2002 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

7-26-2002

USA v. Pharis

Precedential or Non-Precedential: Precedential

Docket No. 00-2855

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Recommended Citation

"USA v. Pharis" (2002). 2002 Decisions. Paper 448.

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PRECEDENTIAL 

 Filed July 26, 2002 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

No. 00-2855 

UNITED STATES OF AMERICA, 

 Appellant 

v. 

DAVID M. PHARIS; EDWARD J. HABINA; 

WILLIAM M. DULL; HARRY GANGLOFF 

On Appeal from the United States District Court 

for the Eastern District of Pennsylvania 

(D.C. Criminal Nos. 99-cr-00743-1; 99-cr-00743-2; 

99-cr-00743-3; and 99-cr-00743-4) 

District Judge: Hon. Herbert J. Hutton 

Argued May 31, 2001 

Before: SLOVITER, FUENTES and COWEN, Circuit Judges 

Reargued En Banc February 13, 2002 

Before: BECKER, Chief Judge, SLOVITER, MANSMANN,* 

SCIRICA, NYGAARD, ALITO, ROTH, McKEE, RENDELL, 

BARRY, AMBRO, FUENTES and COWEN, Circuit Judge s 

(Filed: July 26, 2002) 

_________________________________________________________________ 

* Hon. Carol Los Mansmann participated in the oral argument and 

decision in this case, but died before she could join or concur in this 

Opinion. 

 

 Michael R. Stiles 

 United States Attorney 

 Walter S. Batty, Jr. 

 Robert A. Zauzmer (ARGUED) 

 Amy L. Kurland 

 Kathleen Rice 

 Assistant United States Attorneys 

 Philadelphia, PA 19106 

 Counsel for Appellant 

 Peter Goldberger (ARGUED) 

 Law Office of Peter Goldberger 

 Ardmore, PA 19003-2276 

 Counsel for Appellee 

 David M. Pharis 

 John Rogers Carroll 
 Ellen C. Brotman 

 Carroll & Carroll 

 Philadelphia, PA 19106 

 Thomas A. Bergstrom 

 Malvern, PA 19355 

 Counsel for Appellee 

 William M. Dull 

 Thomas Colas Carroll 

 Carroll & Cedrone 

 Philadelphia, PA 19106 

 Counsel for Appellee 

 Harry Gangloff 

 John W. Morris 

 Philadelphia, PA 19102 

 Counsel for Appellee 

 Edward J. Habina 

 2 

 

OPINION OF THE COURT 

SLOVITER, Circuit Judge: 

After the jury for this federal criminal case had been 

sworn, after two witnesses had testified, and after the 

testimony of a third witness had been stipulated, the 

Government filed a notice of appeal from an adverse ruling 

by the District Court. The issue before us is whether we 

can hear its appeal. 

I. 

FACTS AND PROCEDURAL BACKGROUND 

On November 23, 1999, a federal grand jury returned a 

six-count indictment charging that from January 1988 

until June 1995 David Pharis, Edward Habina, William 

Dull, and Harry Gangloff (Defendants) committed mail 

fraud, in violation of 18 U.S.C. S 1341 (2001), by inflating 

consulting bills that they submitted to insurance 

companies. Defendants’ business, S.T. Hudson 

International, Inc., and its affiliates specialized in providing 

services to insurance companies which had large influxes of 

claims following disasters. Pharis was the CEO and 

president of Hudson, Habina the vice president, Dull an 

associate, and Gangloff a computer consultant. 

According to the indictment, Defendants began their 

fraudulent scheme in 1989 by manually changing 

consulting bills. Specifically, the indictment alleged that 

starting in 1989 and continuing until February 1994, 

Pharis, Habina, and Dull "manually changed, or instructed 

their employees to manually change, the ‘pre-bills’ that 
accurately reflected the consultants’ billings, by inflating 

the number of hours the consultant worked." App. at 14. 

The indictment further alleged that in February 1994, 

Pharis directed Gangloff to develop a computerized billing 

program, known as the "gooser," that automatically 

multiplied the hours each consultant worked by a factor of 

1.15 and then added an additional half hour to the total 

 3 

 

hours billed. App. at 15. In payment of bills produced by 

this computer program, Hudson’s clients mailed to Hudson 

the six checks that form the basis for the Government’s 

charge of mail fraud. 

The trial was scheduled to start on Monday, September 

25, 2000. When the Government filed its trial 

memorandum on Wednesday, September 20, it included a 

motion in limine seeking to offer, under either Federal Rule 

of Evidence 402 or 404(b), evidence of an incident of 

uncharged misconduct by Dull (specifically, the wrongful 

retention of a client’s overpayment) that appears to be 

unrelated to the alleged inflation of any client’s bill. On 

Friday, September 22, Habina responded in opposition to 

the Government’s in limine motion, arguing that the 

proposed evidence was "utterly irrelevant." App. at 47. That 

motion was among the matters addressed in the order 

entered by the District Court on September 26, 2000 and 

was denied. The Government does not press that matter on 

appeal. 

Also on Friday, September 22, Pharis filed a Joint Trial 

Motion to Redact Indictment and Motion In Limine No. 1 

(hereafter "Motion to Redact"), accompanied by a 

supporting memorandum of law from all Defendants. In 

that memorandum, Defendants argued that the 

Government exhibits revealed that there were really two 

separate schemes -- the manual billing scheme which 

ended in February 1993 and the computerized billing 

scheme which began in February 1994. Defendants claimed 

that the schemes differed in methodology, scope, and 

participants, that the statute of limitations barred criminal 

liability for the manual billing scheme, that there was no 

federal jurisdiction alleged as to that manual billing 

because there were no related mailings alleged and that 

only the computerized billing scheme was actionable as 

federal mail fraud. The motion, which specifically alleged 

that the Government was improperly charging two separate 

fraud schemes, requested that the District Court redact 

from the indictment all references to the earlier scheme and 

exclude all evidence relating to it or, in the alternative, that 

the court direct the Government to show the admissibility 

of such evidence under Rule 404(b) by demonstrating that 

 4 

 

the probative value of the pre-1994 evidence was 

substantially greater than its prejudicial effect. Defendants 
sought by their Motion to Redact to preclude the 

Government from presenting any evidence about the 

manual changes to bills that occurred from 1989 to 

February 1994, a period that covers all but roughly a year 

and a half of the time described in the indictment. 

On Monday, September 25, the Government responded to 

the Motion to Redact, defending the indictment’s allegation 

of a single scheme. The jury was sworn in that afternoon. 

On Tuesday, September 26,1 after the jury had been 

given preliminary instructions but before opening 

statements in the trial, the District Court granted 

Defendants’ Motion to Redact. In its memorandum, the 

District Court, in addressing the Government’s motion 

regarding the evidence of Dull’s wrongful retention of a 

client’s overpayment, discussed the circumstances under 

which evidence of uncharged misconduct could be admitted 

pursuant to Rule 404(b). Interspersed with the District 

Court’s discussion of that evidence were comments more 

pertinent to the issue raised by the Defendants’ Motion to 

Redact. Thus, the court stated, "Here, the Government 

seeks to introduce evidence of acts allegedly occurring 

between 1989 and February 1994." United States v. Pharis, 

No. 99-CR-743, slip op. at 3 (E.D. Pa. filed Sept. 26, 2000) 

[hereinafter Sept. 26 order]. 

After additional comments on the wrongfully retained 

payment, the court then shifted to a discussion of the scope 

of the federal mail fraud statute, stating that the statute 

reaches "only those limited instances in which the use of 

the mails is part of the execution of the fraud." Id. at 3-4. 

The court, noting that " ‘[t]he mailings in this case are 

checks that customers sent to Hudson in payment for 

Hudson’s services’ " and that " ‘[t]he scheme was not 

complete until Hudson received the fruits of the scheme, 

that is, the checks,’ " concluded that inasmuch as all six 

counts in the indictment relate to mailings in 1994 and 

1995, those "acts relating to conduct other than that 

_________________________________________________________________ 

1. The court’s order and memorandum were dated September 25 but 

were issued and filed September 26. 

 5 

 

alleged in the indictment constitute other acts that do not 

demonstrate violations of the mail fraud statute, but show 

other acts of Defendants’ bad character." Id. at 4 (quoting 

Government’s in limine motion) (first alternation in 

original). This led the District Court to hold that evidence of 

such other acts was inadmissible under Rule 404(b) and to 

conclude, after performing the balancing test required 

under Rule 403, that the probative value of such evidence 

was substantially outweighed by the danger of unfair 

prejudice. Id. at 5. 

After the District Court granted Defendants’ motion, 

Government counsel, prior to delivering her opening 
statement, requested a sidebar conference for clarification 

of the court’s order. The court denied this request. Counsel 

then presented her opening statement and called a witness. 

During this testimony, the District Court reiterated that the 

Government would not be permitted to prove any acts of 

altering of bills prior to 1994. App. at 174-76. After the 

Government’s first witness, the court recessed until the 

following morning. 

On September 27, the day after the District Court’s 

original ruling was announced but before the trial 

continued, the Government filed a motion for 

reconsideration. In that motion the Government made 

essentially the same arguments it has raised before us on 

appeal. The District Court declined the Government’s 

request for a continuance until the motion for 

reconsideration was ruled upon. The Government 

proceeded to call another witness and the parties agreed to 

a stipulation about the testimony of a third witness. 

The following day, September 28, in rejecting the motion 

for reconsideration, the District Court again quoted Rule 

404(b) at length, said the manually changed bills were a 

"collection of uncharged bad acts . . .[that are] utterly 

unrelated to the offenses which are charged," United States 

v. Pharis, No. 99-CR-743, slip op. at 3 (E.D. Pa. Sept. 28, 

2000) [hereinafter Sept. 28 order] (emphasis added), and 

held those "prior bad acts" to be inadmissible. Id. at 4-5. 

And again, citing Rule 403, the District Court, using the 

language of Rule 404(b), repeated that, although the 

evidence could be used to show Defendants’ "motive, intent, 

 6 

 

plan, scheme or course of conduct," the probative value of 

the evidence was substantially outweighed by the danger of 

unfair prejudice. Id. at 3-4. The Court concluded: 

 To the extent to which the Court’s prior Order 

 intimated that it redacted the indictment, the Court 

 now clarifies its prior order. First, the Court based its 

 decision to bar admission of any evidence during the 

 period 1989 to 1992 on the basis of Federal Rules of 

 Evidence 403, rather than on any authority to redact 

 the indictment. . . . 

 [U]nder Federal Rule of Evidence 403, this Court is 

 granted substantial discretion in balancing the 

 probative value of evidence on the one hand and the 

 unfair prejudice of evidence on the other. 

