr-00404-

JCC-2 SIGMUND ERIKSEN,

Defendant-Appellant. OPINION 

Appeals from the United States District Court

for the Western District of Washington

John C. Coughenour, District Judge, Presiding

Argued and Submitted

January 11, 2011—Seattle, Washington

Filed March 9, 2011

3297
Before: Susan P. Graber and Milan D. Smith, Jr.,

Circuit Judges, and Roger T. Benitez,* District Judge.

Opinion by Judge Milan D. Smith, Jr.

*The Honorable Roger T. Benitez, United States District Judge for the

Southern District of California, sitting by designation. 

3298 UNITED STATES v. ERIKSEN
COUNSEL

C. James Frush, Esq., Jack M. Lovejoy, Esq., Cable Langenbach Kinerk & Bauer LLP, Seattle, Washington, and David

Allen, Esq., Allen Hansen & Maybrown, Seattle, Washington,

for the defendants-appellants.

Micahel S. Morgan, Esq., Assistant United States Attorney,

Western District of Washington, Seattle, Washington, for the

plaintiff-appellee.

OPINION

M. SMITH, Circuit Judge:

Defendants-Appellants Sigmund Eriksen and Raymond

Eriksen appeal their convictions stemming from their misappropriation of employee 401(k) contributions to pay their

company’s operating expenses. Specifically, a jury convicted

each Defendant of two counts of Embezzlement or Conversion of the Funds of an Employment Benefit Plan, in violation

of 18 U.S.C. § 664, and one count of Making False or Misleading Statements in an Employee Retirement Income SecurUNITED STATES v. ERIKSEN 3301
ity Act of 1974 (ERISA) Benefit Plan Document that Federal

Law Requires to be Kept, in violation of 18 U.S.C. § 1027.

Defendants claim that the district court erred in several ways.

We address Defendants’ principal assignments of error in this

Opinion. We address Defendants’ other claims of error in a

contemporaneously filed Memorandum Disposition. We

affirm.

FACTUAL AND PROCEDURAL BACKGROUND

I. Lunde Electric Company Pension Plan 

Until 2005, when it ceased operations, Lunde Electric

Company (Lunde Electric or the Company) of Seattle, Washington, was in the business of maritime electrical repair. Sigmund Eriksen (Sigmund) served as Lunde Electric’s

Chairman, and his son Raymond Eriksen (Raymond) was

President and Chief Executive Officer.

Sigmund purchased Lunde Electric in 1975. In 1979, the

Company established the Lunde Electric Co., Inc., Profit

Sharing Plan (the Plan) to provide retirement benefits for its

union employees. Sigmund and Raymond served as the Plan’s

trustees. Initially, Lunde Electric was the sole financial contributor to the Plan, and the Plan’s assets were held in a brokerage account at a local bank (the Plan Account). From 1979

until the mid-1990s, Earl Sommerfeld served as the Plan’s

bookkeeper. In 1999, Earl’s son, Brad Sommerfeld, assumed

those responsibilities.

The Plan was amended in 1984 and 1991 (the 1991 Plan).

The government and Defendants sharply disagree as to

whether the Plan was subsequently amended. According to

the government, the Plan was again amended in 1995 and

then restated in 2002. Defendants contend that there is no evidence of either event.

3302 UNITED STATES v. ERIKSEN
A. The 1995 Amendment and 2002 Restatement

According to the government, Article IV of the Plan, titled

“Contribution and Allocation,” was amended in 1995 to add

a 401(k) feature (the 1995 Amendment). The 1995 Amendment replaced contributions made exclusively by the Company with a system whereby Plan investors—called

“Participants”—contributed a percentage of their paychecks

—called “elective deferrals”—into the Plan. Lunde would

then “match” fifty percent of each Participant’s elective deferral with an employer contribution. Funds in the Plan Account

were pooled and administered by the Eriksens. 

According to the government, when the Eriksens added the

401(k) feature, they did not redraft the 1991 Plan; instead,

only Article IV of the 1991 Plan was amended. As evidence

of this change, the government introduced two versions of the

1991 Plan. In the first version, which the government proffered as the original 1991 Plan, Article IV refers only to discretionary “Employer’s Contribution[s]”: “For each Plan

Year, the Employer shall contribute to the Plan such amount

as shall be determined by the Employer.” However, in the

second document, Article IV sets forth procedures for a “Participant’s Salary Reduction Election.” Article 4.2 of that document provides, inter alia, that “[e]ach Participant may elect

to defer his Compensation which would have been received

in the Plan Year, but for the deferral election, by up to 10

[percent].” In addition to the documentary evidence, the government presented testimony that the Plan was amended in

1995. For instance, the Plan’s stockbroker testified that new

“trust certification papers” were filed with the Plan’s brokerage firm in 1995.

