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

.

M A R K F

. S P A

N G L E R , Defendant-Appellant

. N o. 14-30042

D.C. No. 2:12-cr-00133- RSM-1

OPI NI ON

A ppeal from the United States District Court for the W e stern District of W ashing ton Ricardo S. Martinez , District J udg e, Presiding

Arg ued and Submitted December 10, 2015—Seattle, W ashing ton

F iled J anuary

15, 2016

B efore: M. Marg aret McKeown and Richard C. Tallman, Circuit J udg es, and J o an Humphrew L efkow, * Senior

District J udg e

Opinion by

J udg e L efkow

* T h e Ho n o rab le J o an Hu m p h rey L ef k o w , Sen io r Un ited States District J u d g e f o r th e No rth ern District o f Illin o is, sittin g b y

d esig n atio n

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

. S P A N G L E R 2

SUMMARY * *

Crim inal Law

The panel affirmed convictions on twenty -four counts o f wire fraud, seven counts of money laundering

, and o ne count of investment-adviser fraud.

The panel held that t h e district court did not a buse its discretion in barring on relevancy g rounds the defenda n t ’s

ex p ert witn e s s from testify ing

, and held that any error was harmless. The panel rejected the defendant’s contention that

ex c lusion o f the ex p e r t’s testimony violated his Six th Amendment rig ht to present a defense.

The panel held that the district c ourt d i d not a buse its discretion in admitting testimony reg arding the defendant’s
status as a fiduci ar y , introduced to ex plain why the defendant’s clients did not question his d ocuments a nd
repo r t s , where the investors’ lay understanding s of the defendant’s fiduciary oblig ations d emonstrated h ow he was able to accomplish the alleg e d f raud, and where any concerns about the jurors’ equating vi o l a tions of fiduciary duty with criminal liability were put to rest by the district court’s careful instruction s o n t he elements o f the o ffenses and the absence of b reach of fiduciary duty as a consideratio n in determining g uilt.

The p a nel rejected the d e f

endant’s contention that the district court violated his F ifth A m endment r ig hts w hen it

** 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

. S P A N G L E R 3

declined to strike Count 3 3, which alleg ed that the defendant committed investment-adviser fraud by violating 15 U .S.C. § 80b-6 (prohibiting i nvestment advisers from eng a g ing in certain conduct) without mentioning 15 U.S.C. § 8 0 b-17 (throug h w hich violations of § 80b-6 a re made criminal) a

nd without using the word “willful.”

The pane l concluded that cumulative error analy sis is inapposite, as the defendant has not d emonstrated a ny e rrors.

COUNSEL

Suz anne L ee Elliott (arg ued), L aw Office of Suz a nne L ee Elliott, Seattle, W ashing ton, for Defendant-Appellant.

Teal L uthy Miller (arg

ued), Assistant United States Attorney ; Annette L

. Hay es, Acting United States Attor n e y , United States Attorney s’ Office, W estern District of Washing ton, Seattle, W ashing ton, for Plaintiff-Appellee.

OP INION

L EF KOW
, Senior District J udg e :

Mark F

. Spang ler appeals his jury convictions on twenty

four counts of wire fraud (18 U.S.C. § 1343), seven counts o f

m o n e y laundering (18 U .S.C. § 1957), and one count of investment-adviser fraud (15 U.S.C. § 80b-17). W e f ocus on three of Spang ler’s arg uments raised on appeal : (1) that the district court abused its discretion in b a r ring his ex pert witness f rom testify ing

, and that the ex clusion of the e x pert’s testimony violated his Six th Amendment rig ht to present aU N I T E D S T A T E S V

. S P A N G L E R 4

defense; (2) that the district court abused its discretion in permitting testimony a

bout his status as a fiduciary ; a nd (3) that the district court v iolated his F ifth Amendment rig hts by failing to strike co u nt 33 from the second superseding indictment. 1 W e h ave jurisdiction under 28 U.S.C. § 12 91, and we affirm.