Id. at 4. 

After receiving the District Court’s denial of its motion for 

reconsideration, the Government filed a notice of appeal 

from both the District Court’s order filed September 26, 

2000, the day after the jury was sworn, and its order dated 

September 28, 2000 denying the Government’s motion for 

reconsideration. The Government requested that the case 
be stayed pending the appeal. Defendants filed motions for 

judgment of acquittal. Defendants also asked the District 

Court to continue the trial with the current jury. The 

District Court denied these three requests and dismissed 

the jury. 

II. ANALYSIS 

A. The District Court’s September 26 Order 

On appeal, Defendants do not defend the District Court’s 

order of September 26, its order denying the Government’s 

motion for reconsideration and the court’s justification for 

these orders. See Transcript of Oral Argument (Feb. 13, 

2002) at 57 [hereinafter Tr.] (agreeing that the indictment 

charged a single scheme) and Tr. at 59-60 (stating that the 

District Court misunderstood both the Government’s 

motion in limine and Defendant’s Motion to Redact). 

 7 

 

The District Court’s September 26 order, in addition to 

denying the Government’s motion to admit evidence of 

other misconduct of Defendants, also denied "the 

Government’s motion to admit evidence of uncharged 

misconduct" under Rule 404(b) and granted Defendant’s 

Motion to Redact. Sept. 26 order at 7-8. In so ruling, the 

District Court appears to have operated under a 

misunderstanding as to the nature of the Government’s 

charge and the applicable law.2 The court stated that 

because all six counts of the indictment rested on mailings 

in 1994 and 1995, the earlier manually changed bills could 

not be part of the mail-fraud scheme. On this point the 

District Court was plainly mistaken. The elements of the 

mail-fraud counts are: (1) a scheme to defraud; (2) use of 

the mails to further that scheme; and (3) fraudulent intent. 

See United States v. Sturm, 671 F.2d 749, 751 (3d Cir. 

1982). The indictment charged that Defendants perpetrated 

a single scheme of mail fraud -- one that encompassed 

both the manually altered bills and the computerized bills. 

It is not of any legal significance that the mailings used to 

bring the scheme under the mail-fraud statute occurred at 

the end of this single scheme. A fraudulent scheme can 

span many years with the mailings occurring only at the 

end of the period. See Schmuck v. United States , 489 U.S. 

705, 711-14 (1989); United States v. Sampson, 371 U.S. 75, 

80 & n.5 (1962); United States v. Ruuska, 883 F.2d 262, 

264-65 (3d Cir. 1989); United States v. Lebovitz , 669 F.2d 

894, 896 (3d Cir. 1982). 

In interpreting the federal mail-fraud statute, the 

Supreme Court has long held that "[i]t is not necessary that 

the scheme contemplate the use of the mails as an 

essential element." Pereira v. United States , 347 U.S. 1, 8 

(1954). All that is required is that the defendants knowingly 

participated in a scheme to defraud and caused a mailing 

to be used in furtherance of the scheme. See, e.g., Sturm, 

671 F.2d at 751; United States v. Pearlstein, 576 F.2d 531, 

534 (3d Cir. 1978).3 
_________________________________________________________________ 

2. We note that the misunderstanding was likely initiated by Defendants’ 

mischaracterization of the indictment in their Motion to Redact. 

3. Defendants’ Motion to Redact noted that any loss to Hudson’s clients 

that resulted from the manual billing scheme occurred before the statute 

 8 

 

The fact that in 1994 Defendants changed the method 

that they used to make increases to the bills they sent their 

clients does not establish that there were two different 

schemes. The District Court was in error if it believed that 

the shift from increasing bills manually to increasing them 

by use of the "gooser" computer program gave rise to a 

different scheme. By itself, changing the method used to 

commit a fraud does not inaugurate a new fraudulent 

scheme. 

Once the District Court concluded that the manually 

altered bills were not properly part of the charged scheme, 

it applied Rule 404(b), finding that the evidence of the 

manually changed bills constituted prior bad acts that 

should be excluded from evidence. Again, the District Court 

was mistaken. Once certain fraudulent conduct is properly 

included as part of the charged scheme, Rule 404(b) poses 

no obstacle because evidence that is part of the charged 

crime does not fall under Rule 404(b). See, e.g. , United 

States v. Gibbs, 190 F.3d 188, 217-18 (3d Cir. 1999); see 

also United States v. Bowie, 232 F.3d 923, 929 (D.C. Cir. 

2000); United States v. Miller, 116 F.3d 641, 682 (2d Cir. 

1997); United States v. Chin, 83 F.3d 83, 87-88 (4th Cir. 

1996). 

The District Court, apparently as part of its Rule 404(b) 

analysis, then applied Rule 403’s balancing test. 4 The 

_________________________________________________________________ 

of limitations. That was not an issue because mailings that fall outside 

the statute of limitations can be considered as evidence to prove later 

fraud that was within the statute of limitations. See, e.g., United States 

v. Ashdown, 509 F.2d 793, 797-98 (5th Cir. 1975). Moreover, a mailing 

that is within the statute of limitations can impose criminal liability for 

conduct that was part of the same scheme but that was initiated outside 

the statute of limitations. See, e.g., United States v. Crossley, 224 F.3d 

847, 857-59 (6th Cir. 2000). Since a mailing is an element of mail fraud, 

"the offense of mail fraud is completed and the statute of limitations 

begins to run on the date on which the defendant, depending on the 

specific use of the mails charged in the indictment,‘places,’ ‘deposits,’ 

‘causes to be deposited,’ ‘takes,’ or ‘receives’ mail, or ‘knowingly causes’ 

mail ‘to be delivered’ as part of the execution of a scheme to defraud." Id. 

at 859; see also United States v. Bach, 172 F.3d 520, 521-22 (7th Cir. 

1999); United States v. Pemberton, 121 F.3d 1157, 1163-64 (8th Cir. 

1997); United States v. Eisen, 974 F.2d 246, 263-64 (2d Cir. 1992). 

4. The court’s analysis in this respect is consistent with our holding that 

Rule 403’s balancing test is one prong of a four-part test for admitting 
 9 

 

District Court explained that whatever the manually 

changed bills showed about Defendants’ motive, intent, 

plan, scheme, etc., the probative value of the evidence was 

"substantially outweighed by the danger of unfair 

prejudice." Sept. 26 order at 4. 

Both parties agree that the District Court made mistakes. 

What should be done about these mistakes is, however, a 

question we can reach only if we have jurisdiction to hear 

this appeal. 

B. Jurisdiction 

1. Dismissal 

The threshold issue before us is whether we have 

jurisdiction to hear the Government’s appeal -- an appeal 

filed after the jury was sworn, after several Government 

witnesses testified, and after the District Court, on the 

Government’s motion, reconsidered and clarified its initial 

ruling.5 

In its brief, the Government rests our jurisdiction over its 

interlocutory appeal on 18 U.S.C. S 3731. Br. of Appellant 

at 20. That statute, the Criminal Appeals Act, states, in 

relevant part: 

 In a criminal case an appeal by the United States 

 shall lie to a court of appeals from a decision, 

 judgment, or order of a district court dismissing an 

_________________________________________________________________ 

evidence under Rule 404(b). See, e.g., Becker v. ARCO Chem. Co., 207 

F.3d 176, 189 (3d Cir. 2000); United States v. Himelwright, 42 F.3d 777, 

781 (3d Cir. 1994). 

5. The District Court’s initial order precluded the Government’s use of 

evidence through February 1994. The District Court’s subsequent order, 

in response to the Government’s motion for reconsideration, modified its 

initial ruling and precluded evidence up until the end of 1992. Sept. 28 

order at 4. The District Court did not explain its modification. The 

dissent, using its telepathic powers to read between the lines, ascribes 

the District Court’s barring of evidence "during the period 1989 to 1992" 

to "merely a scrivener’s error." Dis. op. at 39. Although it does not bear 

on our disposition, we are not convinced by the dissent’s attempt at 

mind reading. 

 10 

 

 indictment . . . as to any one or more counts, except 

 that no appeal shall lie where the double jeopardy 

 clause of the United States Constitution prohibits 

 further prosecution. 

 An appeal by the United States shall lie to a court of 

 appeals from a decision or order of a district court 
 suppressing or excluding evidence . . . in a criminal 

 proceeding, not made after the defendant has been put 

 in jeopardy and before the verdict or finding on an 

 indictment or information, if the United States attorney 

 certifies to the district court that the appeal is not 

 taken for purpose of delay and that the evidence is a 

 substantial proof of a fact material in the proceeding. 

 The provisions of this section shall be liberally 

 construed to effectuate its purpose. 

18 U.S.C. S 3731. 

The Government argues that the District Court’s order 

amounted to a dismissal of the indictment by preventing it 

from proving substantial, material allegations of the 

indictment. However, nothing in the District Court’s order 

purports to dismiss the indictment, all six counts alleged in 

the indictment constituting the mail fraud charges 

remained in the indictment as returned by the grand jury, 

and Defendants’ Motion to Redact, which the court granted, 

did not ask for dismissal of the indictment. Further, in its 

original objection to Defendants’ Motion to Redact, the 

Government did not object that granting the motion would 

amount to a dismissal. That contention emerged only in 

connection with the Government’s motion for 

reconsideration. 

The Government’s argument that the District Court’s 

order "amounted to" a dismissal of the indictment focuses 

on the supposed effect of the order, namely that the order 

precluded the Government from proving the allegations of 

the mail fraud contained in the indictment. The 

Government argues that the District Court "barred the 

government from proving the fraudulent scheme which the 

grand jury described." Br. of Appellant at 22. The 

Government amplified this contention at oral argument 

before us when it stated that the District Court’s ruling 

 11 

 

"gutted" its case because the ruling prevented it from 

proving the scheme to defraud. Tr. at 12. In effect, the 

Government is claiming that a dismissal occurred simply 

because it lost an evidentiary ruling important to its case. 

Thus, the underlying basis for the Government’s appeal 

appears to be the considerable effect the District Court’s 

evidentiary ruling may have had on the Government’s case. 

Defendants concede that "hypothetically . . . an order 

having the form of excluding evidence . . . so sweeping that 

it precluded any and all proof of a count of an indictment 

. . . might be characterized by an appellate court as a 

dismissal under S 3731 rather than as an evidentiary 

ruling," yet they contend that "that hypothetical is far from 

this case." Br. of Appellees at 28-29. We agree. Even if the 

District Court’s ruling were as preclusive as portrayed by 

the Government, it did not preclude the Government from 

attempting to prove a scheme to defraud using post- 
February 1994 evidence relating only to the computerized 

billing method. After all, the indictment alleged mail fraud, 

all six mailings that constituted the acts of mail fraud were 

made after February 1994 and arose out of the computer 

generated bills, and those counts remained intact following 

the order the Government seeks to appeal. 