On January 1, 2002, the Plan was restated and a new document titled “Lunde Electric Company, Inc. 401(k) Profit Sharing Plan” became operative (the 2002 Restatement). Although

the date of the Plan’s effectiveness was not written in one

space provided in the document, several documents signed

UNITED STATES v. ERIKSEN 3303
and dated by Sigmund and Raymond contained information

about the 2002 Restatement’s effective date. These included

a “Consent to Corporate Authorization,” which “RESOLVED

that the form amended 401(k) Profit Sharing Plan and Trust

effective January 1, 2002, presented to this meeting is hereby

approved and adopted.” Additionally, the 2002 Restatement

included a “Supplemental Participation Agreement” dated

January 1, 2002, and signed by Raymond as “Participating

Employer” and by both Raymond and Sigmund as Trustees.

This document also referred to a 401(k) plan.

B. Missing Remittances to the Plan Account

In 1999, Lunde Electric began experiencing financial difficulties and was unable to pay its operating expenses with revenues. The government alleged that, as a result of these

financial problems, the Eriksens caused the Company to stop

remitting elective deferrals to the Plan. 

Brad Sommerfeld regularly reviewed the Trust’s brokerage

statements as part of his responsibilities as Plan accountant.

Those statements reflected deposits into and withdrawals

from the Plan Account. Sommerfeld noticed that regular

deposits into the Plan Account were no longer made after

October 1999. Indeed, the only deposit made to the Plan

Account for the 2000 Plan Year was for $10,000, on December 27, 2000. Although money continued to be withheld from

Participants’ paychecks, no deposits were made into the Plan

Account in 2001, in 2002, or from January through March

2003. 

From 1999 to 2002, Lunde Electric employed three different bookkeepers—Cynthia Halcomb (mid-1990s to 1999),

Brad Mansker (May 2000 to December 2000), and Toni Wunsch (December 2000 to 2003). Both Halcomb and Mansker

testified that they would meet with the Eriksens on a regular

basis to decide which bills to pay. According to Mansker,

within a few months of his starting work at the Company, he

3304 UNITED STATES v. ERIKSEN
learned that elective deferrals were not being remitted to the

Plan. Mansker testified that he raised the issue of the outstanding liability on several occasions, but that the Eriksens

did not direct the Company to make payments to the Plan during his tenure. Moreover, starting in 1999, employees’ elective deferrals were shown as “Receivables” on the Plan’s

balance sheet and reflected as a liability on Lunde Electric’s

books. From 1999 to December 2002, the Plan Account’s

Receivables grew from $35,156.62 to $97,374.68. By 2003,

the Receivables had increased to $103,606; from 1999 to

2003, the Receivables ballooned from 1.47 % of the Plan’s

assets to 15.01%.

On December 5, 2001, the Eriksens participated in a conference call with attorney Ronald Braley. Defendants asked

Braley about the consequences of not funding 401(k) trust

accounts. Braley informed the Eriksens that they could be personally liable as fiduciaries and, in his own words, informed

them “that while the Department of Labor usually does not

take a keen interest in plans with fewer than 100, if an

employee knew about it and complained to the Department of

Labor, that an investigation may open up and they would have

a more serious issue.” During the conference call, Braley

emphasized that the Eriksens had to pay the unfunded liability

“as soon as possible.” Thereafter, Braley memorialized the

conversation in an email he transmitted to the Eriksens. That

email reads, in part: “Apparently, for the past year and one

half, they have failed to contribute to the 401(k) . . . Plan after

taking elective deferrals from employees.” 

On May 2, 2002, Brad Sommerfeld wrote to bookkeeper

Toni Wunsch concerning the Company’s accounting: 

As you know the Company is significantly behind in

depositing its 401K contributions. This is a huge

problem because most of the money comes from

employees’ paychecks and the Officers of the Company and Trustees of the Plan have a fiduciary

UNITED STATES v. ERIKSEN 3305
responsibility to deposit these funds timely (deposits

are due monthly). This is possibly the worst liability

to fall behind on in terms of legal and tax problems.

Sommerfeld testified that he also had a conversation with Sigmund about the Plan’s delinquency and that Sigmund stated,

“We’re doing the best we can.”

C. Lunde Electric’s Tax Filings

After 1995, Lunde Electric began providing yearly “Participant’s Valuation Reports” to employees enrolled in the 401(k)

Plan. These reports purported to show each Participant’s

assets in the Plan and contributions made for the prior Plan

Year. The Valuation Reports were prepared by Brad Sommerfeld and signed by Raymond. Until 1999, a Statement of Net

Assets, which detailed the total Plan assets, was also delivered

to each Participant. After the 1999 Plan Year, Lunde Electric

ceased providing Statements of Net Assets when it delivered

copies of Valuation Reports to Participants. Nevertheless,

Sommerfeld continued to prepare Statements of Net Assets

for those years, which he provided to the Eriksens. 

Lunde Electric filed certain documents with the Internal

Revenue Service (IRS), including a Form 5500, in connection

with its operation of the Plan. Form 5500, titled, “Annual

Return/Report of Employee Benefit Plan,” details contributions made to an ERISA fund. Brad Sommerfeld prepared the

Form 5500 each year, and either Raymond or Sigmund, as

Plan administrators, signed the document before submitting it

to the IRS. 