BACK G ROUND 2

On May 14, 2013, a g rand jury returned a se c o n d superseding indictment charg ing Spang ler with twenty -five
counts of wire fraud, seven counts of money laundering

, a nd

o n e count of investment-adviser f raud. At trial, the
g overnment presented evidence of the following :

Spang ler was a reg istered i n v e s tment adviser and a onetime chairman of the National Associ a t i on of Personal F inancial Advisors. F r om the early 1980s unt i l 2 011, Spang ler headed a Seattle investment firm known during the relevant time period as The Spang ler Group, which serviced between twenty and twenty -five clien t f amilies at any g iven time.

I n 1 998, Spang ler set u

p fiv e i n v es tment funds, two o f which—the Equity I nvestors Group, L L C (Equity ) and the I ncome+ I nvestors Group, L L C (I ncome)—are p a rticularly relevant f

or purposes of this appeal. Spang ler’s c lients

1 W e reso lv e all oth er i ssu es an d af f irm t h e d i s t r ict co u rt in a

m em o ran d u m

d isp o s itio n

f iled co n cu rren tly

w ith th is o p in io n

.

2 W e lim it th is sectio n to g en eral back g ro u n d an d ex p an d o n t h e fa c t s relev an t to Sp an g ler’ s arg u m en ts o n ap peal in th e an aly sis s ectio n s set f o rth b elo w

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

. S P A N G L E R 5

ex p ecte d t hat the money they p ut into Equity and I ncome would be inv ested in publicly -traded companies and that investm e n t decisions would be made by an outside investment manag er, rather t han Spang ler. These

ex p ectations found support in the private placement memoranda (PPMs) for the funds. I ndeed, the 1998 version of the PPM for E quit y , w hich was drafted by W illiam Carleton, Spang ler’s attorney , provided that “the securities in which [ Equity ] invests a re ex pected to be traded i n p u blic

m a rkets” and that Spang ler would use Southeastern As s et Manag ement, I nc. to make investment decisions. B oth PPMs provide d that the funds’ investment objectives could be chang ed only

by a two-thirds vote of the owners.

The PPMs also contained disclaimers, which the defense emphasiz ed at trial. F or ex ample, the PPMs warned c lients that the investments to be made involved a “hig h deg ree o f risk” and that “no investment in these securi t ies should be made by any p erson who is not in a position to lose the entire
amount o f such investment.” A t trial, C arleton described these warning s as “boilerplate.”

I n 1999, Spang ler and C arleton org aniz ed Spang ler Ventures, which consisted of a series of in v e s t ment funds dedicated to startup com p a nies. A ccording to Carleton, the
purpose o f Spang ler Ventures was to offer “hig h-risk v entures t y l e

. . . startup company investing ” separate from the fi v e funds set up in 1998. Spang le r w a s intimately involved in
two o f the st a r tups in which the Spang ler Ventures funds invested: Te r a H o p a

n d Tamarac. Spang ler served a s chairman of both entities and held other positions as well.

Despite his apparent intent to separate the funds invested in public equities from those in v e s t ed in startup companies,U N I T E D S T A T E S V

. S P A N G L E R 6

in 2003 Spang ler beg an to move money f rom E q uity a nd I ncome into T eraHop an d Tamarac, all without his c lients’
consent. Althou gh h e sometimes transferred the money directly

, he often funneled the money throug h the Spang ler Ventures funds first, larg ely because he stood to g ain 16% o f

a ny profits made by Spang ler Ventures under the terms of those funds.

Spang ler’s diversion of c ash fr o m E q u ity a nd I n come to TeraHop was especially problematic because TeraHop lost

more than $50 million b e t w een 2001 and 2010. Given TeraHop’s poor fin a n c ial p erformance, TeraHop f requently could not make interest pay ments on loans it had taken from I ncome. Accordin gl y , TeraHop borrowed money from Equity and various S p ang ler Ventures funds to make the
pay ments, and I ncome, in turn, u s ed the money to pay quarterly dividends to investors. I n this way , Spang ler operated a circular Ponz i scheme, u sing his clients’ money to g enerate their interest pay ments.