It is acknowledged by the parties that Defendants shifted 

to computerized billing as a result of the influx of bills that 

needed processing in the wake of the January 1994 

Northridge Earthquake in Los Angeles. The Government 

contends that before computerization, Defendants or their 

employees would (a) draft a pre-bill that accurately reflected 

the hours worked as listed on a consultant’s time sheet, (b) 

manually "mark-up" that pre-bill to indicate that the 

consultant had worked more hours than listed by the 

consultant, and then (c) send a final bill charging the client 

for the hours as increased. The Government explains that 

once Defendants devised a computerized billing system, 

with its automatic fraudulently inflated hours, there was no 

need for any communication among Defendants and their 

employees and hence no evidence comparable to that 

available regarding the manual overbilling. The Government 

candidly concedes that its concern is that the District 

Court’s order would have prevented it from proving the 

 12 

 

fraudulent scheme beyond a reasonable doubt because the 

evidence of the earlier manual overbilling was necessary to 

rebut Defendants’ defense that the computerized overbilling 

was merely an error. But that effect cannot be the basis for 

transforming an evidentiary ruling into a dismissal, any 

more than a midtrial order rejecting essential evidence 

proffered by the government in a drug trial can be 

considered a dismissal. 

The second paragraph of S 3731 authorizes the 

government to take an interlocutory appeal from a decision 

or order excluding evidence but only under certain 

conditions. One such condition is that the order be one "not 

made after the defendant has been put in jeopardy." 18 

U.S.C. S 3731. The Government concedes that Defendants 

were put in jeopardy by September 26, 2000. It thus follows 

that the statutory provision fashioned to cover precisely 

this situation, the exclusion of evidence that the 

Government would have certified was a "substantial proof 

of a fact material in the proceeding," id. , was not available 

to the Government. 

The Government could have protected itself from the 

situation in which it finds itself. Defendants’ Motion to 

Redact, which, inter alia, moved to exclude all evidence 

pertaining to Hudson’s billings before February 1994, was 

filed in the afternoon of Friday, September 22. The jury was 

not impaneled until Monday, September 25. Federal Rule of 

Criminal Procedure 12(e) requires that the District Court 

decide pre-trial motions before the trial begins unless the 

court has deferred decision for good cause; however, the 
rule precludes such deferral if a party’s right to appeal is 

adversely affected. Fed. R. Crim. P. 12(e). 

The Government concedes that it did not ask the District 

Court to withhold swearing the jury until the motion to 

exclude evidence was decided nor did the Government call 

Rule 12(e) to the attention of the District Court. 

Government’s counsel has candidly conceded that in failing 

to ask the District Court not to swear the jury until after 

the pending motion was decided, the Government "made a 

mistake." Tr. at 7. It was a mistake that is not without 

consequences. Because the Government failed to timely 

invoke the procedural rule and the statutory provision 

 13 

 

designed for the specific situation in which it found itself, 

the Government seeks to turn S 3731 upside down, inside 

out, and have this court become the first to call the 

exclusion of evidence a dismissal of the indictment, just so 

it can appeal. 

We cannot allow the Government’s concern about the 

impact of an order in a particular case to lead us to 

overlook the distinction between the first and second 

paragraphs of S 3731. The distinction between an 

evidentiary ruling and a dismissal exists and has meaning. 

The District Court’s ruling was no more than "a decision or 

order . . . suppressing or excluding evidence . . . in a 

criminal proceeding" that occurred "after the defendant[s] 

ha[d] been put in jeopardy," and thus cannot be appealed. 

18 U.S.C. S 3731.6 

The Government conceded at oral argument that it knew 

of no other case in which a court has interpreted an 

evidentiary ruling as a dismissal of an indictment. Tr. at 

29. Yet it has maintained before us that the present case is 

not unique but rather a "repetition" of United States v. 

Maker, 751 F.2d 614 (3d Cir. 1984), which it asserts should 

dictate this court’s analysis. Maker is of no help, and 

indeed is irrelevant on the principal issue before us 

because, unlike the present case, that case came to this 

court after the district court had dismissed the indictment. 

Id. at 615. Therefore, in Maker, we did not have occasion to 

address the circumstances in which an evidentiary ruling 

can amount to the functional equivalent of a dismissal of 

an indictment falling within the first paragraph ofS 3731. 

_________________________________________________________________ 

6. Further, we are not convinced that the ruling would have the 

draconian effect that the Government posits. If the purpose of the 

evidence was to show the intent to defraud over a lengthy period of time, 

a skilled Government prosecutor may very well have been able to 

question witnesses about that issue and elicit that background without 

directly violating the court’s evidentiary ruling. As the trial unfolded, the 

District Court may have modified what may have appeared at first to be 

its rigid prohibition. Moreover, the Government did not attempt to elicit 

testimony concerning what may have been an additional year period 

given by the District Court, see supra note 5, about which to question 
the witnesses. 

 14 

 

In Maker, two defendants were indicted on eighteen 

counts of mail fraud and charged with a single scheme to 

defraud three different insurance companies arising out of 

two car accidents. After jeopardy attached, the district 

court ordered separate trials with respect to each accident 

and also for each defendant. Id. at 615. Then, relying on 

United States v. Camiel, 689 F.2d 31 (3d Cir. 1982), it 

dismissed the indictment because the allegations in the 

indictment did not support a single scheme to defraud but 

rather two separate schemes, one arising from each 

accident. Maker, 751 F.2d at 615. However, the court 

denied the defendants’ motion for a judgment of acquittal. 

Id. at 620. The government appealed. 

The Maker defendants challenged this court’s jurisdiction 

under S 3731, not because there was no dismissal but on 

the ground the appeal was barred by the Double Jeopardy 

Clause. We concluded that the district court had made a 

legal determination, not a factual one, so that the Double 

Jeopardy Clause was not implicated. Id. at 624. On review 

of the merits of the government’s appeal, we concluded that 

the indictment charged only one scheme to defraud, and 

that the district court erred in dismissing the indictment. 

Id. at 626. 

The only questions at issue in Maker, whether the court 

implicitly made a factual determination in dismissing the 

indictment and whether the indictment charged one or two 

schemes to defraud, are not contested in this case. Maker’s 

analysis of the parameters of the scheme to defraud might 

prove useful were we to reach that issue here, but because 

the Maker decision does not pertain to the question when a 

court should recharacterize an evidentiary ruling as a 

dismissal of an indictment, that case does not support the 

Government’s position. 

The Government further relies on this court’s decision in 

Camiel, but that is of no help either. In Camiel, following a 

jury verdict of guilty, the district court found that the 

indictment improperly charged a single fraudulent scheme, 

and accordingly entered a directed verdict of acquittal. The 

government argued that the proper remedy for the defective 

indictment was retrial and severance of the three 

defendants’ trials, rather than acquittal. We rejected that 

 15 

 

view because a court may not correct an indictment, even 

if flawed. Camiel, 689 F.2d at 39-40. Accordingly, we 

determined that "a new trial with the possibility of 

severance [was] not the answer," and thus affirmed the 

judgment of acquittal. Id. at 40. 

As with Maker, Camiel lends support to the conclusion 
that the District Court in this case erred in attempting to 

compartmentalize the evidence. See, e.g., Maker, 751 F.2d 

at 625 ("Camiel . . . teaches that in evaluating whether one 

scheme has been alleged or proved, a court should focus on 

the identity of the actors and the overall purpose of their 

conduct."). But the Camiel court never questioned whether 

it lacked jurisdiction to hear the government’s appeal under 

S 3731. Thus, Camiel does not establish, or even intimate, 

that a district court order restricting the admission of 

evidence, even one that amounts to an amendment of an 

indictment, effectively constitutes a dismissal of that same 

indictment. The irrelevance of Maker and Camiel, the legal 

props on which the Government relies, demonstrates the 

weakness of the Government’s argument. 

More pertinent to the case before us is the Supreme 

Court’s opinion in Sanabria v. United States, 437 U.S. 54 

(1978). The first sentence of the opinion characterizes "the 

issue presented [as] whether the United States may appeal 

in a criminal case from a midtrial ruling resulting in the 

exclusion of certain evidence and from a subsequently 

entered judgment of acquittal." Id. at 56. The indictment in 

Sanabria charged several defendants with one count of 

conducting an illegal gambling business in violation of 

federal law, a business that involved two different types of 

conduct -- numbers betting and horse betting, both 

allegedly in violation of Massachusetts law. Under the 

federal statute defendants were charged with violating, 18 

U.S.C. S 1955 (1976), the gambling business must have 

been in violation of the law of the state where the business 

was located. At the close of the defendants’ case at trial, the 

court excluded evidence of numbers betting because the 

state statute referenced in the indictment addressed only 

horse betting and not numbers betting, but the court did 

not strike or amend any language in the indictment. The 

court then granted the motion for judgment of acquittal 

 16 

 

filed by Sanabria, one of the defendants, because there was 

no evidence linking him to the horse-betting activities. Id. 

at 59. 

Following the conviction of the other defendants, the 

government appealed from the district court’s order 

excluding evidence of the numbers-betting activities and 

entering a judgment of acquittal. The government 

recognized it could not appeal the ruling regarding 

Sanabria’s involvement with horse betting, as that aspect of 

the acquittal was based on the insufficiency of the evidence, 

but it sought a new trial on the aspect of the charge 

involving numbers betting. The court of appeals interpreted 

the district court’s evidentiary ruling to be a"dismissal" of 

the numbers-betting "charge," thus finding it had 

jurisdiction under S 3731 to consider the government’s 

claim that the "dismissal" was in error. Id. at 61. Reviewing 

the merits, the court of appeals concluded that the 

"dismissal" was in error and ordered a new trial. The 

Supreme Court granted certiorari and reversed. 
The order granting certiorari was limited to the question 

whether "the Government’s appeal was authorized by 

statute and not barred by the Double Jeopardy Clause." Id. 

at 62 n.13. However, the Court did not thereafter discuss 

the statute on which the court of appeals had relied for its 

jurisdiction. It explained that it had previously observed 

that "the jurisdictional statute authorizing Government 

appeals, 18 U.S.C. S 3731 (1976), was ‘intended to remove 

all statutory barriers’ to appeals from orders terminating 

prosecutions. United States v. Martin Linen Supply Co., 430 

U.S. 564, 568 (1977), quoting United States v. Wilson, 420 

U.S. 332, 337 (1975)." Id. at 63 n.16 (quotation omitted). It 

therefore turned immediately to the constitutional issue, 

which was whether the Double Jeopardy Clause barred the 

appeal. 

