FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA, 

Plaintiff-Appellee, No. 06-10592

v. D.C. No.  CR-0-00284-MJJ PAVEL IVANOVICH LAZARENKO,

Pavlo Ivanovych Lazarenko, OPINION

Defendant-Appellant. 

Appeal from the United States District Court

for the Northern District of California

Martin J. Jenkins, District Judge, Presiding

Argued and Submitted

June 9, 2008—San Francisco, California

Filed September 26, 2008

Before: A. Wallace Tashima, M. Margaret McKeown, and

Ronald M. Gould, Circuit Judges.

Opinion by Judge McKeown

13807
COUNSEL

Dennis P. Riordan (argued), Donald M. Horgan, Riordan &

Horgan, San Francisco, California; Doron Weinberg, Weinberg & Wilder, San Francisco, California, for the defendantappellant. 

Hartley M. K. West (argued), Assistant United States Attorney; Scott N. Schools, United States Attorney; Barbara J. Valliere, Chief, Appellate Section, San Francisco, California, for

the plaintiff-appellee. 

OPINION

McKEOWN, Circuit Judge: 

During his meteoric rise from serving as a local Ukrainian

official to Prime Minister of Ukraine, Pavel Ivanovich

Lazarenko formed multiple business relationships and

engaged in a tangled series of business transactions that netted

him millions of dollars. Lazarenko kept his money in foreign

bank accounts, transferring funds from one account to another

across the globe in an effort, so he was accused, to disguise

and conceal the sources and ownership of the proceeds from

13812 UNITED STATES v. LAZARENKO
the Ukrainian people. After the money passed through bank

accounts in the United States, from Swiss, off-shore, and

other accounts, the United States charged him in a 53-count

indictment with conspiracy, money laundering, wire fraud,

and interstate transportation of stolen property. Lazarenko

was convicted on fourteen counts and now challenges those

convictions on appeal. We affirm eight of his convictions, but

reverse six others. 

I. BACKGROUND

During the 1990s, Lazarenko was a public official in

Ukraine. For several years he served in regional governmental

positions, including as Governor of the Dnepropetrovsk

region of Ukraine. He rose to the level of Ukrainian First Vice

Prime Minister in 1995 and in May 1996, Lazarenko was

appointed Prime Minister. Following a rift in his relationship

with President Leonid Kuchma, he was dismissed from this

position in July 1997. He then became a member of the Ukrainian Parliament and led the opposition Hromada Party. 

While serving as a government official, Lazarenko became

involved in the affairs of a number of businesses and formed

relationships with prominent businessmen. The United States

alleged that certain of Lazarenko’s business relationships

amounted to extortion and that he defrauded the Ukranian

people by obtaining interests in companies, allocating privileges to cronies, and then failing to disclose his assets and

wealth as required on Ukranian financial disclosure forms.

The government identified five arrangements that formed the

basis for the charges in the indictment. 

A. THE UNDERLYING SCHEMES

1. Extortion of Kiritchenko

According to testimony at trial, Lazarenko was extremely

powerful as the governor of the Dnepropetrovsk region of

UNITED STATES v. LAZARENKO 13813
Ukraine and in his other public roles. He required businesses

to pay him fifty percent of their profits in exchange for his

influence to make the businesses successful. Conversely,

Lazarenko used his influence to disadvantage the businesses

if he was not paid. 

In 1990, Peter Kiritchenko, a businessman, formed a company known as Agrosnabsbyt, which was involved in agriculture and metals. In 1992, Kiritchenko met with Lazarenko

because, according to Kiritchenko, “to do any kind of serious

trade one needed [Lazarenko’s] agreement.” Lazarenko

informed Kiritchenko that he worked with everyone “50-50,”

which Kiritchenko interpreted as meaning that Lazarenko

would control fifty percent of the business and take fifty percent of the profits. Kiritchenko initially transferred $40,000 to

Lazarenko as a gesture of “good faith.” In January 1993,

Kiritchenko transferred a fifty percent interest in Agrosnabsbyt to Ekaterina Karova, a relative of Lazarenko, and transferred fifty percent of the profits from the business to

accounts controlled by Lazarenko. Later, Lazarenko and

Kiritchenko partnered to move Lazarenko’s money between

accounts and together they purchased the European Federal

Credit Bank (“EuroFed”). 

2. Extortion of Dityatkovsky

According to the indictment, Lazarenko established a similar relationship with Alexei Alexandrovich Dityatkovsky. In

1993, Lazarenko met Dityatkovsky and took a fifty percent

interest in his company, Dneproneft, along with fifty percent

of the profits as well. Lazarenko’s share went to his driver and

to an associate. 

3. Naukovy State Farm

While Lazarenko was governor of Dnepropetrovsk, he was

also actively involved in the operations of Naukovy State

Farm (“Naukovy”), a dairy operation that was directed by

13814 UNITED STATES v. LAZARENKO
Mykola Agafonov.1

 Naukovy also had secured the right to

export metal products and raw materials. Naukovy purchased

cattle and farm equipment from a Dutch company, Van der

Ploeg von Terpstra (“Van der Ploeg”). Van der Ploeg kept a

foreign currency account at ABN Amro Bank for its business

with Naukovy (the “ABN Amro account”). Unbeknownst to

Van der Ploeg’s chief accountant, Agafonov was given access

to this account for his own use. Agafonov used the money in

the ABN Amro account to, among other things, purchase a

BMW and pay his credit card bills. 

Lazarenko was also actively involved in the operations at

Nikopolsky Metal Works factory (“Nikopolsky”). At his

direction, $2.4 million was transferred from Nikopolsky to

Van der Ploeg’s ABN Amro account supposedly to purchase

wheat on behalf of Naukovy to combat a food crisis that was

plaguing Ukraine at the time.2 The accountant for Naukovy

and the bookkeeper for Van der Ploeg both testified that they

did not know whether wheat was ever purchased. The records

reflect that $1.2 million was transferred from the ABN Amro

account to Agafonov’s account in Hungary at PostaBank (the

“PostaBank account”). In turn, $1.205 million was transferred

from the PostaBank account to an account known as LIP Handel, controlled by Lazarenko in Switzerland. Lazarenko then

transferred the money from this Swiss account to various

banks, including a $1.8 million transfer to an account controlled by Kiritchenko at Bank of America in San Francisco,

California. 

4. United Energy Systems of Ukraine

Eventually, Lazarenko became the First Prime Minister of

1

“Naukovy” is the spelling of the name of the company in Ukrainian.

Occasionally the parties or the record refer to it by its Russian name

“Naucnij.” 

2Nikopolsky Metal Works factory is sometimes referred to in the record

and by the parties as “Nikopol” or as “Nikopol Ferroalloy.” 

UNITED STATES v. LAZARENKO 13815
Ukraine and was responsible for the energy section within the

government. According to the indictment, an associate of

Lazarenko’s, Yulia Tymoshenko, created a natural gas company, United Energy Systems of Ukraine (“UESU”), which

received deliveries of gas from RAO Gazprom. UESU was

held in large part by United Energy International, Ltd.