To c onceal evidence of wrong doing, Spang ler provided his clients with carefully worded q u a r terly statements titled “portfolio performance analy ses.” These statements referred
to the funds invested in Equity as “marketable equities” a nd the funds invested in I ncom e as “specialty b onds.” I nvestments in “priva t e equities” w ere listed in a separate categ ory , creating the illusion that o nly a small percentag e o f funds was dedicated to p rivate i n v e stments such as startup companies. I n reality

, however, a much larg er p o rtion o f Spang ler’s c lients’ portfolios was invested in private e quities,

as funds invested in Eq u i t y a n d I ncome were also being moved into TeraHop and Tamarac. F or ex ample, a portfolio report for one of Spang ler’s clients from the last quarter o f 2010 represented that the c l i e n t h a d less than 1 % of hisU N I T E D S T A T E S V

. S P A N G L E R 7

portfolio invested in TeraHop w hen 51% of his portfolio was actually invested in the startup.

I n 2 0 08, Spang ler sent l e t t e rs to his clients and asked them to sig n new PPMs for Equity

, I ncome, and other f unds. The letters informed S p a n gler’s clients of name chang es for

some of t h e funds (e.g

., E q uity became “SG Growth+ I nvestors Group, L .L .C.” and I ncome became “SG I n come+ I nvestors Group, L .L .C.”). The n e w PPMs g ave Spang ler d i s c retion to invest funds h imself rather than with t h e assistance o f an outside investment adviser. Fu r t h e r, the revised PPM for Equity chang ed the lang uag e of the orig inal P PM stating that securities were “ex p ected to be” traded in public markets to read that secur i ties “may be” traded in public markets. Th e P P M s did not mention TeraHop o r Tamarac directly

, and Spang ler’s clients testified that they did
not closely r eview the new PPMs or seek leg al advice before sig ning them, larg ely because they trusted Spang ler a nd relied on his ex pertise.

Concerned about their investments in the wake of the economic downturn of 2008, s o m e of Spang ler’s c lients asked him to liquidat e their investments in Equity a nd I ncome, which Spang ler coul d n ot a ccomplish within the time

c o n s traints established by the PPMs. W hen Spang le r informed his clients that he needed to seek new investors to liquidate their interests, they told h im that the pla n s o u n d ed like a Ponz i scheme. F rom there, the situation unraveled, a nd in 2011 The S pang ler Group was forced into receivership. The receiver w as able to recover some of Spang ler’s c lients’ funds, but many

of his clients lost millions.

At trial, Spang ler re s t e d after the g overnment’s case without testify ing o r offering other evidence. On N ovemberU N I T E D S T A T E S V

. S P A N G L E R 8

7, 2013, the jury f

o u n d Spang ler g uilty of thirty -two of the
t h i rty

- three c ounts c harg ed, finding him n ot g uilty of o n e count of w ire fraud. On March 1 3
, 2 014, the district court sentenced him to 192 mont h s of imprisonment and three
y ears o f supervised release

. Spang ler timely appealed, challeng ing only

his convictions.

D ISCUSSION

I. Whether t he District Court Abused its Discretion in Barring Spangler’s Expert Witness F rom Testif ying

Spangl e r fi rst arg ues that the district c ourt e rred in precluding h is ex pert witness, J ohn Keller, from testify ing

. W e review a district co u rt’s decision to ex clude ex pert testimony for an abuse o f discretion. S ee United S tates v

. Laurienti
, 611 F

. 3d 530, 547 (9th Cir. 2010).