However, in deciding the double jeopardy issue, i.e., 

whether the horse-betting and numbers-betting activities 

were part of the "same offense" so that the acquittal for 

insufficient evidence as to Sanabria’s participation in horse 

betting barred the new trial ordered for Sanabria on the 

numbers-betting conduct, the Supreme Court first 

considered the nature of the district court’s order with 

 17 

 

respect to the numbers-betting aspect of the charge. It did 

so to ascertain whether "the numbers theory was dismissed 

from the count before the judgment of acquittal was 

entered," id. at 65, and therefore whether Sanabria was 

acquitted of numbers betting, which would have entailed a 

resolution of factual issues precluding a second trial for the 

same offense.7 The government argued that the district 

court’s order was a "dismissal" of a discrete portion of the 

count in which the two types of gambling were included. 

The Supreme Court was "not persuaded that it is correct to 

characterize the trial court’s action as a ‘dismissal’ of a 

discrete portion of the count." Id. at 66. It continued, 

"[w]hile form is not to be exalted over substance . . . , 

neither is it appropriate entirely to ignore the form of order 

entered by the trial court." Id. 

The Court concluded that the district court’s order simply 

constituted "an evidentiary ruling based on its 

interpretation of the indictment," and not a dismissal. Id. at 

68. As the Court noted, 

 [N]ot every erroneous interpretation of an indictment 

 for purposes of deciding what evidence is admissible 

 can be regarded as a ‘dismissal.’ Here the District 

 Court did not find that the count failed to charge a 

 necessary element of the offense; rather, it found the 

 indictment’s description of the offense too narrow to 

 warrant the admission of certain evidence. To this 

 extent, we believe the ruling below is properly to be 

 characterized as an erroneous evidentiary ruling. 

Id. (citation omitted). 
The Supreme Court concluded that the evidentiary ruling 

on the numbers charge, albeit erroneous, "led to an 

acquittal for insufficient evidence," id., and held that the 

Double Jeopardy Clause would be offended by a new trial 

relating to the numbers charge, as that charge was part of 

the "same offense" as the horse-betting charge on which the 

defendant had been acquitted. Id. at 69. 

_________________________________________________________________ 

7. The Double Jeopardy Clause of the Fifth Amendment provides that no 

person shall "be subject for the same offense to be twice put in jeopardy 

of life or limb." U.S. Const. amend. V. 

 18 

 

The Government tries to minimize the significance of 

Sanabria by limiting it to cases where the trial court 

entered a judgment of acquittal. However, Sanabria’s 

analysis of an evidentiary ruling based on an interpretation 

of an indictment as distinguished from a dismissal of that 

indictment is applicable here. 

The district court in Sanabria "found the indictment’s 

description of the offense too narrow to warrant the 

admission of certain evidence." Id. at 68. The District Court 

in this case made a similar ruling. Accordingly, the District 

Court’s exclusionary ruling in this case did not constitute 

a dismissal of one or more counts of the indictment within 

the scope of S 3731, even construing that statute liberally, 

as the statute requires. Moreover, the Government does not 

argue that the District Court’s ruling dismissed"a portion 

of a count," from which order an appeal to this court would 

lie under S 3731 when "the dismissed portion of the count 

constitutes an independent ground of criminal liability." 

United States v. Serafini, 167 F.3d 812, 814 (3d Cir. 1999). 

That argument would have been meritless, as it is plain 

that the excluded evidence included no alleged mailings 

and thus could provide no independent ground of liability. 

Because the District Court’s evidentiary ruling did not 

constitute a dismissal of the indictment, we reject the 

Government’s argument that this court has jurisdiction to 

hear its appeal under S 3731.8 

We need not rest our disposition only on our 

interpretation of the meaning of "dismissal" in S 3731. Even 

if we were to limit our consideration to S 3731 and assume 

that the order of the District Court were a dismissal of the 

indictment (which we have held it was not), the first 

paragraph of S 3731 permits the Government to retry 

Defendants only if the Double Jeopardy Clause is not a bar 

to further prosecution. The Government’s opening brief 

_________________________________________________________________ 

8. Because we believe that the District Court’s ruling did not amount to 

a dismissal at all, we need not consider further whether the District 

Court’s order amounted to a dismissal of the indictment as it pertained 

to defendant Harry Gangloff in particular, inasmuch as he appears to 
have been implicated only in the inflated computer billing scheme. 

 19 

 

conceded this in its section headed "There Is No Double 

Jeopardy Bar to a Retrial." Br. of Appellant at 30. 

Moreover, there is a plausible argument that the 

Supreme Court’s statement in Wilson cited in Sanabria, 

437 U.S. at 63 n.16, that the jurisdictional statute was 

"intended to remove all statutory barriers to Government 

appeals and to allow appeals whenever the Constitution 

would permit," Wilson, 420 U.S. at 337, requires us to move 

directly to the Constitution in determining our jurisdiction 

over appeals from orders terminating prosecutions. 9 There 

is legislative history to support the intent described in 

Wilson. See, e.g., id. at 338-39. Under that theory, our 

interpretation of S 3731 would not be dispositive, 

notwithstanding the Government’s reliance upon it as a 

basis for our jurisdiction and we turn to the Double 

Jeopardy Clause for consideration of its effect on our 

jurisdiction.10 

2. Double Jeopardy 

The first relevant question is whether Defendants were 

placed in jeopardy. As discussed above, all parties agree 

that the jury had been sworn and the trial had been 

started. Defendants were, therefore, placed in jeopardy. 

This does not end our inquiry. As we observed in Maker, 

 [a]lthough the Supreme Court has explicitly held that 

 "[t]he federal rule that jeopardy attaches when the jury 

 is empaneled and sworn is an integral part of the 

 constitutional guarantee against double jeopardy," Crist 

_________________________________________________________________ 

9. The Court in Sanabria recognized some undefined limitation other 

than the obvious Double Jeopardy Clause, as it stated in another 

context, without explanation, "the Government is not authorized to 

appeal from all adverse rulings in criminal cases." 437 U.S. at 67 n.21. 

10. In Sanabria, the Supreme Court, after concluding that further 

prosecution was barred because it viewed the district court’s order to 

have been a judgment of acquittal, nevertheless proceeded to discuss 

whether, even if the government were correct that the order was merely 

a dismissal, further prosecution of Sanabria was barred by the Double 

Jeopardy Clause. 437 U.S. at 69. Although there was no acquittal in this 

case, all the parties acknowledge the relevance of the Double Jeopardy 

Clause to our jurisdiction. 

 20 

 

 v. Bretz, 437 U.S. 28, 38 (1978), this proposition . . . 

 is the beginning rather than the end of our analysis. 

751 F.2d at 620 n.22. 
In Sanabria, the Court summarized the "limited 

circumstances" when a second trial on the same offense is 

constitutionally permissible. 437 U.S. at 63. It stated, 

 A new trial is permitted, e.g., where the defendant 

 successfully appeals his conviction, United States v. 

 Ball, 163 U.S. 662, 672 (1896); where a mistrial is 

 declared for a "manifest necessity," Wade v. Hunter, 

 336 U.S. 684 (1949); where the defendant requests a 

 mistrial in the absence of prosecutorial or judicial 

 overreaching, United States v. Dinitz, 424 U.S. 600 

 (1976); or where an indictment is dismissed at the 

 defendant’s request in circumstances functionally 

 equivalent to a mistrial, Lee v. United States , supra. 

 See also Jeffers v. United States, 432 U.S. 137 (1977). 

Id. at 63 n.15. 

The situations listed in the passage quoted above from 

Sanabria can be characterized as situations in which the 

defendant consented to or requested the termination. This 

is not such a situation, as illustrated by this court’s 

precedents. 

In Love v. Morton, 112 F.3d 131, 136-37 (3d Cir. 1997), 

towards the close of the first day of Love’s criminal trial, the 

trial judge learned that his mother-in-law had died 

unexpectedly. Without the explicit consent of the parties, 

the judge declared a mistrial and left the courthouse. Id. at 

134-35. The next day, a new trial began with a new jury 

and a new judge. Love’s request for dismissal on double 

jeopardy grounds was overruled by the new judge, and he 

was thereafter convicted. In considering Love’s habeas 

petition, we held that "[t]o demonstrate manifest necessity, 

the state must show that under the circumstances the trial 

judge ‘had no alternative to the declaration of a mistrial.’ 

The trial judge must consider and exhaust all other 

possibilities." Id. at 137 (quoting United States v. McKoy, 

591 F.2d 218, 222 (3d Cir. 1979)). Applying this principle, 

we held that there was no manifest necessity for declaring 

 21 

 

a mistrial because there were other possibilities available. 

For example, the trial could have been continued with a 

replacement judge presiding after the new judge reviewed 

the trial transcript. Further, we held that under the 

circumstances, Love’s consent to the termination could not 

be inferred from his failure to object to it. Id. at 138-39. We 

therefore concluded that the Double Jeopardy Clause 

prohibited Love’s second trial. See also McKoy , 591 F.2d at 

222-23 (finding no manifest necessity for declaring mistrial 

and, hence, holding further prosecution was prohibited by 

double jeopardy). 

In the present case, there were also clear alternatives to 

termination. Before the District Court dismissed the jury, 

the Government suggested that the trial be stayed briefly 

without discharging the jury during the pendency of an 
expedited appeal. Defendants suggested that the trial could 

continue unless and until this court granted a stay. 

Alternatively, as we noted previously, had the Government 

raised and the District Court followed Federal Rule of 

Criminal Procedure 12(e) by ruling on the pending motions 

before the trial began, an appeal would have been feasible 

without any attachment of jeopardy. In the present case, as 

in Love, there was no manifest necessity to terminate the 

trial. 

In light of the lack of manifest necessity, we next 

consider whether Defendants in effect consented to the 

termination of the trial. The Government argues that the 

termination was prompted by Defendants’ motion, and 

thus, there is no double jeopardy bar to a remand for a new 

trial on the theory that Defendants consented to the 

termination. 

We observed in Love that "[m]istrials declared with the 

defendants’ consent do not bar a later prosecution," and 

cited United States v. Dinitz, 424 U.S. 600, 607 (1976). 