Among other questions, Form 5500 asks: “Was there a failure to transmit to the plan any participant contributions within

the time period described in 29 [Code of Federal Regulations

(C.F.R.)] 2510.3-102?” The reference to the Code of Federal

Regulations is to an ERISA regulation titled “Definition of

3306 UNITED STATES v. ERIKSEN
‘plan assets’—participant contributions” (the Plan Asset Regulation), which provides:

(a)(1) General rule. For purposes of subtitle A and

parts 1 and 4 of subtitle B of title I of ERISA and

section 4975 of the Internal Revenue Code only (but

without any implication for and may not be relied

upon to bar criminal prosecutions under 18 U.S.C.

664), the assets of the plan include amounts (other

than union dues) that a participant or beneficiary

pays to an employer, or amounts that a participant

has withheld from his wages by an employer, for

contribution or repayment of a participant loan to the

plan, as of the earliest date on which such contributions or repayments can reasonably be segregated

from the employer’s general assets.

. . . .

(b) Maximum time period for pension benefit plans.

(1) . . . [I]n no event shall the date determined pursuant to paragraph (a)(1) of this section occur later

than the 15th business day of the month following

the month in which the participant contribution or

participant loan repayment amounts are received by

the employer (in the case of amounts that a participant or beneficiary pays to an employer) or the 15th

business day of the month following the month in

which such amounts would otherwise have been

payable to the participant in cash (in the case of

amounts withheld by an employer from a participant’s wages). 

29 C.F.R. § 2510.3-102(a)(1), (b)(1). For the 1999, 2000, and

2001 tax years, the Form 5500s filed by Lunde Electric indicated that all Participant contributions had been transmitted.

UNITED STATES v. ERIKSEN 3307
Sommerfeld testified that this was not true and that he had falsified the three forms because:

The answer yes is a flag to the Internal Revenue Service that the plan is delinquent or behind on their

contributions. And that may—or would result in

either an IRS audit or a Department of Labor investigation. And I was afraid that I would be blamed for

blowing the whistle or causing either one of those

actions to take place and cause harm to the company.

D. Department of Labor Investigation and Indictment

In early 2003, bookkeeper Wunsch discussed her concerns

about the 401(k) Plan with the Eriksens. Thereafter, Wunsch

contacted the Department of Labor (DOL) and met with an

investigator. In March 2003, the DOL issued a grand jury subpoena to Lunde Electric. After the April 2003 subpoena was

served, Lunde Electric resumed remitting elective deferrals to

the Plan. By October 2004, Lunde Electric had lowered its

outstanding obligations to the Plan from approximately

$105,000 to $1,000. When Lunde Electric ceased operations

in April 2005, all Plan Participants received their full 401(k)

distribution. 

In 2008, based on the events detailed supra, Sigmund and

Raymond were indicted on one count of Conspiracy to

Embezzle $70,120.55 from an ERISA Employee Plan, in violation of 18 U.S.C. § 371 (Count 1); seventeen counts of

Embezzlement or Conversion from an ERISA Employee Benefit Plan, in violation of 18 U.S.C. §§ 664 and 2 (Counts 2-

18), and three counts of Making False or Misleading Statements in an ERISA Benefit Plan Document that Federal Law

Requires to be Kept, in violation of 18 U.S.C. §§ 1027 and 2

(Counts 19-21).

II. Trial and Sentencing

The Eriksens’ jury trial commenced on October 5, 2009.

Raymond testified that he did not play a role in preparing any

3308 UNITED STATES v. ERIKSEN
of the Plan’s documents and that he did not remember signing

the 1995 Amendment establishing the 401(k). According to

Raymond, neither he nor Sigmund was involved in the preparation or review of the Valuation Reports, the Form 5500s, or

the Plan’s Statements of Net Assets. Raymond testified that

he was unaware that employee elective deferrals were not

being forwarded to the Plan Account in 1999, 2000, and 2001.

However, Raymond acknowledged making personal contributions to the 401(k) starting in October 1999.

At trial, the Eriksens presented the testimony of William

Whitman, an expert witness on ERISA issues. Although

Whitman testified that there are no “hard deadlines” for when

an employer must contribute the employer portion of a 401(k)

plan, he did not testify about when an employer must remit

employee contributions. According to Whitman, an amendment to an ERISA plan must be “in writing” and executed by

a corporate officer and the plan’s trustees. 

The jury returned identical verdicts for both Defendants,

convicting them on Counts 17 and 18, for failing to remit

elective deferrals from December 2002 and March 2003 paychecks. The jury also convicted Defendants on Count 21,

which concerned making a false statement in the 2001 Valuation Report. The jury deadlocked on Counts 9 through 16 and

20 and acquitted Defendants on Counts 1 through 8 and 19.

Defendants moved for judgments of acquittal, which the district court denied in an order dated November 4, 2009. 

The district court sentenced both Defendants to two years

of probation, a $20,000 fine, 240 hours of community service,

and the mandatory special assessment of $300. Defendants

timely appeal. 

DISCUSSION

Defendants seek to overturn the jury’s verdict on the

grounds that there was insufficient evidence of criminal intent

UNITED STATES v. ERIKSEN 3309
or that Lunde Electric established the 401(k) Plan, and that

the government improperly referred to the Plan Asset Regulation at trial. We are not persuaded.