B e fore trial, Spang ler’s counsel disclosed K e l l e r and three other potential ex pert witnesses. The K eller disclosure stated as follows:

J ohn Keller is a forensic a c c o u ntant a nd former criminal investig ator with the I nternal Revenue Service. He will testify that he reviewed the receiver’s investig ation of the Spang ler Group b usinesses. He will t estify th at based on his review o f the receiver’s analy sis that there were no unex plained diversions o f a s sets. Mr. Keller personally reviewed several portf

o l io position reports

an d p ortfolio performance summaries. He compared various account statements with the Spang ler Company database of client records.U N I T E D S T A T E S V

. S P A N G L E R 9

He found nothing in this analy sis that let [ sic ] him t o b e l ieve that there was any attempt to make false r epresentations to client [ sic ] about their account balances or account activity

. He

saw nothi n g i n the c lient data reports to sug g est that Mr. Spang ler was inappropriately diverting client funds for his own benefit. Mr. Keller has also reviewed the client portfolio analy sis to determine the c li e n t ’ s rates o f
return on their investments and c o m pared them to rates of retu rn if the clients h ad invested money into index funds or kept their
money in Southeast Asset Manag ement.

The g ov ernment moved to ex clude all four ex pert witnesses under F ederal Rule o f E v i dence 702 and Daubert

v. M errell D ow Pharmaceuticals, I nc. , 5 09 U.S. 579 (1993). The district court denied the g overnm e n t’s motion as it related to three of Spang ler’s witnesse s b ut g ranted the motion with respect to Keller, deeming his t e stimony not relevant.

I nitially

, the g overnment contends that Spang ler may not raise this arg ument o n appeal because he failed to testify on his own behalf or otherwise intro d u c e w itness testimony o r

o t her evidence at trial. I n support, the g overnment relies on Luce v. United States
, 469 U.S. 38 (1984), which held that, to preserve for review a c laim of improper impeachment of the defendant w ith a prior conviction, the defendant must testify

. Luce prov i d e s no analog for the situation here. Spang ler’sU N I T E D S T A T E S V

. S P A N G L E R 10

ability to challeng e the ruling ex cluding ex pert testimony is
g overned by

F ederal Rule of Evidence 702. 3

W ith r espect to diversions o f assets and false representations, the district court did n ot abuse its discretion in ex cluding the proffered testimony

. Spang ler arg ues that Keller’s testimony w ould have been relevant to h i s intent to defraud his clients. At trial, the g o v ernment argu ed that Spang ler h ad hidden from his clients that he had been moving their mo n e y from Equity a nd I ncome into TeraHop a nd Tamarac b y listing on his c lients’ f inancial statements the funds invested in Equity and I ncome in separat e ca t e g ories from the funds invested in private equities. I n d o ing so, Spang ler failed to discl o s e t h at the funds in Equity a nd I ncome were also be i n g funneled into private e quities, creating the illusion that his clients’ portfolios were p rimarily invested in publicl y traded c ompanies. Given the
g overnment’s theory

, any testimony that the clients’ financial
statements accurately reflected the a mount of money invested in each Spang ler Group fund would have been irr e l evant. Rather, the g overnment’s p oint w as th a t, while the financial
statements were technically accur a te, they failed to d isclose the reality behind Spang ler ’ s investment decisions. I ndeed, the statements were in evidence for the jury to consider.

Nor was Keller’s proposed testimony about the prudence of Spang ler’s investment decisions relevant to fraudulent

3 Neith er p arty d isp u

tes th at th e d istric t c o u r t ap p lied th e co rrect leg al

ru le. In d eed

, th e co u

rt’ s cited reaso n f

o r ex clu sio n w as lack o f relev an ce,

w h ich i s f o ld ed i n to th e Da u b ert stan d ard u n d er Fed eral Ru le o f Ev id en ce 7 0 2

. S ee Esta te o

f Ba r a b in v. Asten Jo h n so n , In c. , 7 4 0 F .3 d 4 57
, 4 6 3 (9 th C i r. 2 0 14 ) (“ W e h av e in t erp reted Ru le 7 0 2 to req u ire th at ‘ [e]x p ert testim o n y

. . . b e b o th relev a n t a n d r eliab le.”’ (alteratio n s in o rig in al) (q u o tin g Un i ted S ta tes v. Va llejo

, 2 3 7 F.3 d 10 0 8, 1 0 1 9 (9 th Cir. 2 0 0 1 ))).U N I T E D S T A T E S V

. S P A N G L E R 11

intent. The g overnment’s case did not de p end on whether investing in private e q

uities was an advisable investment strategy but on whether Spang ler diverted his clients’ funds without their knowledg e or consent. That in hinds i gh t Spang ler’s investments i n startup companies were a rg u ably prudent does not n eg ate his f raudulent intent. See U

nited States v. Benny
, 7 86 F

. 2d 1410, 1417 (9th Cir. 1986) ( “W hile

an honest, g ood-faith belief in the truth of the misrepresentations may neg ate intent to defraud, a g ood-faith belief that the victim will be repaid and will sustain no loss is no defense at all.” (citation omitted)).