Love, 112 F.3d at 133. In Dinitz, the trial judge dismissed 

Dinitz’s counsel during his opening statement for repeated 

misconduct. The trial judge asked co-counsel, who had not 

discussed the case with any of the witnesses, to proceed 

with trial. Dinitz expressed desire that his original counsel 

be permitted to defend him. The trial judge offered Dinitz 

the choice of (a) continuing the trial with co-counsel, (b) 

 22 

 

recessing the trial during an attempt at interlocutory review 

of the dismissal of original counsel, or (c) declaring a 

mistrial to allow Dinitz to obtain new counsel. Dinitz chose 

a mistrial. Before his subsequent trial, Dinitz argued that 

the Double Jeopardy Clause barred his further prosecution. 

The Supreme Court held that when a defendant requests a 

mistrial, even in response to prosecutorial or judicial error, 

double jeopardy does not bar mistrial, Dinitz , 424 U.S. 606- 

612, unless the error that prompted it was " ‘bad-faith 

conduct by judge or prosecutor.’ " Id. at 611 (quoting United 

States v. Jorn, 400 U.S. 470, 485 (1971) (plurality opinion)). 

In Love, we held that defendant’s failure to object to the 

mistrial did not constitute express consent or implied 

consent because he did not have a meaningful opportunity 

to object to the mistrial. Because there was no consent to 

the termination, the Double Jeopardy Clause barred a new 

trial. Love, 112 F.3d 138-39. 

In Lee v. United States, 432 U.S. 23 (1977), defense 

counsel, immediately before the start of a trial for theft, 

moved to dismiss the information for failure to include 

allegations of knowledge and intent. The trial court denied 

the motion but said that it would be reconsidered. At the 

end of the trial, the court granted the defendant’s motion to 

dismiss for failure to charge knowledge and intent, even 

though the trial judge was convinced that the defendant 

was guilty. The prosecution filed a corrected information 
and, after the second trial, the defendant was convicted. 

The Supreme Court held that the Double Jeopardy Clause 

did not bar the second prosecution because the first 

prosecution was terminated at the defendant’s request. See 

also United States v. Scott, 437 U.S. 82, 98-99 (1978) 

(holding that "defendant, by deliberately choosing to seek 

termination of the proceedings against him on a basis 

unrelated to factual guilt or innocence . . . suffers no injury 

cognizable under the Double Jeopardy Clause if the 

Government is permitted to appeal from such a ruling of 

the trial court in favor of the defendant"). 

In United States v. Kennings, 861 F.2d 381 (3d Cir. 

1988), we held that the fact that the district court rather 

than the defendant first suggested dismissal does not bar 

appeal so long as the defendant agreed to dismissal. Id. at 

 23 

 

383-86. We found that the defendant’s consent and active 

support of dismissal undercut the argument that the 

defendant should only be tried by the first jury empanelled 

to hear his case. Id. at 385. 

Unlike the situations in Lee, Scott, and Kennings, 

Defendants in the present case did not move for a mistrial, 

for a termination of the trial, for the discharge of jury, or for 

the dismissal of the indictment or any count of it. Moreover, 

they objected to the District Court’s decision to terminate 

the trial and asked the court to continue with the trial.11 

Although Defendants, through their Motion to Redact, did 

set in motion the chain of events that led to termination of 

their trial, that alone is not enough to infer their consent to 

the resulting termination of the trial. 

In Kennings, we contrasted the situation before us with 

that the court faced in United States v. Dahlstrum, 655 F.2d 

971 (9th Cir. 1981). In Kennings, the defendant 

"encouraged the dismissal solely on the grounds that the 

statute was inapplicable" and "argued that the appropriate 

action by the court was immediate, midtrial dismissal." 

Kennings, 861 F.2d at 385 n.6. We noted that in Dahlstrum, 

on the other hand, "the [trial] court dismissed the case sua 

sponte" and "the defendant passively acquiesced . . . . in 

response to the judge’s statements that he ‘did not believe 

the government had proved its case,’ [and t]hus, 

acquiescence could not have been read to mean that retrial 

would be acceptable to the defendant." Id. (quoting 

Dahlstrum, 655 F.2d at 975). We found that these 

differences explained why the Double Jeopardy Clause did 

not bar the appeal in Kennings but it did bar the appeal in 

Dahlstrum. Id. 

Our analysis in Kennings demonstrates that a defendant 

who merely sets in motion a series of events that leads to 

the termination of his or her trial is protected from being 

retried by the Double Jeopardy Clause. Defendants in the 

_________________________________________________________________ 
11. Defendants did, however, ask for an acquittal, but their motion for 

acquittal was not granted. If Defendants had been acquitted, then the 

Double Jeopardy Clause would bar any further prosecution. Defendants 

do not claim that they were acquitted and do not base their argument 

that double jeopardy bars their further prosecution on this ground. 

 24 

 

present case did no more than set in motion events that 

led, over their objections, to the dismissal of their trial. The 

real cause of the trial being interrupted was the 

Government’s desire to appeal the exclusion of some of its 

evidence. Because Defendants did not consent to the 

termination, even if the District Court’s decision to 

terminate the trial did constitute a dismissal, the Double 

Jeopardy Clause bars this court from having jurisdiction to 

hear the Government’s appeal. 

3. The Dissent 

The dissent’s interesting discourse on the important 

principle of separation of powers overlooks that the holding 

of the majority in this case is that the court lacks 

jurisdiction to hear the Government’s appeal. In each of the 

cases cited by the dissent on pages 29 through 31, the 

court’s appellate jurisdiction stood on firm statutory 

ground. Thus, in United States v. Giannattasio , 979 F.2d 

98, 100 (7th Cir. 1992), the court reviewed the dismissal of 

an indictment; in United States v. Zabawa, 39 F.3d 279, 

283 (10th Cir. 1994), and United States v. Nakashian, 820 

F.2d 549, 550 (2d Cir. 1987), each court deemed the 

district court’s requirement that the government select a 

limited number of counts on which it would proceed to be 

a dismissal of one or more counts, and thus expressly 

covered by 18 U.S.C. S 3731; in United States v. Abdelhaq, 

246 F.3d 990 (7th Cir. 2001), the defendant was appealing 

his conviction, and thus there was no question of 

jurisdiction under S 3731; in United States v. Marubeni 

America Corp., 611 F.2d 763, 764-65 (9th Cir. 1980), the 

court (following a similar decision by the Second Circuit) 

held that dismissal of a substantial part of a count of an 

indictment fell within S 3731; and in United States v. 

Woolard, 981 F.2d 756, 757 (5th Cir. 1993), the court held 

it had jurisdiction over the order of the district court 

striking the death penalty as a possible sentence because it 

effectively "removed a discrete basis of criminal liability." 

The District Court’s order in this case is not comparable to 

any of those cases. The court neither struck nor dismissed 

a count or a portion of a count. Because the references to 

the manual billing were included in the indictment only as 

part of the history of Defendants’ scheme, the Government 

 25 

 

never included them in any count, so the court’s order did 

not remove any discrete basis for criminal liability. 

The dissent concludes its discussion of this portion of its 
opinion with the sentence that "the law governing the 

separation of powers between the executive and judicial 

branches is sufficient to demonstrate that the District 

Court’s actions in this case must have resulted in a 

dismissal." Dis. op. at 34 (emphasis added). The dissent’s 

non sequitur is not an effective substitute for an order or 

action by the District Court that does indeed fall within 18 

U.S.C. S 3731. Had its separation of powers argument been 

of any force, the Government, which has vigorously 

pursued this appeal, would be likely to have included it. 

But it didn’t. 

When the dissent turns to the issue of the order the 

District Court did enter, it appears to misread it, as it fails 

to acknowledge that, whatever the effect of the order, it did 

nothing more than exclude evidence of the manual scheme 

(which, as we previously acknowledged, was erroneous). 

Because no count in the indictment charged the manual 

billing as an offense, the District Court’s exclusion of 

evidence of the manual billing cannot be viewed as a 

dismissal of any count or a part thereof. It follows that the 

points made by the dissent are not persuasive. 

III. 

CONCLUSION 

Despite the various mistakes that the District Court 

made, this court lacks jurisdiction to hear the 

Government’s appeal under S 3731 both because the 

District Court did not dismiss the indictment and because 

a retrial is barred by the Double Jeopardy Clause. We will 

therefore dismiss the Government’s appeal. 

 26 

 

COWEN, Circuit Judge, dissenting: 

Under our system of government, judges do not draft 

indictments. The power to decide whether charges will be 

brought, which violations to allege, and what the scope of 

those charges will be belongs to the executive branch and 

grand jury, not to the judiciary. United States v. Armstrong, 

517 U.S. 456, 464 (1996); Wayte v. United States , 470 U.S. 

598, 607-608 (1985); Heckler v. Chaney, 470 U.S. 821, 832 

(1985); United States v. Goodwin, 457 U.S. 368, 382 (1982); 

Bordenkircher v. Hayes, 434 U.S. 357, 364 (1978); Oyler v. 

Boles, 368 U.S. 448, 456 (1962); United States v. Chemical 

Foundation, Inc., 272 U.S. 1, 14-15 (1926). See also, United 

States v. Williams, 504 U.S. 36, 47-50 (1992). This 

separation of powers is fundamental to our Constitution’s 

design. "Time and again we have reaffirmed the importance 

in our constitutional scheme of the separation of 

governmental powers into the three coordinate branches." 

Morrison v. Olson, 487 U.S. 654, 693 (1988) (citations 

omitted). Just as the legislative branch cannot alter the 

outcome of a case that the judiciary has decided, Plaut v. 

Spendthrift Farms, Inc., 514 U.S. 211 (1995), so too the 

judicial branch cannot assume the role of writing 
indictments that initiate cases. 

Undermining the important principle of separated 

powers, the majority today grants trial courts substantial 

powers to reshape indictments brought by the executive 

and approved by a grand jury. The majority concludes that 

the District Court in this case was permitted -- without 

dismissing the indictment -- to cut in half the fraudulent 

scheme alleged in each of the six counts of mail fraud 

brought in the indictment, and to do so based on what the 

majority admits are pure errors of law. This erroneous 

alteration of the indictment changed allegations addressing 

an essential element of the offense of mail fraud, the 

fraudulent scheme, see United States v. Lane, 474 U.S. 

438, 451 (1986) (quoting Kann v. United States , 323 U.S. 

88, 94 (1944)); United States v. Sturm, 671 F.2d 749, 751 

(3d Cir. 1982), and the evidence encompassed by the 

excluded half of the fraudulent scheme is crucial, as the 

government very plausibly insists, to proving any claim of 

fraud. 