I. Embezzlement or Conversion of the Elective Deferrals

A. Scope of the Offense

[1] Defendants were convicted under 18 U.S.C. § 664 for

embezzling or converting the Plan’s assets in December 2002

and March 2003. Section 664 provides:

Any person who embezzles, steals, or unlawfully

and willfully abstracts or converts to his own use or

to the use of another, any of the moneys, funds,

securities, premiums, credits, property, or other

assets of any employee welfare benefit plan or

employee pension benefit plan, or of any fund connected therewith, shall be fined under this title, or

imprisoned not more than five years, or both.

As used in this section, the term “any employee welfare benefit plan or employee pension benefit plan”

means any employee benefit plan subject to any provision of title I of the Employee Retirement Income

Security Act of 1974.

18 U.S.C. § 664. We have held that the operative terms “embezzles” and “converts” are to be given their common-law

meanings. United States v. Andreen, 628 F.2d 1236, 1241 (9th

Cir. 1980); Woxberg v. United States, 329 F.2d 284, 290 (9th

Cir. 1964). Thus, “[e]mbezzlement is the fraudulent appropriation of property by a person to whom such property has been

entrusted, or into whose hands it has lawfully come.” Woxberg, 329 F.2d at 290; see also Andreen, 628 F.2d at 1241

(citing United States v. Dupee, 569 F.2d 1061, 1064 (9th Cir.

1978)). Conversion “encompasses the use of property, placed

in one’s custody for a limited purpose, in an unauthorized

3310 UNITED STATES v. ERIKSEN
manner or to an unauthorized extent.” Andreen, 628 F.2d at

1241 (citing Morissette v. United States, 342 U.S. 246, 272

(1952)). 

We have also recognized that § 664 does more than recapitulate common-law offenses. Because § 664 and other

pension-protection laws, see, e.g., 29 U.S.C. § 501(c) (prohibiting embezzlement from a labor organization fund), are

aimed at “preserv[ing] welfare and pension funds for the protection of those entitled to their benefits,” we have held that

§ 664 imposes liability for a broad class of “unauthorized”

acts willfully committed by those in a fiduciary or advisory

capacity. See Andreen, 628 F.2d at 1241, 1242 (examining the

legislative history of 29 U.S.C. § 501, 18 U.S.C. § 664). As

then-Judge Kennedy explained:

The essence of the crime is theft and in the context

of union funds or pension plans the offense includes

a taking or appropriation that is unauthorized, if

accomplished with specific criminal intent. In this

respect lack of authorization may be shown if the

diversion is substantially inconsistent with the fiduciary purposes and objectives of the union funds or

pension plan, as set forth by statutes, bylaws, charters, or trust documents which govern uses of the

funds in question. Whatever imprecision attends this

definition is remedied substantially by the requirement of scienter, which is an essential element of the

crime. The act to be criminal must be willful, which

means an act done with a fraudulent intent or a bad

purpose or an evil motive.

Id. at 1241 (emphasis added) (citation omitted).

[2] We have consistently declined invitations to engraft

additional elements onto, or create affirmative defenses for,

§ 664 violations. In Andreen, we rejected the “participant benefit” theory by holding that so long as a fiduciary used plan

UNITED STATES v. ERIKSEN 3311
assets in an unauthorized manner, the “lack of benefit to the

[plan beneficiaries] is not an element of the offense required

to be shown as part of the prosecution’s case.” Id. at 1242.

Likewise, “the conferring of any benefit in such a case is not

a defense, except insofar as it may bear upon the defendant’s

state of mind in committing the acts in question.” Id. at

1242-43. We thus rejected the appeal of an attorney who had

assisted the trustees of a pension plan in drafting an unauthorized compensation plan that rewarded the trustees for merely

executing their fiduciary duties. Id. at 1245-46. We reasoned

that the attorney’s attendance at trustee meetings where the

compensation plan was discussed, coupled with his knowledge that the “plan was unauthorized,” was sufficient to show

that he aided and abetted a violation of § 664. Id. at 1246. 

In United States v. Ford, a companion case to Andreen, we

affirmed the convictions of the trustees whom Andreen had

assisted. 632 F.2d 1354 (9th Cir. 1980), overruled on other

grounds, as recognized in United States v. Miller, 874 F.2d

1255, 1268 (9th Cir. 1989). In reviewing a sufficiency-of-theevidence challenge, we highlighted repeatedly certain circumstantial facts that showed the trustees’ awareness that their

behavior was not authorized by the trusts’ beneficiaries—

primarily that the trustees were offering themselves benefits

from the trust at a lower cost than was available to beneficiaries. Id. at 1366, 1367 n.12, 1368. 