Even if the d istrict co u rt had erred in b arring Keller’s testimony

, t he error was harmless. Under our test for h armless error, we “must reverse unless it is more pro b a b l e than not that the error did not materially a f f ect the v erdict.” Laurienti
, 611 F .3d at 547 (quoting Unite d S tates v. Rahm

, 993 F .2d 1405, 1415 (9th Cir. 1993)). Spang l er was a ble to

a s s ert repeatedly throug h cross-ex amination and his c o u n s e l ’ s opening statement and closing arg u ment that the financial
statements distributed by Spang ler accurately reflected his clients’ investments in the differen t Spang ler Group funds and that Spang ler’s investment strateg y was prudent g iven the f i n a ncial crisis of 2008. Moreover, Spang ler could ha v e called a different ex pert w itness, Peter B rous, to testify about “the state of the e conomy and its effects on v arious investments during a time frame spanning from 2005 to 2010.” Given that Spang ler c hose n ot to call B rous to support his arg ument that Spang ler’s investment strateg y was sound, he cannot c redibly arg ue that he was p rejudiced by the district court’s ex clusion of Keller. Cf. U nited S tates v. Cohen

, 510 F .3d 1114, 1127 ( 9th Cir. 20 0 7 ) (reversing the defendant’s c onviction and r emanding for a new trial whenU N I T E D S T A T E S V

. S P A N G L E R 12

the erroneous ex clusion of e x pert testimony left the defendant “without any way

to ex plain” his arg ument).

W e also reject Spang ler’s attempt to constitutionaliz e his claims by arg u ing that the district court’s ruling deprived him of h is Six th Amendment rig ht to present a defense. W hile the Constitution affords the accused “a meaning ful oppo r t u n ity
to present a complete defen s e , ” H olmes v. South Carolina

, 547 U

. S

. 319, 324 (2006) (quoting Crane v. Kentucky

, 476 U.S. 683, 690 (1986)), a c r iminal defendant “must comply with e stablished r ules of procedure and evidence desig ne d t o assure both fairness a nd reliability in the ascertainment of g uil t an d innocence.” United States v

. W aters , 627 F .3d 345, 354 (9th Ci r

. 2010) (quoting United States v

. Perkins

, 9 37 F .2d 1397, 1401 (9th Cir. 1991)). I n this case, Spang ler was able “ to present the substance” of his d e f e n s e to the jury

. See id. ; see also Perkins

, 937 F .2d at 1401. The limited nature o f Spang ler’s defense was in larg e part self-imposed, as h e declined to intro d u c e three ex pert witnesses the district court deemed a dmissible. A c cording ly

, we find no constitutional error.

II. Whether the District Cou r t Abused its Discretion in Adm itting Testim ony Regarding Spangler’s Status as a F iduciary

Spang ler n ex t contends that t he district c ourt erred in
pe rm i tting testimony about Spang ler’s status as a fiduciary

. W e review f

or an abuse of discretion a district court’s decision to a dmit evidence. U nited States v. Curtin
, 489 F .3d 935, 943 (9th Cir. 2007) (en banc).