 27 

 

The upshot of the majority’s rule is that district courts in 

this circuit now possess unchanneled discretion to rewrite 

indictments without having the effect of dismissing them, 

even though the changes to the offense elements are 

substantial enough to prevent the government from proving 

the defendants’ crimes. At most the only limitation that can 

be extracted from the majority’s opinion is that perhaps the 

number of counts and type of offense must be maintained, 

together with some unspecified facts about some 

unspecified elements of the offense. See Majority Op. at 12- 

13. Thus, it would seem that a district court could, without 

dismissing the indictment, force the government to proceed 

on a lesser included offense that was never expressly 

charged in the indictment, even though the greater offense 

was supported by the law and evidence. Or a district court 

could alter the type of fraudulent scheme alleged by 

changing, for example, a scheme alleging fraudulent over 

billing to one charging fraudulent billing for services that 

were never performed, even though the latter was 

unsupported by the evidence. Or a district court could 

decide to reduce by a third the total losses alleged from a 

fraudulent scheme. If the majority’s rule is limited only to 

changes to certain categories of offense elements, or even 

more specifically to just the duration of a fraudulent 

scheme in mail-fraud prosecutions, the majority certainly 

does not say so, nor does its opinion offer any explanation 

of how such an anomalous special limitation could be 

justified. 

In describing its standard, the majority says, quoting the 

appellees’ brief, that "hypothetically . . . an order having 

the form of excluding evidence . . . so sweeping that it 

precluded any and all proof of a count of an indictment . . . 

might be characterized by an appellate court as a dismissal 

under S 3731 . . . ." Id. at 12. But the majority concludes 

that this standard was not met in this case because,"[a]fter 
all, the indictment alleged mail fraud, all six mailings that 

constituted the acts of mail fraud were made after February 

1994 and arose out of the computer generated bills, and 

those counts remained intact following the order the 

Government seeks to appeal." Id. at 12. In other words, it 

is of no consequence that the District Court cut in half the 

scope of one element of the offense, the fraudulent scheme, 

 28 

 

and did so in a manner that made proof of the remaining, 

narrower criminal offense considerably more difficult if not 

impossible. Conspicuously, the majority does not cite any 

legal authority supporting its sweeping standard for altering 

indictments without dismissing them. 

And there is legal authority that concludes that the 

separation of powers prevents district courts from reaching 

so far into the executive branch’s role of selecting the type 

and scope of criminal charges. Cases like Armstrong, 

Wayte, Heckler, Goodwin, Bordenkircher, Oyler, and 

Chemical Foundation, Inc. establish that the task of 

selecting charges belongs to the executive. Similarly, several 

courts have concluded that it transgresses the separation of 

powers for a district court to force the government to 

proceed on only parts of an indictment. See, e.g., United 

States v. Zabawa, 39 F.3d 279 (10th Cir. 1994); United 

States v. Giannattasio, 979 F.2d 98 (7th Cir. 1992). These 

cases embody the fundamental principle that unelected 

federal judges are not vested under the Constitution with 

the responsibility to exercise prosecutorial discretion and 

"take Care that the Laws be faithfully executed." Art. II, 

Sec. 3. A more democratically responsive branch must be 

left to make the difficult choices about whom to charge, 

which crimes to pursue, and how numerous and serious 

the charges will be. District courts of course retain the 

power to dismiss legally defective indictments, but they 

cannot engage in a freewheeling process of rewriting 

indictments and offering defendants lighter or different 

charges. 

In Zabawa after the district court required the 

government to proceed to trial on a limited portion of the 

indictment, the government objected and sought to appeal 

because it believed that reducing the counts prevented the 

government from "presenting the necessary evidence to 

convict all defendants." Zabawa, 39 F.3d at 284. Although 

the district court did not dismiss those counts that the 

government was not permitted to pursue at trial, the Tenth 

Circuit concluded that "the district court’s order -- forcing 

a choice of counts without a formal dismissal of the other 

counts -- is not significantly different from ordering a 

formal dismissal without prejudice." Id. at 283. The Tenth 

 29 

 

Circuit continued that the district court’s attempt to limit 

the counts presented would violate the separation of 
powers: "Because the district court’s ruling forces the 

government to abandon, at least temporarily, the 

prosecution of separate crimes it has charged against 

defendants who are scheduled to be tried, we believe the 

ruling goes beyond those subject to the court’s 

discretionary control and impinges upon the separation of 

powers. Prosecutorial discretion is a function of the 

executive branch, not the judiciary." Id. at 284. 

In Giannattasio the Seventh Circuit similarly held that a 

district court violated the separation of powers when it 

forced the government to select five of fifteen counts to 

present at trial. Judge Posner’s opinion explained: 

 A judge in our system does not have the authority to 

 tell prosecutors which crimes to prosecute or when to 

 prosecute them. Prosecutorial discretion resides in the 

 executive, not in the judicial branch, and that 

 discretion, though subject of course to judicial review 

 to protect constitutional rights, is not reviewable for a 

 simple abuse of discretion. This principle is most often 

 involved when the issue is whom to prosecute . . . but 

 it has equal force when the issue is which crimes of a 

 given criminal to prosecute. If Dr. Giannattasio 

 committed fifteen Medicare frauds, a judge cannot tell 

 the Justice Department to prosecute him for only five 

 of the frauds, or to prosecute him for five now and the 

 rest later, if necessary . . . . No rule authorizes the 

 judge to sever offenses in an indictment because he 

 believes that a trial of all the counts charged would 

 clog his docket without yielding any offsetting benefit 

 in the form of a greater likelihood of conviction or a 

 more severe punishment. 

Giannattasio, 39 F.3d at 100 (citations omitted). Cf. United 

States v. Abdelhaq, 246 F.3d 990, 992 (7th Cir. 2001) ("The 

judge felt that the government didn’t need the extra counts. 

He may have been right. There would be no sentencing 

increment from conviction of the other charges if the 

government succeeded in convicting the defendant of the 

main charge . . . . And indeed, after she was convicted on 

that charge and sentenced to 21 years in prison, the 

 30 

 

government dismissed the counts that had been severed. 

But the decision on how many counts are needed to 

present an effective case is a managerial decision 

committed to the discretion of the prosecution."); United 

States v. Woolard, 981 F.2d 756, 757 (5th Cir. 1993) 

(finding jurisdiction for "orders that did not dismiss an 

entire count but altered it in a significant way from the 

grand jury’s charge."); United States v. Nakashian, 820 F.2d 

549, 550 (2d Cir. 1987) ("an order compelling an election 

between counts is a ‘dismissal’ for Section 3731 

purposes."); United States v. Marubeni America Corp., 611 

F.2d 763, 764-65 (9th Cir. 1980) (finding jurisdiction for a 

government appeal of an order striking forfeiture allegations 

from RICO indictment). 
Two other lines of authority confirm that the District 

Court should not be permitted to alter the scope of the 

fraudulent scheme alleged in the indictment. The first line 

of authority interprets the scope of Fed.R.Crim.P. 7(d), 

which allows a defendant to request that a court remove 

surplusage from the charging indictment. Under the rule, 

the "scope of a district court’s discretion to strike material 

from an indictment is narrow." United States v. Oakar, 111 

F.3d 146, 157 (D.C. Cir. 1997) (citing United States v. 

Jordan, 626 F.2d 928, 931 n.1 (D.C. Cir. 1980));"Words 

descriptive of what is legally essential to the charge in the 

indictment cannot be stricken as surplusage." Wright, 

Federal Practice and Procedure S 127, at 635. See also 

United States v. Collins, 920 F.2d 619, 631 (10th Cir. 1990); 

United States v. Figueroa, 900 F.2d 1211, 1218 (8th Cir. 

1990); United States v. Behenna, 552 F.2d 573, 576 (4th 

Cir. 1977); United States v. Root, 366 F.2d 377, 381 (9th 

Cir. 1966). "Material that can fairly be described as 

‘surplus’ may only be stricken if it is irrelevant and 

prejudicial." Oakar, 111 F.3d at 157. See also United States 

v. Rezaq, 134 F.3d 1121, 1134 (D.C. Cir. 1998); Untied 

States v. Huppert, 917 F.2d 507, 511 (11th Cir. 1990); 

United States v. Scarpa, 913 F.2d 993, 1013 (2d Cir. 1990). 

The second line of authority is based not on the 

separation of powers or on the scope of Fed.R.Crim.P. 7(d), 

but on the Fifth Amendment’s Grand Jury Clause limiting 

amendments to indictments. See Ex parte Bain, 121 U.S. 1 

 31 

 

(1887). While Bain has been rejected and limited in a 

number of important respects, the Supreme Court recently 

noted that by limiting Bain, the Court "need not retreat" 

from the "settled proposition" in Bain that "an indictment 

may not be amended except by resubmisson to the grand 

jury, unless the change is merely a matter of form." United 

States v. Cotton, 122 S.Ct. 1781, 1785 (2002) (quoting 

Russell v. United States, 369 U.S. 749, 770 (1962)). In Bain 

the Supreme Court stated: 

 If it lies within the province of a court to change the 

 charging part of an indictment to suit its own notions 

 of what it ought to have been, or what the grand jury 

 would probably have made it if their attention had 

 been called to suggested changes, the great importance 

 which the common law attaches to an indictment by a 

 grand jury, as a prerequisite to a prisoner’s trial for a 

 crime, and without which the Constitution says "no 

 person shall be held to answer," may be frittered away 

 until its value is almost destroyed. 

121 U.S. at 10. 

The one limitation of Bain relevant here is the rule that 

a prosecutor may choose to withdraw a portion of the 

indictment that the evidence does not support and proceed 

on a lesser included offense without resubmitting the 
indictment to the grand jury. United States v. Miller, 471 

U.S. 130 (1985). The defendant in Miller had been charged 

with defrauding his insurer both by consenting to a 

burglary of his place of business and by lying to the insurer 

about the value of his losses. After the grand jury returned 

the indictment, the government moved to strike the part of 

the indictment alleging that the defendant had prior 

knowledge of the burglary, but the government correctly 

maintained that the remaining allegations of lying about 

the value of the loss still supported the indictment’s 

allegation of mail fraud. In finding no violation of Bain, the 

Supreme Court explained, "A part of the indictment 

unnecessary to and independent of the allegations of the 

offense proved may normally be treated as a ‘useless 

averment’ that ‘may be ignored.’ " Miller, 471 U.S. at 136 

(quoting Ford v. United States, 273 U.S. 593, 602 (1927)). 