In two related appeals, United States v. Mett, 178 F.3d 1058

(9th Cir. 1999), and United States v. Wiseman, 274 F.3d 1235

(9th Cir. 2001), we again disavowed a participant-benefit

defense and further held that ERISA-plan fiduciaries could

not be implicitly authorized to use assets in a manner that

jeopardizes their availability for the beneficiaries. Mett, 178

F.3d at 1067-68. Mett and Wiseman were separate appeals of

the same underlying prosecution against two executives of an

art gallery who withdrew $1.6 million from a pension plan to

finance their floundering enterprise. Id. at 1060-61. Mett, the

gallery’s president, and Wiseman, the vice-president, served

3312 UNITED STATES v. ERIKSEN
as the trustees of two pension benefit plans. Id. at 1060. After

being indicted for felony art fraud, their gallery “fell on hard

times,” and the trustees withdrew money from pension plans

and deposited it into the company’s general operating account

without informing the employees-beneficiaries. Id. at

1060-61. While Mett and Wiseman admitted making the withdrawals, they sought to avoid liability by characterizing their

appropriations as implicitly authorized “loans” necessary for

the business to survive. Id. at 1060. This implied authorization

was founded on the premise that, because the gallery would

have had to be closed and the employee-beneficiaries “would

otherwise have been laid off and faced with unemployment,”

id., the acts were not criminal. 

We rejected the “implied authorization” defense based on

a fiduciary’s purported intention to serve the “broader” interests of employee welfare. Id. at 1067. Because ERISA funds

are protected so that they will be “available at retirement”—

and are therefore subject to numerous non-alienation

restrictions—we observed that an “authorization” argument

was illogical. After all, if the beneficiaries themselves are not

at liberty to dispose of the funds for a purpose other than

retirement, they could not lawfully authorize someone else to

do it for them. Id. at 1068 (“[I]t is little different from arguing

that complete strangers ‘authorized’ the illicit transactions.”).

[3] Following retrial in light of other errors, the Mett

defendants returned to us in United States v. Wiseman, claiming that the district court had committed new errors by not

giving a mistake-of-law instruction or an instruction that the

government had to show the defendants were not “borrowing”

from the pension. 274 F.3d at 1241. We rejected both contentions. With respect to the mistake-of-law argument, we held

that, although “ ‘the defendant must knowingly act wrongfully to deprive another of property,’ there is no requirement

that the defendant also know his conduct was illegal.” Id. at

1240 (alterations and internal quotation marks omitted). We

likewise rejected the gallery executives’ “borrowing”-fromUNITED STATES v. ERIKSEN 3313
the-pension-fund defense. Id. at 1241. We stated that evidence

of borrowing, or for that matter evidence of intent to repay,

is relevant to criminal intent, but that “[i]ntent to repay generally is not a defense to embezzlement . . . [or] conversion.”

Id. (citing United States v. Ross, 206 F.3d 896, 899 (9th Cir.

2000)); see also United States v. Thordarson, 646 F.2d 1323,

1335 n.22 (9th Cir. 1981). 

B. Sufficiency of the Evidence

The jury convicted Defendants of two § 664 crimes: Counts

17 and 18. Count 17 concerned $1,192.40 of employee elective deferrals withheld in December 2002. Count 18 involved

$1,000.40 in deferrals from March 2003. The district court

gave the same jury instruction for both of these counts, requiring proof beyond a reasonable doubt that:

First, the Lunde Electric Company 401(k) Plan was

established or maintained as an employee pension

benefit plan subject to Title I of the [ERISA]; and 

Second, the defendant either:

(a) embezzled or stole funds of the plan; or

(b) unlawfully and willfully abstracted or

converted funds of the plan to his own use

or the use of another[.]

The district court defined “embezzled,” “stole,” “converted,”

and “abstracted.” 

Defendants contend that there was insufficient evidence to

support these elements. “Evidence is sufficient for conviction

if, viewing the evidence in the light most favorable to the

prosecution, any rational trier of fact could have found the

essential elements of the crime beyond a reasonable doubt.”

3314 UNITED STATES v. ERIKSEN
United States v. Bush, 626 F.3d 527, 533 (9th Cir. 2010)

(internal quotation marks omitted). 

In a mid-trial motion for a directed verdict, Defendants

asserted that the government had not established the existence

of the Plan and thus claimed that any deferrals withheld were

actually discretionary employer contributions. This argument

was not renewed in Defendants’ post-trial Fed. R. Crim. P. 29

motion. Defendants also assert that the failure to remit elective deferrals within the time frame established by the DOL’s

Plan Asset Regulation, 29 C.F.R. § 2510.3-102(b)(1), is not

tantamount to embezzlement or conversion and that the government’s references to the Plan Asset Regulation were prejudicial. Because Defendants’ Rule 29 motion regarding Counts

17 and 18 was limited to an argument about mens rea, our

review is for plain error. United States v. Alvarez-Valenzuela,

231 F.3d 1198, 1200-01 (9th Cir. 2000) (“[W]e interpret Rule

29(a) to suggest that failure to renew the motion at the end of

trial does not mean that it has been waived, but only that a

higher standard of review is to be imposed. [We] may review

an unrenewed motion for judgment of acquittal, but only to

prevent a manifest miscarriage of justice, or for plain error.”).

1. Establishment of the Lunde Electric 401(k) Plan

Defendants assert that there was insufficient proof that the

Plan contained a 401(k) feature. They argue that all ERISA

plans contain an amendment procedure and that “[t]hese . . .

procedures, once set forth in a benefit plan, constrain the

employer from amending the plan by other means.” Winterrowd v. Am. Gen. Annuity Ins. Co., 321 F.3d 933, 937 (9th

Cir. 2003) (citing Curtiss-Wright Corp. v. Schoonejongen,

514 U.S. 73, 85 (1995)). According to Defendants’ theory, the

government had to introduce a properly executed version of

the 1995 Amendment. Because the government does not have

such a document, Defendants argue, the elective deferrals

were actually discretionary “employer contributions” that do

not become “Plan Assets” until they are remitted to the Plan.