B e fore trial, Spang ler moved to strik e t h e p art o f the second superseding indictment that referenced the fiduci a r yU N I T E D S T A T E S V

. S P A N G L E R 13

d u t y h e o wed to his clients 4 and to ex clude any evidence o f his status as a fiduciary at trial. Specifically

, Spang ler a rg u ed that evidence o f his fiduciary duty would ra i s e the risk that the jury w ould perceive a violation of his fiduciary duties (a

c i v i l offense that can r esult from neg lig ent conduct) a s tantamount to willful fraud, and consequently

, find criminal liability

. After finding that the portion of the motion directed
at the indictmen t w as moot, as the court would not read the indictment to the jury

, the district court denied the remainder of the motion on the basis that its instructions would delineate “what the elements of e ach of the crimes charg ed ag ainst Mr. Spang ler are, and what specific b urden the g o vernment bears in proving each of those particular elements.”

Government witness es did mention Spang ler’s status a s

a fiduciary in their testi m o n y

. F or ex ample, when the prosecutor a sked J ames Peterson, a former client o f Spang ler’s, whether he had a lawy er review various leg al documents h e h ad received from Spang ler, Petersen answered that he had not and ex p lained, “I mean, I w as pay ing Mr. Spang ler a g ood amount of money to be a financial advisor.

. . . And, y ou k

now, he w as my fiduciary

. He had a fiduciary responsibility to me.” Similarly

, the p rosecutor referenced Spang ler’s fiduciary du t y t o his clients during closing arg u ment and r eb uttal. F or ex ample, the p rosecutor arg ued that Spang ler’ s c l i e n ts had asked him to “protect my life’s work.

. . . And Mark Spang ler, as their investment advisor, a s their fiduciary

, said, I w i l l p ro t e c t it.

. . . That is what a fiduciary is. T hat is why Mark Spang ler’ s c lients

4 T h e in v estm en t- ad v iser- f rau d co u n t o f th e seco n d su p ersed in g in d ictm en t p r o v id ed

, “ MA RK F. SP A NGL ER

. . . o w ed a f

i d u ciary

o b lig atio n o f g oo d f

aith

, lo y alty

, an d fa i r d ealin g to [h is] clien ts, w h ich

en tru s ted MA RK F. SP A

NGL ER . . . w i th

th eir m o n ey

to m an ag e.”U N I T E D S T A T E S V

. S P A N G L E R 14

trusted him when they

handed him their life’s work. That is how these crimes happened.” Alt h oug h the g overnment proffered a p ropo s ed jury instruction specify ing when a fiduciary duty ex ists and instructing the jury tha t a violation of t h at d u ty was one factor to consider in d etermining whether the g o vernment h ad proved investment-adviser fraud bey ond a reasonable d oubt, t h e district court refused the instruct i on. W ith respect to both the wire-fraud a nd investment-adviser-fraud counts, the c ourt instructed the jury

on the elements of proof with o u t indicating that it could consider breach of fiduciary duty

. Spang ler n ow relies on United States v. Christo

, 614 F .2d 486 (5th Cir. 1 980), and U nited States v. W

olf

, 820 F .2d 1499 (9th Cir. 1987), to ar g ue that the cumulative effect o f references to Spang ler’s fi d uciary d uties by g overnment witness e s and the prosecutor, as well as the district court’s failure to g ive a limiting instruction, raised the risk that a reasonable juror would h ave concluded t h a t any breach o f fiduciary duty c onstituted fraud. B oth Christo and W olf dealt with the dang er of jurors’ equating violations of civil statutes

or r eg ulations with criminal liability in the co n t e x t o f prosecutions ag ainst bank ex ecutive s f o r misapplication o f bank funds under 18 U.S.C. § 656.

I n Christo

, the g overnment’s case centered on a series o f overdrafts in the d efendant ex e c utive’s account which, the
g overnment arg ued, were v iola t i o n s of a civil statute prohibiting a bank from e x tending more than $5,000 credit to its ex ecutive officers. Christo

, 614 F .2d a t 489. The
g overnment “attempt[ ed] to bootstrap” the civil violations into c riminal misapplication felonies. I d. at 492. I n addition, the c ourt instructed t h e jury to consider whether the overdrafts v iolated the civil statute in determining criminalU N I T E D S T A T E S V

. S P A N G L E R 15

liabili t y

. Id. at 491. The F ifth Circuit reversed the convictions on the basis that the g o v e rnment’s conduct compounded by the improper jury instruction required a new trial. See id. at 492 (“After ex amining the record of the trial,

one questions whether Ch r i s t o was found g uilty of willful misapplication with intent to injure and defraud the b a nk o r . . . for overdrafting

his checking account.”).