(“UEIL”), which was owned by a Turkish national. UESU

conveyed title to the gas to UEIL such that payments from

Ukrainian customers for gas were diverted to UEIL. UEIL did

not pay RAO Gazprom for the gas deliveries with the money

it received from customers. Instead, it transferred approximately $140 million to a Cypriot company, Somolli, that was

controlled, in part, by Tymoshenko. UEIL and Somolli transferred $97 million to accounts controlled by Kiritchenko in

Switzerland, Poland, and the United States. Kiritchenko then

transferred $120 million to accounts controlled by Lazarenko

in Switzerland and Antigua. Lazarenko made two transfers of

$14 million each from one of these accounts to accounts in

the United States. 

5. PMH/GHP

Lazarenko and Kiritchenko also allegedly controlled a Panamanian company, GHP Corp. (“GHP”). According to the

U.S. government, in 1997, Lazarenko, by then Prime Minister, caused the Ukrainian Cabinet of Ministers to contract with

GHP for the purchase of six pre-fabricated homes. GHP

turned to Pacific Modern Homes (“PMH”) in California and

purchased six pre-fabricated homes for $524,763. The Cabinet of Ministers purchased the homes from GHP for

$1,416,000. GHP produced false invoices to customs officials

to make it appear that it had shipped the homes and paid

$1,416,000 for them. Half of the profit realized by GHP was

deposited into an account controlled by Lazarenko. 

B. THE CHARGES

Based on Lazarenko’s business activities, the government

brought numerous charges. Count 1 charged Lazarenko with

13816 UNITED STATES v. LAZARENKO
conspiracy to commit money laundering, in violation of 18

U.S.C. § 1956(h), for conducting financial transactions that

involved the proceeds of extortion, wire fraud, and receipt and

transfer of property that was stolen. 

Counts 2 through 5 charged Lazarenko with money laundering, in violation of 18 U.S.C. § 1956(a)(2). The indictment

specifically identified four wire transfers from Kiritchenko’s

ABS Trading account in San Francisco to Lazarenko’s

account in Geneva, Switzerland in 1994 and early 1995.

Counts 6 through 8 charged Lazarenko with money laundering, in violation of 18 U.S.C. § 1956(a)(1)(B). These transactions allegedly occurred in November 1997, August 1998, and

September 1998. All the money laundering counts were based

on the specific unlawful activities of receipt and transfer of

property that was “stolen, unlawfully converted, and taken by

fraud,” in violation of 18 U.S.C. §§ 2314 and 2315; “extortion

as specified in 18 U.S.C. § 1956(c)(7)(B)(ii); and wire fraud

in violation of 18 U.S.C. §§ 1343 and 1346.” Id.

Counts 9 through 30 charged Lazarenko with wire fraud in

violation of 18 U.S.C. §§ 1343 and 1346. Specifically,

Lazarenko was charged with honest services fraud against the

people of Ukraine for obtaining ownership interests in Agrosnabsbyt, Dneproneft, and GHP, using his authority and influence to grant these companies privileges, and receiving

money from these businesses. The indictment identified specific wire transfers in 1997 and 1998. 

Counts 31 through 53 charged Lazarenko with transportation of stolen property in violation of 18 U.S.C. § 2314. The

indictment identified a wire transfer in 1994 and several others in 1997 and 1998. 

C. DISMISSAL OF SOME CHARGES

At the close of the government’s case-in-chief, the district

court granted in part Lazarenko’s Rule 29 motion for a judgUNITED STATES v. LAZARENKO 13817
ment of acquittal. The scope of the indictment was massive

and the trial testimony voluminous. The district court carefully reviewed the evidence in addressing the Rule 29 motion.

Significantly, the district court dismissed the allegations that

related to Lazarenko’s relationship with UESU. The district

court ruled that the government failed to prove that there was

fraud in Lazarenko’s alleged dealings with UESU, that

Lazarenko’s failure to inform the Ukrainian people that he

was receiving money from UESU was a material omission in

support of the government’s property fraud theory, or that

there was material harm to support the theory that the UESU

dealings constituted honest services fraud. The court also held

that the money laundering charges could not rest on the property fraud theory with respect to UESU. 

The court further concluded that the evidence did not support charges arising out of the PMH-GHP fraud because the

government failed to establish the element of material harm.

On the government’s motion, the court dismissed the allegations regarding Dityatkovsky. Altogether, the court dismissed

24 counts: counts 9 through 19 (wire fraud), count 30 (wire

fraud), counts 32 through 42 (interstate transportation of

stolen property), and count 53 (interstate transportation of

stolen property). 

Following the jury’s verdict of guilty on all of the remaining counts, the district court partially granted Lazarenko’s

renewed Rule 29 motion and dismissed counts 20 through 24

and counts 43 through 52. The court concluded that “[n]o reasonable jury could find that the transfers [in counts 20-23

(wire fraud) and counts 43-46 (interstate transportation of

stolen property)] represented the proceeds of Kiritchenko

extortion or Naukovy fraud.” The court further concluded that

counts 24 and 47, for wire fraud and interstate transportation

of stolen property, respectively, failed because the government’s theory that the funds involved in that alleged transfer

had been extorted from Kiritchenko was not supported by the

indictment. Finally, the court dismissed counts 48 through 52,

13818 UNITED STATES v. LAZARENKO
which charged Lazarenko with interstate transportation of

stolen property, because the court found that there were sufficient clean funds in the accounts at issue to cover the transfers. 

Lazarenko now challenges his remaining convictions on

counts 1 through 8, 25 through 29, and 31. 

II. ANALYSIS

A. SUFFICIENCY OF THE INDICTMENT

Lazarenko argues that the indictment must be dismissed

because it failed to allege that his conduct violated Ukrainian

law. We review the sufficiency of an indictment de novo.

United States v. Berger, 473 F.3d 1080, 1097 (9th Cir. 2007).

An indictment is sufficient if it (1) “contains the elements of

the offense charged and fairly informs a defendant of the

charge against which he must defend” and (2) “enables him

to plead an acquittal or conviction in bar of future prosecutions for the same offense.” Hamling v. United States, 418

U.S. 87, 117 (1974). “[A]n indictment ‘should be read in its

entirety, construed according to common sense, and interpreted to include facts which are necessarily implied.’ ” Berger, 473 F.3d at 1103 (quoting United States v. King, 200

F.3d 1207, 1217 (9th Cir. 1999)). “Unless the defendant was

misled and thereby prejudiced, neither an error in a citation

nor a citation’s omission is a ground to dismiss the indictment

or information or to reverse a conviction.” Fed. R. Crim. P.

7(c)(3). 

[1] The indictment tracks the statutory language in charging

money laundering, wire fraud and interstate transportation of

stolen property. We have previously held that those statutes

set forth the essential elements of these offenses. See United

States v. Savage, 67 F.3d 1435, 1441 (9th Cir. 1995) (money

laundering); United States v. Ladum, 141 F.3d 1328, 1341

(9th Cir. 1998) (money laundering); United States v. Bonallo,

UNITED STATES v. LAZARENKO 13819
858 F.2d 1427, 1433 (9th Cir. 1988) (wire fraud); United

States v. Rosi, 27 F.3d 409, 414-15 (9th Cir. 1994) (interstate

transportation of stolen property). Lazarenko seeks to import

an additional element into these offenses, claiming that the

Ukrainian law at issue is also an essential element because the

government must prove a violation of Ukrainian law to sustain a conviction. 