UNITED STATES v. ERIKSEN 3315
Defendants’ argument regarding the validity of the 1995

Amendment is a red herring. Defendants were convicted only

for their failure to remit deferrals after the 2002 Restatement.

Even though the Form 5500s submitted to the IRS by Lunde

Electric, the testimony of Brad Sommerfeld, and the email by

attorney Braley all indicated that the 401(k) Plan existed

before 2002, because Counts 17 and 18 concerned conduct

that occurred after the 2002 Plan Restatement, we need only

consider that document. The Eriksens do not dispute that the

1991 Plan was governed by Title I of ERISA, but contend that

the evidence did not allow the conclusion that the Plan was

thereafter amended or restated. 

[4] “Generally, whether a plan is subject to Title I of

ERISA is an issue of fact to be decided by the jury, guided

by applicable legal principles.” United States v. Wofford, 560

F.3d 341, 347 (5th Cir. 2009) (citing United States v. Helbling, 209 F.3d 226, 239 (3d Cir. 2000)). The amendment

procedures for any ERISA benefit plan must be specified by

the employer and identify the persons with the “authority to

amend.” Winterrowd, 321 F.3d at 937 (citing 29 U.S.C.

§ 1102(b)(3)). Here, the 1991 Plan, at Section 10.6, specified

that amending the Plan “shall only be by the written action of

each and every Participating Employer and with the consent

of the Trustee where such consent is necessary.” To show

such an amendment occurred by at least 2002, the government

introduced a written copy of the 2002 Restatement, which

included a 401(k) provision and was signed by Raymond as

“Employer” and “Trustee” and by Sigmund as “Trustee.” The

government also introduced addenda referring to the effective

date of the Restatement as January 1, 2002, as well as a “Consent to Corporate Action” by Lunde Electric that approved the

“amended 401(k) Profit Sharing Plan . . . effective January 1,

2002.” Any of these documents alone was competent evidence to allow the jury to conclude that the Plan had been

restated in 2002 with a 401(k) plan. Accordingly, there was

sufficient evidence for the jury to conclude that the 1991 Plan

3316 UNITED STATES v. ERIKSEN
had been restated before the Eriksens retained their employees’ elective deferrals in the Company’s general account.

2. Embezzlement, Conversion, or Unauthorized Use

of Funds

The second element of § 664 requires the jury to find that

a defendant willfully embezzled, converted, or misappropriated the funds of a pension plan. Andreen, 628 F.2d at 1241.

Defendants concede that the funds were not remitted to the

Plan Account before the DOL investigation. However, they

contend that their keeping elective deferrals for longer than

fifteen days—a deadline specified in the Plan Asset

Regulation—is not tantamount to embezzlement or conversion. According to Defendants, the government, by referencing the Plan Asset Regulation, misled the jury into concluding

otherwise. In support of their argument, Defendants ask us to

consider the holdings of United States v. Christo, 614 F.2d

486 (5th Cir. 1980), and United States v. Wolf, 820 F.2d 1499

(9th Cir. 1987). 

Although both Christo and Wolf address the dangers of

“bootstrapping” a civil violation into a criminal one, neither

case concerns § 664 crimes, nor do their holdings apply here.

Both Christo and Wolf concerned prosecutions against bank

executives for misapplication of bank funds, in violation of 18

U.S.C. § 656. Wolf, 820 F.2d at 1501; Christo, 614 F.2d at

489. 

In Christo, the misapplication charge was based on a bank

officer’s repeatedly overdrawing his checking account. At the

time, 12 U.S.C. § 375a prohibited a bank from extending a

loan of more than $5,000 to one of its officers. Christo, 614

F.2d at 488 n.2, 490. The trial court quoted § 375a to the jury

and further instructed the jury that it could consider violations

of § 375a in connection with the criminal misapplication

charges. Id. at 491. The Fifth Circuit reversed the defendant’s

misapplication conviction, observing: 

UNITED STATES v. ERIKSEN 3317
A conviction, resulting from the government’s

attempt to bootstrap a series of checking account

overdrafts, a civil regulatory violation, into an equal

amount of misapplication felonies, cannot be

allowed to stand. The government’s evidence and

argument concerning violations of § 375a impermissibly infected the very purpose for which the trial

was being conducted . . . . 

Id. at 492. 

In Wolf, we relied on Christo to reverse convictions against

a bank executive for misapplying bank funds and making

false entries in a bank record. The executive had, among other

acts, failed to disclose required information about the beneficiaries of his bank loans. Wolf, 820 F.2d at 1503. We faulted

the government for basing its misapplication charges on a

civil banking regulation that imposes a duty on bank employees to inform the bank’s board of directors about the purpose

of a loan. During Wolf’s trial, the government’s expert witness testified that the defendant’s failure to disclose he was a

beneficiary of some of the loans he disbursed violated Federal

Reserve Regulation O (12 C.F.R. § 215). We held that the references to the Regulation were impermissible: 

Unlike references to [other civil violations which

occurred during the trial], the references to Regulation O cannot be dismissed as being simply background information. The references were a key part

of the government’s case on the misapplication and

false entry counts. . . .