Similarly

, in W

ol f

, w e r elied on Christo in r eversing conviction s of a bank ex e c utive for criminal misapplication of bank funds and false entry

. T here, the g overnment relied

on violations o f banking Reg ula t i o n O
, which requires the defendant to disclose to the bank’s d i r e ctors his interest in bank loans, t o s h o w a material nondisclosure on a loan application. W

olf

, 820 F .2d at 1505. The jury w as instructed that violation o f Reg ulation O was “ b a c k g round evidence,” but we c oncluded the instruction was insufficient to cure the “serious risk that the jury would find W olf g uilty of criminal misapplication and false entry because h e failed to comply with Reg ulation O.” Id.

Nothing in t h i s r ecord indicates that testimony a nd

a r g u m e n t r e g a r d i n g S p a n g l e r ’ s f i d u c i a r y s t a t u s “impermissibly infected” Spang ler’s prosecutio n

. Cf. Christo

, 614 F .2d at 492. As set o u t a bove, the testimony
reg arding fiduciary duty was introduced to ex p lain why Spang ler’s c lients did not question h is documents and reports. The investors’ lay understanding s of Spang ler’s fi duciary

o b l i g a t i o n s

— t h e y t h o u g h t t h e y c o u l d t r u s t him—demonstrated how he was able to accomplish the alleg ed f raud. W e are s atisfied that admission of the testimony did not result i n the sort o f b o otstrapping ag ainst which Christo and W

olf warned. Moreo v e r , any concerns about the jurors’ equating viola t i ons of fiduciary duty withU N I T E D S T A T E S V

. S P A N G L E R 16

criminal liability were put to rest by the district court’s careful inst r u c t i o ns on the elements o f the o ffenses and the absence of refer e n ce t o breach of fiduciary duty as a consideration in determ i n ing g uilt. A s such, we conclude there was no abuse of discretion.

III. Whether the District C ourt Violated Spangler’s F if th A m endme nt Rights When it Declined t o Strike Count 33 F rom the Indictm ent

Spang ler also contends that the district court violated his F ifth Amendment rig hts when it declined to dismiss count 33 of the second superseding indictment. W e review the

s u f ficiency of an indictment de novo. United States v. L o , 231 F .3d 471, 481 (9th Cir. 2000).

Count 33 alleg e d that Spang ler committed i n v estmentadviser fraud under the I nvestment Advisers Act of 1940 b y violating 1 5 U.S.C. § 8 0b-6, which prohibi t s i n vestment advisers from eng ag ing in certain conduct. A separate section of the Act, 15 U.S.C. § 80b-17, prov i d e s that “[ a] ny person who willfully violates any provis ion of this subchapter

. . . shall, u pon conviction, be fined not more than $10,000, imprisoned for not more than five y ears, or both.” Althoug h the second supers e d i n g indictment charg ed Spang ler with failing to disclose his interests in TeraHop and Tamarac and the full ex tent of his clients’ investments in t h o s e entities in violation of § 80b-6, it made n o m e n t i o n of § 80b-17. Nor did it use the word “willful.”

Ten day s into trial and after the g overnment had presented all of its e vidence, S p a n g ler moved to dismiss count 33,
arg uing that the second superseding indictment failed to cite the correct statutory subsection and to alleg e willfulness, anU N I T E D S T A T E S V

. S P A N G L E R 17

essential element o f the offense. B ecause of these defects, S p a n g ler arg ued, it was unclear whether the g rand jury h a d passed o n t h e charg e. The district c ourt denied the motion, finding that it was untimely a nd therefore that, g iving the indictment a liberal and common-sense reading , it could not be said “that the defend a n t w a s in any way misled o r prejudiced by the e r ror, if there is an error, in the citation. Nor is the c itation omission g rou n d s to d ismiss the indictment, at least at this point in time.”