 32 

 

In our case, however, the government has not sought to 

abandon any allegations or charges and pursue a 

separately alleged or lesser included offense, and the 

government has steadfastly maintained, quite plausibly, 

that the allegations excluded by the District Court are 

essential for proving the defendants’ guilt of any charge of 

mail fraud. The allegations can hardly be described as 

"unnecessary" and "independent" to the offense that the 

government wished to pursue, or even to the truncated 

offense that the District Court wanted the government to 

pursue. If there is any meaning to the screening function 

performed by a grand jury, it must be implicated when a 

district court amends an indictment in a fashion that 

excludes evidence that the government itself believes makes 

its case difficult if not impossible to prove, and thus very 

likely did play an important role in the grand jury’s decision 

to indict. 

One potential caveat presented by applying Bain ’s 

prohibition on amending indictments is that the rule might 

be regarded as only a defendant’s right. The government 

may be the wrong party to complain about amendments 

that undermine the grand jury’s role in screening charges. 

Cf. Rakas v. Illinois, 439 U.S. 128, 134 (1978) (limiting 

those who have standing to assert Fourth Amendment 

violations). See also Minnesota v. Carter, 525 U.S. 83 

(1998)); Rawlings v. Kentucky, 448 U.S. 98, 105 (1980). 

And Bain’s rule can be waived. United States v. Cotton, 122 

S.Ct. at 1786. Of course, the defendants have not waived 

their right to a grand jury indictment, and the government 

has steadily asserted its objections to the District Court’s 

rulings. 

But more important, the grand jury through its 

investigatory powers serves a public role beyond protecting 

the defendant charged, and hence the rule against 

amending indictments may serve more than the defendant’s 

interests. "The investigation of crime by the grand jury 

implements a fundamental governmental role of securing 

the safety of the person and property of the citizen." United 
States v. Calandra, 414 U.S. 338, 344 (1974) (quoting 

Branzburg v. Hayes, 408 U.S. 665, 700 (1972)) (internal 

quotations and brackets omitted). The Supreme Court in 

Williams explained: 

 33 

 

 Rooted in long centuries of Anglo-American history, the 

 grand jury is mentioned in the Bill of Rights, but not 

 in the body of the Constitution. It has not been 

 textually assigned, therefore, to any of the branches 

 described in the first three Articles. It is a 

 constitutional fixture in its own right. In fact the whole 

 theory of its function is that it belongs to no branch of 

 the institutional Government, serving as a kind of 

 buffer or referee between the Government and the 

 people. 

504 U.S. at 47 (citations and quotation marks omitted). 

While refusing in Williams to expand judicial oversight of 

the grand jury’s evidence-taking process, the Supreme 

Court added: "The grand jury’s functional independence 

from the Judicial Branch is evident both in the scope of its 

power to investigate criminal wrongdoing and in the 

manner in which that power is exercised. ‘Unlike a court, 

whose jurisdiction is predicated upon a specific case or 

controversy, the grand jury can investigate merely on 

suspicion that the law is being violated, or even because it 

wants assurance that it is not.’ " Williams, 504 U.S. at 48 

(quoting United States v. R. Enterprises, Inc. , 498 U.S. 292, 

297 (1991) and United States v. Morton Salt Co. , 338 U.S. 

632, 642-643 (1950)) (brackets omitted). See also In Re 

Grand Jury, 286 F.3d 153 (3d Cir. 2002); In re Grand Jury, 

223 F.3d 213 (3d Cir. 2000). These considerations may 

militate against allowing only the defendant to invoke the 

rule against amending indictments. Chief Justice Marshall’s 

famous declaration that in a grand jury proceeding,"The 

public has the right to every man’s evidence," United States 

v. Burr, 25 Fed. Cas. 38 (No. 14,692e) (CC Va. 1807), 

emphasizes that body’s purpose of serving the broader 

public’s interests, and not just the defendant’s. 

In the end, however, I believe that the law governing the 

separations of powers between the executive and judicial 

branches is sufficient to demonstrate that the District 

Court’s actions in this case must have resulted in a 

dismissal. For that reason, I need not reach whether the 

government can assert a violation of Bain’s rule against 

amending indictments. 

 34 

 

The majority is obliged, however, to address this issue 

since the government has invoked the rule against 

amending indictments. But not only has the majority failed 

to address amendments adequately, it also insists that it 

may ignore the implications that its decision has for the 

separation of powers because the government never 
discussed, and hence waived, the issue. 

I believe that by arguing against the amendment to the 

indictment, the government has not slept on its rights and 

has invoked rules designed to protect the separation of 

powers. But regardless, the threat posed to the separation 

of powers is substantial and cannot be waived any more 

than jurisdiction can be. As the Supreme Court has said on 

numerous occasions, the separation of powers prevents 

"encroachment or aggrandizement of one branch at the 

expense of the other. To the extent this structural principle 

is implicated in a given case, the parties cannot by consent 

cure the constitutional difficulty for the same reason that 

the parties by consent cannot confer on federal courts 

subject-matter jurisdiction beyond the limitations imposed 

by Article III, Section 2." Commodity Futures Trading Comm. 

v. Schor, 478 U.S. 833, 850-51 (1986) (citations omitted). 

See also Freytag v. Comm. of Internal Revenue, 501 U.S. 

868, 879 (1991). ("[T]he disruption to sound appellate 

process entailed by entertaining objections not raised below 

does not always overcome what Justice Harlan called" ‘the 

strong interest of the federal judiciary in maintaining the 

constitutional plan of separation of powers.’ ") The Court’s 

conclusion in Freytag about why a challenge under the 

Appointments Clause could not be waived applies equally 

here. "The structural interests protected by the 

Appointments Clause are not those of any one branch of 

Government but of the entire Republic." Id. at 880. Cf. Steel 

Co. v. Citizens for a Better Environment, 523 U.S. 83, 94 

(1998) (The doctrine of "hypothetical jurisdiction" that was 

once invoked by lower courts improperly "carries the courts 

beyond the bounds of authorized judicial action and thus 

offends fundamental principles of separation of powers."). 

The majority’s best effort to avoid the subject of 

impermissible amendments to indictments is to rely on the 

defendant’s argument that the District Court merely made 

 35 

 

an evidentiary ruling. Like the District Court in its second 

opinion responding to the government’s motion for 

reconsideration, the majority attempts to characterize the 

District Court’s decision as just an evidentiary ruling that 

happened to be especially damaging to the government’s 

case. "In effect, the Government is claiming that a dismissal 

occurred simply because it lost an evidentiary ruling 

important to its case." Majority Op. at 12. 

As a threshold matter, whether a district court’s ruling 

resulted in a dismissal turns on what the ruling 

accomplished and not whether the district court called it an 

evidentiary ruling rather than a dismissal. In evaluating 

when there was a dismissal and when the government’s 

appeal is barred by the Double Jeopardy Clause, the 

Supreme Court has repeatedly said, "The trial judge’s 

characterization of his own action cannot control . . . ." 

Smalis v. Pennsylvania, 476 U.S. 140, 144 n.5 (1986) 

(quoting United States v. Scott, 437 U.S. 82, 96 (1978) 
(internal brackets and quotation marks omitted)); Martin 

Linen Supply Co., 430 U.S. 564, 567 n.4 (1977); United 

States v. Maker, 751 F.2d 614, 621 n.26 (3d Cir. 1984); 

United States v. Ember, 726 F.2d 522, 524 (9th Cir. 1984). 

The principle is analogous to the Supreme Court’s 

extension of Bain that even if a trial court does not 

expressly allow an amendment to an indictment, the court 

can constructively amend the indictment by allowing the 

government to rest on proof of an offense crucially different 

than the one alleged in the indictment. See Stirone v. United 

States, 361 U.S. 212, 217 (1960). In flatly declaring that 

there was no dismissal, and hence no jurisdiction under 

S 3731, the majority never acknowledges or discusses these 

cases and begs a central question in this case. 

The fact that a district court’s label does not control is 

not of course an open-ended license for the government to 

claim that there was a dismissal of an indictment every 

time the government loses an evidentiary ruling significant 

to its case. The Supreme Court’s rule was not intended to 

give the government in practical effect a broader right of 

interlocutory appeal than even ordinary civil litigants have. 

If the majority is motivated by a concern that the 

government not secure such a broad right of appeal, then 

 36 

 

I am in agreement with their sentiment -- but not with 

their estimation of what occurred in this case. To call the 

District Court’s ruling a merely evidentiary one is to 

misunderstand what transpired at trial and to jeopardize a 

constitutional value -- the separation of judicial and 

executive functions -- carrying as great importance as the 

concern with limiting government appeals. 

To understand why this case does not simply involve a 

damaging evidentiary ruling, it is important to review both 

the District Court’s initial ruling, which granted the 

defendants’ motion to redact the indictment, as well as the 

Court’s second opinion, which denied the motion for 

reconsideration but purported to recast the ruling as an 

evidentiary one. In both opinions, the District Court made 

it abundantly clear that it believed that there were two 

schemes alleged in the indictment and that the earlier 

scheme should not properly be considered part of the 

indictment. The District Court was not limiting a way of 

proving allegations in the indictment, such as by excluding 

hearsay evidence of the manually altered bills. Rather, the 

Court was saying that the scheme alleged in the indictment 

was contrary to the law and could not be validly proved by 

any means. 

When the District Court was discussing what evidence it 

was excluding, the Court said in its opinion after the 

motion for reconsideration: 

 The evidence that the Government proposes is utterly 

 unrelated to the offenses which are charged. Those 

 prior bad acts have nothing to do with the computer 
 programming of bills, they have nothing to do with the 

 California earthquake program, they are not temporally 

 continuous; and they involve different insurance 

 companies. The six counts involve automatic computer 

 adjustment of bills. The legitimacy of that process is the 

 issue in the case. 

Supp. App. at 11 (emphasis added). 

The government also points out that at trial the district 

judge said: "All six counts relate to acts the Government 

alleges were violated in 1994 and 1995. The Court 

concludes that acts relating to conduct other than that 

 37 

 

alleged in the indictment in those years constitute other 

acts that do not demonstrate violations of the mail fraud 

statute." App. at 176. Like the statement quoted from the 

District Court’s second opinion, this statement at trial also 

strongly supports the government’s contention that the 

District Court sought to preclude all evidence about the 

manually altered bills. 

Moreover, when the government asked its first witness at 

trial about her observation that the company began having 

financial problems in 1989, the defense objected that the 

part of the indictment relevant to that period had been 

redacted. App. at 173-74. And the District Court sustained 

the objection, stating, "Anything she has to tell us about 

1988 and 1989 is not relevant." App. at 175. A fair reading 

of the record makes plain that what the District Court did 

was exclude categorically all evidence about the defendants’ 

conduct prior to the period when the gooser program was 

created and used. 