To supply the missing element of the false entry

and misapplication charges, the government turned

to Regulation O. Through its expert witness the government established that Regulation O imposed a

duty on [the defendant] to inform the bank’s directors that he had an interest in the loans . . . . In sum,

3318 UNITED STATES v. ERIKSEN
the government used Regulation O to supply a crucial element of the misapplication and false entry

charges.

Id. at 1505 (emphasis added). Thus, under the logic of Christo

and Wolf, it is impermissible to use the violation of a civil

statute to ipso facto “supply a crucial element” of a criminal

offense. 

[5] Contrary to Christo and Wolf, the Plan Asset Regulation played an inconsequential or, more likely, no role in

Defendants’ convictions. Importantly, the Plan Asset Regulation does not create a reporting or other affirmative obligation

on an employer nor does it prohibit certain behaviors under

threat of civil sanction; rather, the regulation simply defines

“plan asset”: “the assets of the plan include amounts . . . that

a participant or beneficiary pays to an employer.” 29 C.F.R.

§ 2510.3-102(a)(1) (emphasis added). While one could selectively excerpt and rewrite portions of the regulation to create

the appearance that it requires employers to remit their elective deferrals, the regulation does not create any such obligation. Indeed, the obligation not to use other people’s money

for purposes they have not authorized is traceable more fairly

to antiquity than to the Plan Asset Regulation. Thus, contrary

to the facts in Wolf, none of the elements of Counts 17 or 18

was established at trial, or could be established, by bootstrapping a violation of the regulation. Unlike in Christo, the regulation did not mislead the jury in its deliberations, as it was

not even a factor for the jurors’ consideration.

[6] The government did not contend that it was Defendants’ failure to remit deferrals within fifteen days that constituted their crime. Rather, it was the fact that employee

contributions were never remitted from January 1, 2002, until

the DOL became involved, but were, instead, used to pay

business expenses, as recounted by Brad Sommerfeld and others, that formed the factual and legal basis for the government’s case. Conversion is a simple offense that

UNITED STATES v. ERIKSEN 3319
“encompasses the use of property, placed in one’s custody for

a limited purpose, in an unauthorized manner or to an unauthorized extent.” Andreen, 628 F.2d at 1241. When Defendants commingled their employees’ contributions with the

Company’s assets to prop up their failing business, they intentionally used their employee’s assets for an unauthorized purpose. Moreover, they sent Participants account statements

showing 401(k) balances which were, in fact, non-existent.

Defendants’ acts were “substantially inconsistent with the

fiduciary purposes and objectives of the union funds or pension plan, as set forth by statutes, bylaws, charters, or trust

documents which govern uses of the funds in question.” Id.

As fiduciaries of the money given to them by their employees,

Defendants were entrusted with custody of their employees’

money for the sole purpose of remitting it to the 401(k) Plan;

the Defendants’ decision to deviate, be it to bet on horse races

or pay other bills, is the wilful criminal misappropriation punished by § 664. 

[7] Finally, Defendants’ argument regarding the absence of

intent is undercut by the evidence that both Defendants were

alerted repeatedly about their obligation to remit the deferrals.

Moreover, the government showed that Defendants hid their

actions from employees by, for instance, withholding Statements of Net Assets in yearly investor reports. 

[8] Accordingly, there was sufficient evidence to support

Defendants’ convictions on Counts 17 and 18. 

II. False or Misleading Statements in a Required ERISA

Document

Defendants also challenge their convictions under 18

U.S.C. § 1027 for Making False or Misleading Statements in

an ERISA Benefit Plan Document that Federal Law Requires

to be Kept (Count 21). Count 21 concerned false statements

in the 2001 Valuation Reports. Specifically, the government

showed that the Valuation Reports, under the heading “Addi3320 UNITED STATES v. ERIKSEN
tions During Year,” indicated that both employee deferrals

and employer contributions had been made to the Participants’ accounts. According to the government’s expert witness, these reports were not accurate “[b]ecause these

valuation reports show that . . . money had been placed into

the trust. It shows that the contributions . . . had been placed

into the trust and into investments so those monies can grow,

which is in fact not the case.” 

Defendants argue that this misstatement in the Valuation

Reports is not material and, nevertheless, the Valuation

Reports were not “required” under the ERISA. Because

Defendants raised these arguments to the district court, our

review is de novo. See United States v. Sarault, 840 F.2d

1479, 1482 (9th Cir. 1988). 

[9] We have held that § 1027 prohibits: (1) “any knowingly made false statements or representations of fact, [and]

certain knowingly concealed, covered-up, or undisclosed

facts”; (2) “in a document required by ERISA” to be either

published by an employee welfare benefit plan or employee

pension benefit plan, kept as part of the records of such a

plan, or certified to the administrator of a plan. Sarault, 840

F.2d at 1482. 