[2] Nothing in our case law supports requiring the government to plead a specific violation of foreign law in an indictment. Indeed, Lazarenko’s challenge does not achieve novelty

status simply because it involves foreign law. To analyze his

claim, we look for guidance to our general precedent on

indictments. For example, when bringing charges of money

laundering, the government need not allege all the elements

of the “specified unlawful activity,” i.e., the underlying

offense. See United States v. Lomow, 266 F.3d 1013, 1017

(9th Cir. 2001); United States v. Golb, 69 F.3d 1417, 1429

(9th Cir. 1995). Here, the violation of Ukrainian law is the

specified unlawful activity. 

[3] Nor can it be said that the omission of a citation to foreign law in the charges of wire fraud and interstate transportation of stolen property misled or prejudiced Lazarenko. See

Fed. R. Crim. P. 7(c)(3). The indictment provided detailed

allegations regarding the basis for the charges, including

dates, amounts, account numbers, and sources of the money.

Cf. Berger, 473 F.3d at 1101. Significantly, the jury was

instructed that it had to find a violation of Ukranian law and

was provided with the elements of the relevant Ukranian statutes. 

[4] Relying on Richardson v. United States, 526 U.S. 813

(1999), Lazarenko contends that there is a long list of predicate offenses to the money laundering statute and without a

finding regarding the specific predicate offense, there is a risk

of disagreement among the jurors as to what the defendant

did. This argument falters, though, because not only did the

13820 UNITED STATES v. LAZARENKO
Supreme Court not comment on the sufficiency of an indictment in Richardson, here the indictment identified interstate

transportation of stolen property, extortion, and wire fraud as

the “specified unlawful activit[ies]” and provided detailed

allegations regarding each of these offenses. There was little

room for jurors to disagree on the underlying offenses. The

indictment against Lazarenko was legally sufficient. 

B. WIRE FRAUD CHARGES—COUNTS 25 THROUGH 29

Lazarenko claims that the government constructively

amended the indictment following the court’s dismissal of the

UESU allegations by changing its theory to argue that the

wire transfers charged as wire fraud in counts 25 and 26 of the

indictment were in furtherance of the Naukovy fraud. He also

challenges the sufficiency of the evidence on counts 25

through 29. 

We review de novo whether there has been a constructive

amendment to an indictment. United States v. Pang, 362 F.3d

1187, 1193 (9th Cir. 2004). “A constructive amendment

occurs when the defendant is charged with one crime but, in

effect, is tried for another crime.” Pang, 362 F.3d at 1193. 

[5] The indictment charged generally that the accounts

involved in the transfers alleged as wire fraud in counts 25 to

26 received proceeds from both fraud and extortion. However,

under the heading “The UESU Fraud,” the government

alleged more specifically that 

Between February of 1996 and September of 1997,

the money from Somolli, along with other funds,

totaling more than $120,000,000 was transferred

from Kiritchenko’s accounts into accounts controlled

by Lazarenko in Switzerland and Antigua. Thereafter, Lazarenko transferred portions of these funds

from Switzerland into bank accounts in the Northern

UNITED STATES v. LAZARENKO 13821
District of California, including two transfers of

$14,000,000 each on August 1, 1997. 

Count 25 and count 26 both allege a transfer of $14 million

into a bank account in the Northern District of California on

August 1, 1997. The plainest reading of these allegations is

that the transfers in counts 25 and 26 are the same two transfers alleged under the heading “The UESU Fraud.” When the

district court dismissed the UESU allegations after the close

of the government’s case-in-chief, counts 25 and 26 should

have been dismissed as well. 

The government asserted in its brief that the $14 million

transfers were not necessarily funds derived from the UESU

scheme because the indictment alleged that money from

Somolli, “along with other funds,” was deposited into

Lazarenko’s Swiss bank account. We decline to read this

catch-all phrase as turning the two $14 million transfers into

proceeds from the Naukovy fraud. The paragraph in which

these allegations are found begins, “Lazarenko . . . received

and transferred money that had been stolen, converted and

taken by fraud in connection with the distribution of natural

gas in Ukraine as follows.” Each allegation following relates

directly to the UESU scheme, including allegations about the

parties involved and payments between UEIL, Somolli, and

UESU. It simply makes no sense to read this paragraph as

concluding with Lazarenko transferring money from a completely different scheme. The details of the transfers in this

paragraph and in counts 25 and 26 are identical and the only

logical conclusion that can be drawn is that those counts are

premised on the UESU scheme. 

At oral argument, the government claimed that an allegation in a later paragraph, paragraph 35, supported its argument

that the transfers of $14 million in counts 25 and 26 were part

of the Naukovy fraud. This paragraph, though, does not

advance the government’s position. The portion of the paragraph to which the government points merely alleges that

13822 UNITED STATES v. LAZARENKO
“[b]etween 1993 and 1994, Lazarenko received at least

$14,000,000 from Naukovy State Farm.” This allegation neither speaks to whether two transfers of $14 million were made

in August 1997, nor does anything there cause us to read the

allegations under “The UESU Fraud” any differently. 

Even with the government’s shift in theory, the government

failed to provide sufficient evidence to support Lazarenko’s

wire fraud convictions on counts 25 and 26, as well as on

counts 27, 28, and 29. We evaluate a challenge to the sufficiency of the evidence by viewing the evidence in the light

most favorable to the prosecution. Jackson v. Virginia, 443

U.S. 307, 324 (1979). Evidence is sufficient to support a conviction if, viewed in this light, a rational trier of fact could

have found the essential elements of the crime beyond a reasonable doubt. Id.

We first address a threshold question, namely whether the

government must trace the wire transfer proceeds back to

some unlawful activity. Lazarenko puts it this way: whether

“a wire transfer not proven to contain proceeds of theft or

fraud for the purpose of a transporting stolen property offense

[can] be found, on the same evidence, to contain such illegal

proceeds.” This argument piggy-backs on the government’s

burden in the context of interstate transportation of stolen

property. 

To sustain a conviction for interstate transportation of

stolen property, the government must prove that the money

transported was stolen, converted, taken by fraud, or derived

from such property. See United States v. Morgan, 805 F.2d

1372, 1377-78 (9th Cir. 1986). The property must be “directly

traceable” to the fraud or theft. Id. at 1378. By contrast, in a

money laundering charge, the commingling of tainted money

with clean money taints the entire account. See United States

v. English, 92 F.3d 909, 916 (9th Cir. 1996). The money

transferred from a commingled account does not need to be

traceable to fraud, theft, or any wrongdoing at all. It is enough

UNITED STATES v. LAZARENKO 13823
that the money, even if innocently obtained, was commingled

in an account with money that was obtained illegally. See id.