Althoug h the failure of an ind i c t ment to state an offense
cannot be waived, a tardy challeng e —that is, o n e made during trial or after the verdict—‘“sug g ests a purely t actical motivation’ and i s needlessly wasteful because pleading defects can u sually be readily cured through a superseding indictment b efore trial.” Lo
, 231 F .3d a t 481 (quoting United States v. Pheaster

, 544 F .2d 353
, 361 (9th Cir. 1976)). F urther, ‘“the f

act of the delay tends to neg ate the possibility of prejudice in the preparation of the defense, ’ b e cause o ne

can ex pect that the challeng e would ha v e come earlier were there any real confusion a bout the elements o f t h e c rime charg ed.” Id. (quoting Pheaster

, 54 4 F. 2 d at 361). Given the s e considerations, “indictments which are tardily challeng ed are liberally construed in favor of validity

, ” Echavarria-Olarte v. Reno
, 3 5 F .3d 395, 397 (9th Cir. 1 994) (quoting United States v. Rodriguez-Ramirez , 777 F .2d 454, 459 (9th Cir. 1 985)), and the q u e s t ion becomes whether the indictment is sufficient when “read in a common sense, nontechnical fashion.” Lo , 231 F

. 3d at 481.

Apply ing that standard here, we have no trouble sustaining the indictment. “Correct citation to the relevant

s t a t u t e, thoug h alway s desirable, is not fatal if omitted,” a s l o n g a s the “ the error did not mislead the defendant to h i sU N I T E D S T A T E S V

. S P A N G L E R 18

prejudice.” United States v

. Vroman
, 975 F .2d 669, 671 (9th Cir. 1 992) ( i n t ernal quotation marks and citations omitted). Here, Spang ler does n ot arg ue that he was prejudiced by the lack of a ci t a t i o n to § 80b-17 nor could he, as he acknowledg ed in a pretri a l m otion that “[ v ] iolations of § 80b-6 are made criminal throug h § 80b-17.”

I nstead, Spang ler arg ues that the a bsence of the word “willful” from the investment-adviser-fraud count raises the risk that the g rand jury did n o t find that Spang ler acted with fraudulent intent. T his contention also fails. As we stated in United States v. Awad

, 551 F .3d 930, 936 (9th Cir. 2009), “an inference of w illfulness is obvious because of the facts alleg ed in the indictment.” Specifically

, the second superseding indictment alle g e d, among other thing s, that Spang ler “knowing ly devised a scheme and artifice to defraud investors” by diverting their money “into two ri s k y p rivate start-up companies” an d concealing evidence of any wrong doing

. Count 33 ex pressly incorporated al l other portions of the indictment by reference, including the lang uag e quoted above. Given that the S u p r e m e Court in a related contex t has defined a “willful” act as “one undertaken with a ‘bad purpose,”’ Bryan v. U nited S tates , 524 U.S. 184, 191 (1998); see also A wad

, 551 F .3d at 936, a reasonab l e gr a nd juror w ould infer from the second supersedin g indictment that Spang ler acted with the requisite bad purpose.

IV. Cum ulative Error

F inally , Spang ler maintains that the cumulative effect of the errors committed at trial justifies reversa l of his convictions. Under the la w o f c umulative error, where “ no sing le trial error ex amin ed in isolation is sufficiently
p rejudicial to warrant r eversal, the cumulative effec t o fU N I T E D S T A T E S V

. S P A N G L E R 19

multiple e rrors may s t i l l prejudice a d efendant.” United States v. Frederick

, 78 F .3d 1370, 1381 (9th Cir. 1996). Here, the cumulative error analy sis is inapposite, a s Spang ler has not demonstrated any err o r s by the district court. See United States v. Martinez-Martinez
, 369 F .3d 1076, 1090 (9th Cir. 2004).

CONCLUSION

F or the foreg oing r easons, we affirm Spang l e r ’s convictions.

AF F IRMED.