[10] Contrary to Defendants’ contention, materiality is not

a prerequisite for, or an element of, a false statement conviction. See 18 U.S.C. § 1027 (“Whoever . . . makes any false

statement or representation of fact” (emphasis added));

Sarault, 840 F.2d at 1485 (explaining that Section 1027 prohibits “any knowingly made false statements or representations of fact”); see also United States v. Nolan, 136 F.3d 265,

271 (2d Cir. 1998) (“Materiality is not an element of a § 1027

violation.”). Even if it were an element of the offense, the

Valuation Reports statement that money had been added during the Plan Year, when it in fact it had been used by the

Company under Defendants’ direction, was undoubtedly

material information that Participants would have desired to

UNITED STATES v. ERIKSEN 3321
know. For instance, had an employee attempted to cash out

his 401(k) account at the end of 2001, he would have received

far less than what was indicated in the Valuation Reports

received from Defendants.

[11] Turning to the central question of whether the Valuation Reports were required by the ERISA, we begin by examining the Act’s record-retention requirements: 

Every person . . . shall maintain records on the matters of which disclosure is required which will provide in sufficient detail the necessary basic

information and data from which the documents thus

required may be verified, explained, or clarified, and

checked for accuracy and completeness, and shall

include vouchers, worksheets, receipts, and applicable resolutions . . . .

29 U.S.C. § 1027. In Sarault, we cast a broad net concerning

what is “required” by this statute. There, we reviewed the

conviction of an attorney who made false representations

about the solvency of an insurance company in a letter he sent

to fund trustees who were seeking insurance coverage. 840

F.2d at 1481-82. The letter represented that the insurance

company was secured by $20 million in “reserves,” which

were actually fraudulent certificates of deposit. Id. at 1481.

Following his conviction for making a false statement under

§ 1027, the defendant argued that only “financial records such

as receipts and premium statements” were required by the

ERISA. Id. at 1483. Drawing from a predecessor statute to the

ERISA, we observed that Congress intended for “a broad

range of documentation [to] be maintained under 29 U.S.C.

§ 1027.” Id. at 1484. This range included the attorney’s letter

because the trustees used it to complete other forms required

by the ERISA, including IRS Form 5500. See 29 U.S.C.

§ 1024(a)(2)(A); United States v. Harris, 185 F.3d 999,

1003-04 (9th Cir. 1999). Thus, it was undoubtedly a document that provided “ ‘in sufficient detail the necessary basic

3322 UNITED STATES v. ERIKSEN
information’ ” to allow another ERISA form to be “verif[ied],

explain[ed], clarif[ied], and check[ed] for accuracy and completeness.” Id. at 1483-84 (quoting 29 U.S.C. § 1027).

[12] Like the letter in Sarault, the Valuation Reports could

be used, and indeed were used, by Defendants to complete the

annual Form 5500. As noted supra, Form 5500 asks whether

the company transmitted all Participant deferrals to the trust

account. Answering this question required aggregating each

Participant’s contributions, as memorialized in the Valuation

Reports, and then comparing that amount to the deposits to

the Plan’s brokerage account. Indeed, it was precisely this

comparison that alerted Brad Sommerfeld that certain monies

were not being remitted. Although Lunde Electric was not

obligated to provide the Valuation Reports to investors unless

demanded, Sommerfeld still completed them, used them to

prepare the Form 5500, and then mailed them to Participants.

The evidence showed that neither Defendant was ignorant of

the misstatements in these reports. Raymond, as Trustee,

signed these reports before they were sent to Participants. See

Wiseman, 274 F.3d at 1243 (“Key evidence of [the defendant’s] involvement in the embezzlement is his endorsement

. . . of the checks drawn from the benefit plan accounts

. . . .”). Likewise, Sigmund was present at the various times

when attorney Braley and others told Defendants to deposit

the deferrals and, according to Lunde Electric’s several

accountants, Sigmund was intimately involved in the Company’s decisions about which bills should be paid with its dwindling cash revenues. 

[13] Defendants’ post-hoc rationalizations—in particular

that, because Participants were ultimately repaid, these misstatements should be excused—ignores the language of

§ 1027. As we observed in Harris, “[a]ll a person has to do

in order to comply [with § 1027] is fill out truthfully the

[Form 5500].” 185 F.3d at 1004. Defendants would have us

adopt a holding that undermines a clear purpose of the

ERISA, which, as we detailed in Sarault, “was the need to

UNITED STATES v. ERIKSEN 3323
have more information available to plan beneficiaries so they

can enforce their own rights.” 840 F.2d at 1484. While Defendants, upon the DOL’s launching of its investigation, may

have experienced a change of heart and repaid the Plan

Account, their initial decision to mislead their own employees

about the solvency of their retirement plans by filing false

account statements and false Form 5500s are the behaviors

targeted by § 1027. Ultimately, the ERISA’s goals of honest

disclosure and investor protection would be greatly undermined if Defendants escaped liability for providing patently

false account statements to Plan Participants. 

[14] Accordingly, we hold there was sufficient evidence to

support Defendants’ convictions on Count 21.

CONCLUSION

For the foregoing reasons, Defendants’ convictions and

sentences are AFFIRMED. 

3324 UNITED STATES v. ERIKSEN