[6] Wire fraud does not necessarily rest on the characterization of the funds. It is well-established that the wire used in

the wire fraud scheme need only have been “in furtherance”

of the scheme. Schreiber Distrib. Co. v. Serv-Well Furniture

Co., Inc., 806 F.2d 1393, 1399-1400 (9th Cir. 1986); see, e.g.,

United States v. Johnson, 297 F.3d 845, 871 (9th Cir. 2002)

(upholding a wire fraud conviction where the wire involved

was a telephone call). In a case such as this, where the wire

at issue is a wire transfer of funds that are connected to an

unlawful activity, the “in furtherance” inquiry may be met

without a strict tracing of the wired funds. We decline to narrow the “in furtherance” focus by requiring the funds to be

traced back to a particular unlawful activity.3

[7] We turn, then, to the question whether the wire transfers

alleged in counts 25 to 29 were “in furtherance” of the

Naukovy fraud. To support a wire fraud charge, the wire must

be “incident to the execution of the scheme” and not “part of

an after-the-fact transaction that, although foreseeable, was

not in furtherance of the defendant’s fraudulent scheme.”

United States v. Lo, 231 F.3d 471, 478 (9th Cir. 2000)

(explaining the principle in the context of mail fraud);4 United

States v. Manarite, 44 F.3d 1407, 1413 (9th Cir. 1995) (finding that mailings and phone calls made after a “one-shot”

credit scam was completed were not in furtherance of an

3Thus, we are not persuaded by Lazarenko’s argument that there was

instructional error with respect to the wire fraud counts. The district court

correctly instructed the jury that it needed to determine whether the wire

was “an important part of the scheme,” defining “important” as “incident

to an essential part of the scheme.” The court was not required to instruct

the jury on how to determine whether the accounts contained the proceeds

from a fraud. 

4

“It is well settled that cases construing the mail fraud and wire fraud

statutes are applicable to either.” United States v. Shipsey, 363 F.3d 962,

971 n.10 (9th Cir. 2004). 

13824 UNITED STATES v. LAZARENKO
ongoing scheme). The importance of the temporal aspect of

the wire transfer to the underlying scheme is best illustrated

in our case law: “[T]he pertinent question is not whether or

not the defendant ‘had obtained all the money [she] expected

to get’ before the [wire] occurred. Rather, . . . the [wire] can

occur after the defendant has obtained her fee, if ‘the [wire]

is part of the execution of the scheme as conceived by the perpetrator at the time.’ ” Lo, 231 F.3d at 478 (quoting United

States v. Sampson, 371 U.S. 75, 79 (1962); Schmuck v. United

States, 489 U.S. 705, 715 (1989)). 

The wire transfers at issue occurred in 1997 and 1998,

approximately three or four years after the money was wired

into the account. Counts 25 and 26 are transfers of $14 million from Lazarenko’s CARPO-53 account in Switzerland to

Kiritchenko’s EuroFed accounts at Pacific Bank in California

and at Commercial Bank of San Francisco. Count 27 is a

transfer of $24 million from Lazarenko’s EuroFed account in

Switzerland to a EuroFed account at Hambrecht & Quist in

California. Counts 28 and 29 are transfers of $9 million and

$5.3 million from Lazarenko’s Lady Lake account in the

Bahamas to Kiritchenko’s account at Commercial Bank of

San Francisco and to an account controlled by Lazarenko at

WestAmerica Bank in California. 

The government’s theory was that these transfers were

meant to hide Lazarenko’s fraudulent activity as he sought

political office. Kiritchenko testified at trial that Lazarenko

closed his CARPO-53 bank account in Switzerland in 1997,

after Lazarenko was dismissed as Prime Minister. This

account contained close to $200 million. He explained that

Lazarenko made the transfers that are alleged in counts 25 to

29 of the indictment because he was under investigation in

Ukraine and did not want his assets frozen. 

[8] Under the facts of this case, we conclude no rational

trier of fact could find that these transfers in 1997 and 1998

were “in furtherance” of the Naukovy fraud, which centered

UNITED STATES v. LAZARENKO 13825
on allegedly shady agricultural and personal purchases. The

fraudulent activity was completed, and the money concealed,

in 1994, when the money reached Lazarenko’s control and he

deposited it into coded bank accounts where it remained for

three years. Subsequent transfers were not part of the scheme

as it was originally conceived. Cf. Lo, 231 F.3d at 478. Nothing in the evidence supports an inference, let alone a conviction, on the grounds that the transfers were simply a delayed

link in the fraudulent chain. 

If the government’s theory were correct, then it would be

possible for an ordinary fraud to be converted into wire fraud

simply by the perpetrator picking up the telephone three years

later and asking a friend if he can store some fraudulentlyobtained property in his garage before the police execute a

search warrant or later taking the proceeds of fraud and transferring them to another bank. The government’s theory

extends an already broad statute too far. Concealing the

source and ownership of fraudulently-obtained property in

downstream transactions is better understood as money laundering absent evidence that the wire transfer is “incident to an

essential part of the scheme.” Lo, 231 F.3d at 478 (quoting

Pereira v. United States, 347 U.S. 1, 8 (1954)) (emphasis

omitted). 

[9] We reverse Lazarenko’s convictions on counts 25

through 29. 

C. MONEY LAUNDERING—COUNTS 6 THROUGH 8

[10] Our reversal of Lazarenko’s convictions on counts 25

to 29 does not, as Lazarenko urges, require us to reverse his

convictions on counts 6, 7, and 8 for money laundering.

Count 6 alleged that in November 1997 Lazarenko laundered

$6 million from a EuroFed account at Commercial Bank in

San Francisco to another EuroFed account. Just three months

earlier, in August 1997, the Commercial Bank account had

received the $14 million transfer that was charged as wire

13826 UNITED STATES v. LAZARENKO
fraud in count 26. Count 7 alleged that Lazarenko laundered

$6.745 million by drawing a check on the account of one of

his companies, Dugsbery, Inc., and using it to purchase a

home in Marin County, California, in 1998. Count 8 charges

Lazarenko with an unlawful transfer of $2.3 million from one

Dugsbery account at WestAmerica Bank to another at Bank

Boston Robertson Stevens, also in 1998. The money in the

Dugsbery account can be traced to Lazarenko’s Lady Lake

bank account in the Bahamas; the transfer of money from

Lady Lake to the Dugsbery account was charged as wire fraud

in count 29. 

The funds in the San Francisco EuroFed account and in the

Dugsbery WestAmerica account can be traced back to

Lazarenko’s large CARPO-53 account, where he deposited

proceeds from his Naukovy fraud and from his extortion of

Kiritchenko. The government contends that even if

Lazarenko’s wire fraud convictions are reversed, the money

laundering charges in counts 6, 7, and 8 still rest on

Lazarenko’s laundering of funds extorted from Kiritchenko. 

[11] The government was somewhat inconsistent in how it

portrayed these counts to the jury. During its closing argument, when summing up counts 6, 7, and 8, the government

at times referred only to the fraud allegations, making no

mention of extortion proceeds. Nonetheless, argument is not

evidence, and the evidence shows that proceeds from extortion ended up in the EuroFed accounts and in the Dugsbery

account. At trial, the government showed that Lazarenko

laundered proceeds from the extortion. Recognizing that we

consider these facts in the light most favorable to the government, Jackson, 443 U.S. at 324, we affirm the convictions on

counts 6, 7, and 8. 