Seizing on a clever but mistaken argument by the 

defendants, the majority suggests that despite all the 

passages quoted above, the District Court did not flatly 

prohibit all evidence about the earlier scheme of manually 

altered bills. See Majority Op. at 10 n.5 and 14 n.6. The 

defendants’ argument, endorsed by the majority, is that 

once the District Court switched so that its decision 

purported to rest on evidentiary grounds, the District Court 

struck a compromise, allowed one year’s worth of evidence 

about the manually altered bills, and for the other, earlier 

years still did not foreclose all discussion of the defendants’ 

business. All of these points, the defendants maintain, 

indicate that the District Court did not prohibit the 

government from going forward with its prosecution of the 

single scheme covering the period described in the 

indictment, and hence the District Court’s ruling did not 

effectively dismiss the indictment. 

The reason the defendants and the majority maintain 

that the District Court intended to permit evidence about 

one year’s worth of the manually altered bills, 

notwithstanding the Court’s emphatic language quoted 

above, is that in several places the Court’s opinion in 
response to the government’s motion for reconsideration 

 38 

 

said it was barring evidence "during the period 1989 to 

1992." Supp. App. at 12 (emphasis added). The references 

to "1992" appear to give the government one year of 

evidence about the manual bills, because, as the majority 

opinion notes, the gooser program was not initiated until 

February 1994. By comparison, before the government’s 

motion for reconsideration, the Court’s first order referred 

to the period where the evidence would be excluded as 

covering 1989 to February 1994, which did correctly 

capture the end of the period when the indictment alleges 

that bills were manually altered. 

There are a number of reasons for believing that the 

District Court’s several references to 1992 were merely a 

scrivener’s error. First, the use of 1992 is inconsistent with 

the Court’s explanation of why it was ruling the way it did 

-- namely that it believed the manually altered bills could 

not properly be included in the fraudulent scheme. Given 

the passages quoted earlier, one of which comes directly 

from the Court’s second opinion, denying the government’s 

motion for reconsideration, the defendants’ and majority’s 

theory that the District Court meant to write "1992" leaves 

inexplicable the fact that the Court never discussed why it 

was purportedly having a change of heart midway through 

its second opinion and allowing roughly one year of 

evidence about the manually altered bills. Why allow any of 

the evidence, given the Court’s views? And why permit the 

roughly one year of evidence that the majority and 

defendants say the Court allowed? There was nothing 

particularly unique about that time span. Given the 

arbitrariness of that proposed line, it is reasonable to 

expect that the Court would give some explanation for this 

change from the earlier opinion and from other language in 

its second opinion. This is especially so given that the 

District Court, which made a point of stressing the 

substantial deference given to its rulings under Rule 403, 

was undoubtedly aware that we have held that when a 

district court fails to give its reasons for its exercise of 

discretion under Rule 403, and the court’s reasons are not 

apparent from the record, we are unable to conduct any 

meaningful review and do not defer to the district court’s 

determination. Becker v. ARCO Chemical Co., 207 F.3d 176, 

181 (3d Cir. 2000); United States v. Sriyuth, 98 F.3d 739, 

 39 

 

749 n.9 (3d Cir. 1996); United States v. Himelwright, 42 

F.3d 777, 781 (3d Cir. 1994). 

Another reason to believe that the reference to 1992 was 

in error is that in a number of places the Court’s opinion 

copied language from defendant Habina’s brief, and, as it 

happens, that brief mistakenly referred to the period of 

manually altered bills as covering 1989 to 1992. Given 
these reasons for doubting that the District Court intended 

to write "1992" rather than "1994", reasons that the 

majority never addresses, the majority’s reliance on the 

1992 date in defending the District Court’s ruling as not 

excluding all evidence about the manually changed bills is 

difficult to understand. Under the circumstances, I would 

think that the most the majority could claim, if it believes 

anything of consequence rides on the 1992 date, is that a 

remand to the District Court for clarification is in order. 

Certainly the evidence calls for more than a flip reference to 

needing "telepathic powers" to interpret the District Court’s 

actions. See Majority Op. fn. 5 at 10. The majority’s failure 

to engage the evidence apparently flows from its refusal to 

acknowledge cases like Smalis, Scott, Martin Linen Supply, 

Maker, and Ember, which holds that the name a District 

Court gives to its ruling does not control. 

But in any event, I believe that whether the District Court 

intended to write "1992" or "1994" is irrelevant. The fact 

remains that the District Court erroneously believed that 

the fraudulent scheme alleged in the indictment was 

improper and as a result erroneously precluded the 

government from presenting any evidence about a very 

crucial period of the fraudulent scheme alleged in the 

indictment. It really doesn’t matter whether the ban on 

manually altered bills extends to 1992 or 1994, for under 

either scenario the District Court improperly changed the 

indictment on an offense element. Indeed, if the District 

Court did intend to include one year of the manually 

altered bills as part of the fraudulent scheme, that may 

only make the Court’s action worse because it would be 

even clearer that the Court was exercising the type of 

purely prosecutorial discretion in framing charges that 

should never rest with the judiciary. 

 40 

 

Once it is established that the District Court’s action 

must be deemed a dismissal of the indictment, the question 

then becomes whether the government is entitled to an 

appeal even though a jury had been sworn and testimony 

taken from witnesses. Although the majority’s discussion 

confuses the analysis of this point by discussing appeals 

from acquittals and mistrials, neither of which is implicated 

in this case, the analysis of an appeal from a dismissal is 

straightforward. Existing Supreme Court precedent holds 

that if a defense motion prompts a district court to grant a 

dismissal before any determination of the defendant’s guilt, 

as is true in this case, then the government is entitled to an 

appeal -- even though the jury has already been empaneled 

and sworn. See United States v. Scott, 437 U.S. 82, 95-101 

(1978); United States v. Lee, 432 U.S. 23, 27-28, 33 (1977). 

Just as a defendant whose conviction is reversed on appeal 

due to legal error may be subjected to retrial, so too there 

is no double-jeopardy bar "where the defendant, instead of 

obtaining reversal of his conviction on appeal, obtains the 

termination of the proceedings against him in the trial 

court without any finding by a court or jury as to his guilt 

or innocence." Scott, 437 U.S. at 100. 
The majority attempts to distinguish Scott and Lee on two 

grounds. First, the majority says that the appeal is in fact 

controlled by Sanabria v. United States, 437 U.S. 54 (1978), 

which dealt with an appeal where the trial court had 

entered an acquittal. Second, the majority attempts to limit 

Scott and Lee by grafting onto them a requirement that the 

defendants consent to the termination of their trial, a 

standard that the majority insists was not met here. This 

consent requirement, according to the majority, would in 

fact bar the appeal in this case even if the District Court’s 

ruling did constitute a dismissal. Both attempts to 

distinguish Scott and Lee are flawed. 

Sanabria was handed down on the same day as Scott and 

amplifies on a crucial condition in Scott. As noted earlier, 

Scott stated that if the government appealed a dismissal 

after jeopardy attached, the appeal would only be allowed if 

the judge or jury had not made a factual determination 

about the defendant’s guilt or innocence. This caveat 

follows the longstanding rule that an acquittal bars 

 41 

 

appellate review and any further prosecution of that count. 

See e.g., Martin Linen Supply Co., 430 U.S. at 571 (citing 

United Sates v. Ball, 163 U.S. 662, 671 (1896)). The Court’s 

decision in Sanabria had to interpret how that rule would 

apply when the judge made an erroneous evidentiary ruling 

excluding allegations that could have independently 

supported criminal liability, but then entered an order of 

acquittal for insufficient evidence. In analyzing this 

scenario, the Supreme Court decided that it would not 

breach its firm rule against reviewing the correctness of 

acquittals and hence would not look behind them to see if 

they rested on an error of law. When the majority attempts 

to apply Sanabria to this case, what they overlook is that 

the central element of Sanabria’s analysis, an acquittal, is 

not present here. Indeed, the defendants in our case filed a 

motion for acquittal, and the District Court denied it. 

Sanabria is therefore not controlling, and Lee, the case 

handed down on the same day as Sanabria, is. 

The majority’s second attempt to limit Scott and Lee is its 

"consent" requirement. According to the majority, even if 

there was a dismissal, and even if the defendants filed a 

motion that would necessarily require a dismissal, this case 

still does not fall within Scott and Lee because the 

defendants did not expressly ask for a dismissal of the 

indictment and termination of their prosecution before the 

empaneled jury. One obvious weakness with their theory is 

that if a district court’s labeling of its action does not 

control for the purposes of analyzing appeals underS 3731 

and the Double Jeopardy Clause, see, e.g., Smalis v. 

Pennsylvania, 476 U.S. at 144 n.5; Scott, 437 U.S. at 96; 

Martin Linen Supply Co., 430 at 567 n.4.; Maker, 751 F.2d 

at 621 n.26, then it is very difficult to understand why 

defendants’ labeling of their actions should -- particularly 

given the defendants have strong motives for manipulating 
the names they give to their motions. The majority’s 

position practically invites defendants to wait until the eve 

of trial and file motions to redact the indictment when what 

they wish to achieve is a dismissal or substantial reworking 

of the indictment to make the government’s case impossible 

to prove. 

It is also telling that the only authority the majority has 

for its hard and fast rule of what constitutes "consent" is a 

 42 

 

case where the defendant never filed any motion and simply 

expressed agreement with the district court’s dismissal. See 

United States v. Kennings, 861 F.2d 381, 385 (3d Cir. 

1988). If the majority intends to convert the focus on 

subjective intent in Kennings from a sufficient condition to 

a necessary one, then the majority has indeed limited Scott 

and Lee to their facts, for what defendant will ever agree to 

a government appeal instead of going scot-free? 

One last point bears mention. The majority complains 

that the government should not be heard to complain now 

because it did not invoke Fed.R.Crim.P. 12(e) after the 

defendants filed their motion to redact on the eve of trial. In 

Lee, however, the Supreme Court rejected precisely this 

argument as a grounds for denying the government an 

appeal when there was a dismissal of the indictment. As 

the Court noted, the defendant "had only himself to blame" 

for the fact that the dismissal occurred after the court 

began to hear evidence, for by "the last minute timing of his 

motion to dismiss, he virtually assured the attachment of 

jeopardy." Lee, 432 U.S. at 28. 

The majority’s position goes too far in allowing the 

judiciary to rewrite indictments and misinterprets 

controlling Supreme Court precedent. I dissent. Judge 

Fuentes joins in this dissent. 

A True Copy: 

Teste: 

 Clerk of the United States Court of Appeals 

 for the Third Circuit 

 43