D. MONEY LAUNDERING—COUNTS 2 THROUGH 5

We affirm Lazarenko’s money laundering convictions on

counts 2 through 5. The statute clearly lists “extortion” as a

UNITED STATES v. LAZARENKO 13827
foreign offense that may be a predicate offense for money

laundering. 18 U.S.C. § 1956(c)(7)(B)(ii). Lazarenko asserts

that “extortion” as it was used in the money laundering statute, 18 U.S.C. § 1956, at the time of his conduct, is limited

to extortion through violence and the extortion he is charged

with is more akin to bribery. We review de novo “[t]he district court’s interpretation of the money laundering statute . . .

and the scope of the conduct covered by the statute.” United

States v. Deeb, 175 F.3d 1163, 1166-67 (9th Cir. 1999). 

[12] Generally speaking, § 1956 criminalizes the laundering of the proceeds of a “specified unlawful activity.” 18

U.S.C. § 1956. During the period alleged in the indictment

against Lazarenko, 1992-1998, “specified unlawful activity”

was defined to include:

(A) any act or activity constituting an offense listed

in section 1961(1) of this title except an act which is

indictable under subchapter II of chapter 53 of title

31; 

(B) with respect to a financial transaction occurring

in whole or in part in the United States, an offense

against a foreign nation involving 

(i) the manufacture, importation, sale, or

distribution of a controlled substance (as

such term is defined for the purposes of the

Controlled Substances Act) . . . . 

(ii) kidnapping, robbery, or extortion; or5

(iii) fraud, or any scheme or attempt to

defraud, by or against a foreign bank (as

5

In 1996, Congress amended this clause to add “or destruction of property by means of explosive or fire.” See 18 U.S.C. § 1956(c)(7)(B)(ii). 

13828 UNITED STATES v. LAZARENKO
defined in paragraph 7 of section 1(b) of the

International Banking Act of 1978). 

18 U.S.C. § 1956(c)(7) (1992). In 2001, Congress amended

this section to include “bribery of a public official, or the misappropriation, theft, or embezzlement of public funds by or

for the benefit of a public official” as a “specified unlawful

activity.” 18 U.S.C. § 1956(c)(7)(B)(iv). 

Extortion, as it is criminalized under the Hobbs Act, 18

U.S.C. § 1951, can be committed through the threat of violence or under color of official right. See Evans v. United

States, 504 U.S. 255, 261-62 (1992). Lazarenko urges that

“extortion” as it is used in § 1956 does not include nonviolent foreign extortion. He claims that such conduct is

equivalent to foreign bribery and public corruption and that

these offenses were beyond the reach of federal law until the

Patriot Act of 2001.6

[13] “It is a familiar ‘maxim that a statutory term is generally presumed to have its common law meaning.’ ” Evans,

504 U.S. at 259 (quoting Taylor v. United States, 495 U.S.

575, 592 (1990)). At common law, extortion was a crime that

resembled what we know as bribery, and involved an abuse

of power by a public official. Id. at 260. Federal statutes have

expanded that definition to include the obtaining of property

by force. Id. at 261. 

[14] We presume that Congress was aware of the common

law meaning of extortion when it enacted § 1956. As the

Supreme Court has explained, 

[W]here Congress borrows terms of art in which are

6The Foreign Corrupt Practices Act punished those who offered bribes

to foreign officials, but did not reach the foreign officials who received the

bribes. 15 U.S.C. §§ 78dd-1, 78dd-2; United States v. Castle, 925 F.2d

831, 833-34 (5th Cir. 1991). 

UNITED STATES v. LAZARENKO 13829
accumulated the legal tradition and meaning of centuries of practice, it presumably knows and adopts

the cluster of ideas that were attached to each borrowed word in the body of learning from which it

was taken and the meaning its use will convey to the

judicial mind unless otherwise instructed. In such

case, absence of contrary direction may be taken as

satisfaction with widely accepted definitions, not as

a departure from them. 

Evans, 504 U.S. at 259-60 (quoting Morissette v. United

States, 342 U.S. 246, 263 (1952)). Significantly, Congress did

not qualify the term in any way that suggests that we should

read “extortion” as excluding the common law definition. The

fact that “extortion” is listed with “kidnapping” and “robbery”

does not compel us to give the term a narrower meaning or

one predicated on force or violence. 

The 2001 amendment to § 1956 does not become superfluous if we read “extortion” to include extortion under color of

official right. Bribery and extortion under color of official

right are not co-extensive. “Bribery of a public official”

extends to the individual who offers the bribe as well as to the

public official who accepts the bribe.7“Misappropriation,

theft, or embezzlement of public funds by or for the benefit

of a public official” will also capture conduct not punishable

as “extortion under color of official right” because misappropriation, theft, and embezzlement do not necessarily require

the quid pro quo of an official action. See Evans, 504 U.S. at

258-59. 

The Supreme Court’s recent decision in United States v.

Santos, 128 S.Ct. 2020 (2008), does not change our analysis

7The federal bribery statute punishes both one who “corruptly gives,

offers or promises anything of value to any public official” and public

officials who “corruptly demand[ ], seek[ ], receive[ ], accept[ ] or agree[ ]

to receive or accept anything of value.” 18 U.S.C. §§ 201(b)(1), (2). 

13830 UNITED STATES v. LAZARENKO
of the statute. In Santos, the Supreme Court examined the

word “proceeds” as it was used in § 1956. See id. at 2023-26.

The Court concluded that the term, left undefined in the statute, was ambiguous as to whether it meant “profits” or “receipts,” and so defined it in the more defendant-friendly terms

of “profits,” based on the rule of lenity. Id. at 2025. 

Critical to the issue here, the Court began its analysis by

reaffirming the principle that “[w]hen a term is undefined, we

give it its ordinary meaning.” Id. at 2024. This principle both

starts and ends our analysis. The term “extortion” has an ordinary meaning and it is not ambiguous. Unlike the word “proceeds,” “extortion” has a common law meaning and federal

statutes use the term to mean both extortion by violence and

extortion under color of official right. See, e.g., Evans, 504

U.S. at 261; James v. United States, 127 S.Ct. 1586, 1604-05

(2007) (Scalia, J. dissenting) (citing the Travel Act, 18 U.S.C.

§ 1952, the Hobbs Act, 18 U.S.C. § 1951, RICO, 18 U.S.C.

§ 1961, and the Model Penal Code § 223.4 as examples of

statutes with a broad interpretation of “extortion”). 

Lazarenko has not directed us to any statute where Congress used the word “extortion” and meant only extortion by

violence or only extortion under color of official right. Cf.

Santos, 128 S.Ct. at 2024 (observing that Congress “sometimes has defined [proceeds] to mean ‘receipts’ and sometimes ‘profits.’ ”). The ambiguity that the Court wrestled with

in Santos is simply absent with respect to “extortion.” 

Lazarenko’s money laundering convictions on counts 1

through 8 are also supported by the predicate offenses of wire

fraud and interstate transportation of stolen property. See 18

U.S.C. § 1956(c)(7)(A). Neither wire fraud nor interstate

transportation of stolen property needs to be listed under “offenses against a foreign nation” for Lazarenko’s convictions

to be affirmed. Lazarenko was charged with violating the law

of the United States by using a wire within this country in furtherance of his fraud or to transport funds that are derived

UNITED STATES v. LAZARENKO 13831
from fraud. That the underlying conduct occurred elsewhere

does not convert wire fraud or interstate transportation of

stolen property into an offense against a foreign nation. 

E. INTERSTATE TRANSPORTATION OF STOLEN PROPERTY—

COUNT 31

Lazarenko also challenges the sufficiency of the evidence

for his conviction on count 31 for interstate transportation of

stolen property. Count 31 alleges a transfer of $1.8 million

from Lazarenko’s LIP Handel account in Switzerland to

Kiritchenko’s ABS Trading account at Bank of America in

California. As noted earlier, this charge requires a tracing of

the fraud proceeds, not simply a commingled account. What

is totally missing here is evidence from the key account at the

Hungarian PostaBank, from which the money was transferred

into the LIP Handel account. 

According to the testimony of the former director of

Nikopolsky, Boris Velychko, in 1992, Lazarenko’s deputy

negotiated for Nikopolsky to loan $2.4 million to a Dutch

company, Van der Ploeg, on behalf of Naukovy to purchase

wheat. The $2.4 million was transferred to Van der Ploeg’s

account at ABN Amro Bank in the Netherlands in December

1992. The loan to Naukovy was repaid in local currency,

which, according to Velychko, was devalued in 1993. On January 19, 1993, $1.2 million was transferred from the ABN

Amro account to Agrafonov’s account at PostaBank in Hungary. In June 1993, $1.205 million was transferred from the

PostaBank account to Lazarenko’s LIP Handel account in

Switzerland. In July 1994, $1.8 million was transferred from

the LIP Handel account to Kiritchenko’s ABS Trading

account at Bank of America in San Francisco. It is this final

transfer that is charged as the interstate transportation of

stolen property in count 31. 

[15] Anyone who “transports, transmits, or transfers in

interstate or foreign commerce any goods, wares, merchan13832 UNITED STATES v. LAZARENKO
dise, securities or money, of the value of $5,000 or more,

knowing the same to have been stolen, converted or taken by

fraud” is guilty of interstate transportation of stolen property.

18 U.S.C. § 2314. We will uphold the conviction if, viewing

the evidence in the light most favorable to the government,

there is sufficient evidence for a rational juror to find guilt

beyond a reasonable doubt. Jackson, 443 U.S. at 324. 

[16] The ledger from Van der Ploeg’s account at ABN

Amro shows a transfer of $1.2 million to an account at PostaBank, and the ledger for Lazarenko’s LIP Handel at Union

Bank of Switzerland shows a receipt of $1.205 million from

PostaBank, but the glaring gap is that there are no records

from PostaBank at all. The government was unable to produce

any documents from PostaBank itself. Lazarenko asserts that

this gap is fatal to the government’s charge of interstate transportation of stolen property because without those records it

is impossible to know whether the $1.205 million that was

transferred to LIP Handel was the proceeds of fraud or

derived from the proceeds of fraud. We agree. 

The district court instructed the jury that to find Lazarenko

guilty of interstate transportation of stolen property, the funds

that were transferred must be the proceeds of fraud or derived

from the proceeds of fraud. This rule has its roots in United

States v. Poole, 557 F.2d 531 (5th Cir. 1977). There, the

defendant, Poole, deposited a check that contained

fraudulently-obtained funds into his bank account and then,

on the same day, wrote a check on that account for an amount

identical to the amount that had been deposited. Id. at 533-34.

He deposited that check into an out-of-state bank. Id. The

Fifth Circuit reversed the conviction because the bank account

into which Poole deposited the fraudulently-obtained funds

had sufficient clean funds to cover the amount of the check

that was transported across state lines. Id.

The government relies on the Seventh Circuit’s ruling in

United States v. Quintanilla, 2 F.3d 1469 (7th Cir. 1993), to

UNITED STATES v. LAZARENKO 13833
argue that it does not matter whether there were sufficient

clean funds in the PostaBank account to cover the transfer of

$1.205 million to the LIP Handel account. In Quintanilla, the

defendants were found guilty of defrauding the G. Heileman

Brewing Company’s corporate sponsorship program and convicted of, among other charges, interstate transportation of

stolen property. Id. at 1471. Defendant Monreal, the director

of the program, devised a scheme to receive kickbacks from

organizations who received sponsorship awards. Id. The

money passed from Heileman to the organization and the

organization would, in turn, pass a portion to Monreal. Id.

Quintanilla was the director of one of the organizations, Operation Search, that had kicked money back to Monreal. Id.

Quintanilla argued on appeal that Operation Search had sufficient clean funds in its account each time a kickback check

was drawn and transported to Monreal. Id. at 1478. The Seventh Circuit rejected this argument. It explained that, 

[t]he evidence at trial showed, and Quintanilla does

not dispute, that he agreed to pay Monreal a portion

of every Heileman grant that Operation Search

received. Accordingly, the ultimate source of the

funds used to pay Monreal was Heileman. The evidence also showed that Quintanilla followed Monreal’s directions concerning exactly how the

kickbacks were to be made; there is no suggestion

that these directions were not followed to the last

detail. Given the nexus between the Heileman grants

and the kickbacks made to Monreal, we do no[t]

think § 2314 liability hinges in this case on whether

or not Operation Search had sufficient clean funds in

its bank account each time a kickback check was

drawn and transported across state lines to Monreal.

Id. at 1478-79 (footnote omitted). The court looked at the purpose behind § 2314, and noted specifically that the statute was

meant to prevent those who were attempting to “ ‘utilize the

channels of interstate commerce make a successful get

13834 UNITED STATES v. LAZARENKO
away.’ ” Id. at 1479 (quoting United States v. Sheridan, 329

U.S. 379, 384 (1946)). It concluded that “[l]ooking to the substance of Quintanilla’s conduct, it is apparent that the checks

he caused to be transported in interstate commerce represented, and were directly derived from, fraudulently obtained

Heileman funds.” Id.

Quintanilla does not save the government in this case

because the evidence of the nexus between the grants and the

kickbacks in that case was sufficient. Here, the chain of

alleged kickbacks from the wheat deal is missing a few links.

More significantly, though, the jury here was instructed in

accordance with Poole and the government did not object to

the premises underlying that decision. 

In any event, even if we infer that Lazarenko was connected to the wheat deal because it was negotiated by his deputy and he received a payment that represented approximately

fifty percent of the proceeds, PostaBank records are still

required for there to be sufficient evidence that Lazarenko’s

subsequent transfer of $1.8 million to Kiritchenko constituted

interstate transportation of stolen property. The government’s

argument that the transfer of $1.205 million to Lazarenko’s

LIP Handel account was the proceeds of fraud because the

fraud was not complete until the money reached Lazarenko

does not persuade us that the PostaBank records are unnecessary. 

For the $1.8 million transferred from Lazarenko’s LIP Handel account to Kiritchenko’s ABS Trading account to be

fraudulently-obtained property, it must have contained at least

$5,000 of the $2.4 million transferred to Van der Ploeg in the

phony wheat deal. We cannot look only at whether the $1.8

million contained at least $5,000 of the $1.205 million transferred into Lazarenko’s LIP Handel account as the government urges because the evidence viewed in the light most

favorable to the government shows only that the $1.205 million payment was an extortion payment, i.e., fifty percent of

UNITED STATES v. LAZARENKO 13835
the proceeds from the phony wheat transaction.8

 The fraud

was Lazarenko’s deputy arranging for Nikopol to give Van

der Ploeg $2.4 million to buy wheat that was never purchased.

That fraud was completed when the money was transferred to

Van der Ploeg. 

[17] The record supports an inference that Lazarenko

extorted $1.205 million from Agrafonov, because Lazarenko

always extorted half of the profits from businesses. But making an extortion payment and completing a fraud are entirely

different propositions. The $1.205 million extortion payment

also may have been money derived from the phony wheat

deal. Without the records from PostaBank, which would show

whether there were clean funds in the account from which

Agafonov could make the required payment to Lazarenko,

this inference is speculation. In short, the evidence reflects

money into the Hungarian account and money out of the

account, but missing is evidence about the account itself and

whether the transferred money was “directly traceable” to the

fraud itself. See Morgan, 805 F.2d at 1378. Accordingly, we

reverse Lazarenko’s conviction on count 31.9

F. RETROACTIVE MISJOINDER

Lazarenko also appeals the denial of his Rule 33 motion for

a new trial. He argues that the government indicted him on the

UESU charges, knowing that the charges could not be proven,

and then, after the directed verdict of acquittal, used the evidence from the alleged UESU scheme against him in its closing argument, in violation of the doctrine of retroactive

misjoinder.10 He asserts that he was denied the opportunity to

8Kiritchenko testified that Lazarenko worked with everyone 50-50. We

give the government the benefit of the inference that Lazarenko worked

with Agafonov 50-50 as well.” 

9Because we reverse Lazarenko’s conviction on this count, we do not

need to reach his argument that the government’s closing argument was

misleading. 

10This doctrine is closely related to prejudicial spillover. The concepts

and terms are often used interchangeably. See United States v. Vebeliunas,

76 F.3d 1283, 1293-94 (2d Cir. 1996). 

13836 UNITED STATES v. LAZARENKO
respond in his own closing argument to the government’s

misleading statements. 

We review for an abuse of discretion the district court’s

denial of a motion for a new trial made on the grounds of

retroactive misjoinder. United States v. Aldrich, 169 F.3d 526,

528 (8th Cir. 1999). Although we consider de novo whether

a defendant has been deprived of his constitutional right to

present closing argument, see United States v. Igbinosun, 528

F.3d 387, 391 (5th Cir. 2008), a district court’s limitation on

a closing argument is reviewed for an abuse of discretion.

United States v. Spillone, 879 F.2d 514, 518 (9th Cir. 1989).

[18] The Federal Rules of Criminal Procedure allow for

several offenses and several defendants to be joined in a single indictment. If, however, some of the offenses or defendants are dismissed mid-trial, in some cases the trial court

must sever the proceedings in order to protect the defendant

from prejudice. See Schaffer v. United States, 362 U.S. 511,

514 (1960). 

[19] As the Second Circuit explained in Vebeliunas, 

“ ‘Retroactive misjoinder’ arises where joinder of

multiple counts was proper initially, but later

developments—such as a district court’s dismissal of

some counts for lack of evidence or an appellate

court’s reversal of less than all convictions—render

the initial joinder improper. In this Circuit, ‘[t]o

invoke retroactive misjoinder,’ a defendant ‘must

show compelling prejudice.’ Prejudicial spillover

from evidence used to obtain a conviction subsequently reversed on appeal may constitute compelling prejudice.” 

Vebeliunas, 76 F.3d at 1293-94 (internal citations omitted)

(quoting United States v. Jones, 16 F.3d 487, 493 (2d Cir.

1994)). The First Circuit has set a high bar for proving prejuUNITED STATES v. LAZARENKO 13837
dicial spillover: “[A] claim of prejudicial spillover cannot succeed unless ‘a defendant . . . prove[s] prejudice so pervasive

that a miscarriage of justice looms.’ ” United States v. Trainor, 477 F.3d 24, 36 (1st Cir. 2007) (quoting United States v.

Levy-Cordero, 67 F.3d 1002, 1008 (1st Cir. 1995)). 

We have examined the issue of prejudicial spillover in the

context of a defendant’s motion to sever his trial from a codefendant. In United States v. Cuozzo, 962 F.2d 945 (9th Cir.

1992), we stated that, “[i]n assessing the prejudice to a defendant from the ‘spillover’ of incriminating evidence, the primary consideration is whether ‘the jury can reasonably be

expected to compartmentalize the evidence as it relates to separate defendants, in view of its volume and the limited admissibility of some of the evidence.’ ” Id. at 950 (quoting United

States v. Escalante, 637 F.2d 1197, 1201 (9th Cir. 1980)). The

trial court’s instructions to the jury are a “critical factor” in

this assessment. Cuozzo, 962 F.2d at 950. Also, “[t]he fact

that the jury rendered selective verdicts is highly indicative of

its ability to compartmentalize the evidence.” Id.

[20] At the outset, we reject the government’s contention

that we have limited the doctrine of retroactive misjoinder

only to cases where there is more than one defendant. The

government reads United States v. Anguiano, 873 F.2d 1314

(9th Cir. 1989), too broadly. In Anguiano, we held that the

trial court did not err in refusing to give a multiple conspiracies instruction where there was a single defendant. Id. at

1318. We stated that, 

[a] multiple conspiracies instruction is generally

required where the indictment charges several defendants with one overall conspiracy, but the proof at

trial indicates that a jury could reasonably conclude

that some of the defendants were only involved in

separate conspiracies unrelated to the overall conspiracy charged in the indictment. The instruction is

required because, in such a situation, there is a possi13838 UNITED STATES v. LAZARENKO
bility of prejudicial variance between the indictment

and the trial proof. The variance may be prejudicial

in a number of ways, but the problem that is of concern here is the possibility of transference or “spillover” of guilt. In this type of situation, one of the

defendants argues that he or she was only involved,

if at all, in a minor conspiracy that is unrelated to the

overall conspiracy charged in the indictment, and

that a multiple conspiracies instruction is required in

order to ensure that there is no “spillover” of guilt

from one defendant to another. However, there is no

problem of spillover when, as in this case, the defendant stands trial alone. Accordingly, Anguiano was

not entitled to a multiple conspiracies instruction on

this basis. 

Id. at 1317-18 (internal citations and footnotes omitted). We

did not hold broadly that the doctrine of prejudicial spillover

is inapplicable where there is only one defendant. 

[21] The government’s citation to the Seventh Circuit’s

decision in United States v. Holzer, 840 F.2d 1343 (7th Cir.

1988), as limiting the applicability of the doctrine of prejudicial spillover or retroactive misjoinder, also misses the mark.

The Seventh Circuit stated that “[n]o rule of evidence is violated by the admission of evidence concerning a crime of

which the defendant is acquitted, provided the crime was

properly joined to the crime for which he was convicted and

the crimes did not have to be severed for purposes of trial.”

Id. at 1349 (emphasis added). The Seventh Circuit thus is consistent with our sister circuits in recognizing that there are circumstances where charges in a trial must be severed to avoid

prejudice. See, e.g., Vebeliunas, 76 F.3d at 1293-94; Aldrich,

169 F.3d at 528. We thus clarify that the doctrine of prejudicial spillover or retroactive misjoinder may apply to a case

where there is only one defendant. 

[22] Invoking the three-factor test that the Second Circuit

developed in Vebeliunas, the district court concluded that

UNITED STATES v. LAZARENKO 13839
Lazarenko was not prejudiced by the now-dismissed charges.

Under the Vebeliunas test, the court considers: (1) whether the

evidence was so inflammatory that it would tend to cause the

jury to convict on the remaining counts; (2) the degree of

overlap and similarity between the dismissed and remaining

counts; and (3) a general assessment of the strength of the

government’s case on the remaining counts. Vebeliunas, 76

F.3d at 1294. These factors reasonably address concerns about

prejudicial spillover. We adopt these factors and add to them

the factors we identified in Cuozzo—whether the trial court

diligently instructed the jury and whether there is evidence,

such as the jury’s rendering of selective verdicts, to indicate

that the jury compartmentalized the evidence. Cuozzo, 962

F.2d at 950. 

[23] The district court did not abuse its discretion in denying Lazarenko a new trial based on prejudicial misjoinder.

The court first found that the evidence presented in connection with the UESU and GHP frauds was not inflammatory.

It was not persuaded that the jury “threw up their hands” over

the $200 million associated with the dismissed counts because

the jury deliberated for four days and sent questions to the

court. Certainly, the UESU scheme was a significant component of the government’s case against Lazarenko. But the evidence of fraud, illegal transfers and coverups was so extensive

that evidence of $200 million in allegedly unlawful transfers

is hardly more inflammatory than evidence of the other transfers or the evidence that Lazarenko extorted fifty percent of

the profits from all the businesses he was involved with. The

testimony on the $200 million transfer did not amount to compelling prejudice. 

The government does not challenge the district court’s ruling that some of the evidence would have been inadmissible

if the dismissed counts had been dismissed before trial. See

United States v. Hamilton, 334 F.3d 170, 182 (2d Cir. 2003)

(“[P]rejudicial spillover is unlikely if the dismissed count and

13840 UNITED STATES v. LAZARENKO
the remaining counts were either quite similar or quite dissimilar.”). 

[24] Finally, the district court concluded that the government’s case on the remaining counts was sufficiently strong.

The court sent 29 counts to the jury, but overturned the verdict on 15 counts. We have reversed an additional six counts.

This issue presents a closer question, but “[i]t is not necessary

that the court agree with jury verdicts on all counts to determine that the jury carefully weighed the evidence.” United

States v. Stefan, 784 F.2d 1093, 1101 (11th Cir. 1986).

Lazarenko has not explained how the evidence related to the

dismissed counts was tainted by the UESU evidence. The

overall evidence of fraud was strong, although it was incumbent on the government to weave that evidence through the

technical threads of multiple counts. That the government was

not 100% successful does not undermine the evidence that

was airtight. 

Lazarenko further argues that the prejudicial impact of the

evidence on the dismissed counts was compounded in the

government’s closing argument. He claims that while the government referred to the scheme in the “indictment,” he was

prevented from arguing that the single conspiracy alleged in

count 1 was not proven because the central allegations— the

UESU fraud, the GHP/PMH fraud, and the Dityakovsky

extortion— were not proven. He further asserts that the government improperly referred to the UESU fraud in arguing

that Lazarenko was “never engaged in legitimate business,”

while he was precluded from responding that the funds from

UESU were not unlawful. 

The jury did not see the indictment and was not informed

of the specific allegations in the indictment related to UESU.

The district court gave counsel three guidelines for their closing arguments: (1) counsel could not “implicate the Court and

its ruling on the dismissed counts in your argument”; (2)

counsel could not “comment on why the theories were no lonUNITED STATES v. LAZARENKO 13841
ger before” the jury; and (3) counsel could not “mislead them

by way of argument . . . that they can acquit based on the

absence” of the UESU counts. 

[25] The government’s references to the indictment were

not improper. The jury was specifically instructed that certain

counts were no longer before them, the government stated at

the beginning of its closing argument that it was not addressing those counts, and the jury never saw the indictment. With

these safeguards in place, the government’s mention of “the

crimes charged in the indictment,” or the schemes “alleged in

the indictment,” — references that did not mention UESU —

did not improperly implicate the dismissed UESU counts. 

Lazarenko appears to want it both ways. He argues that he

was prevented from countering the government’s references

to the indictment and that he should have been able to argue

that the government failed to prove the single conspiracy and

wire fraud allegations that it promised to prove because the

evidence did not support the UESU, GHP, PMH, and

Dityakovsy allegations. In his closing argument, Lazarenko’s

counsel argued,

[I]s that plan or scheme that the government is now

presenting to you, is that the same plan or scheme

that Mr. Lazarenko was charged with, that the government has been prosecuting in this case? 

Is what the government’s presented to you in final

argument the same scheme that they argued to you

the whole case? 

Remember, the government argued to you that

UESU, UEIL, Itera, prefab houses, Nakosta were all

part of the scheme. 

Now the government argues, the scheme was

Naukovy and Kiritchenko alone. That’s the scheme.

13842 UNITED STATES v. LAZARENKO
We will talk more about this, but the defendant has

a constitutional right to be tried on only what he has

been charged with, and a constitutional right not to

be convicted— 

The court then sustained “its own objection to that part of the

argument.” 

Outside the presence of the jury, the court explained its

view. The court commented that Lazarenko’s counsel had

“very deftly for the most part . . . complied” with the guidelines. The court stated, though, that counsel crossed the line

when he argued that “the defendant has a right under the Constitution . . . to be convicted on the . . . indictment [returned

by the grand jury].” The court stated that “[t]here is nothing

in our record that tells them about the grand jury, their function or what they do. . . . I did not want to mislead this jury

and have them now consider what the grand jury did or didn’t

do.” The court’s objection was limited to counsel’s references

to what had or had not been charged. Lazarenko’s counsel

was not precluded from arguing that the government did not

prove the scheme they initially laid out based on the evidence.

At that point, the indictment was not in play. It was not

improper for the court to limit the closing argument to the evidence. 

We also disagree with Lazarenko’s assertion that the government improperly relied on the UESU scheme when it

argued that Lazarenko had “never engaged in legitimate business.” The government argued to the jury that,

the evidence in this case shows that throughout this

period of time the only position the defendant held

was an official position. The only thing he did was

exercise his official authority. 

He was never engaged in any legitimate business. He

never received, legitimately, any income from

Kiritchenko or from Naukovy State Farms. 

UNITED STATES v. LAZARENKO 13843
The UESU allegations are not implicated in this argument.

Not only did the government at the beginning of its argument

state that it would not be referring to the UESU counts, the

government followed up its statement that Lazarenko did not

have any legitimate business by linking that reference to the

claim that the income from Kiritchenko and Naukovy was

illegal. 

[26] At most, the government indirectly suggested that the

UESU business was illegitimate. Lazarenko responded by

arguing that “the suggestion that money from UESU or Itera

or UEIL and Nakosta had an unlawful source is now no longer before you. Those sources are not unlawful.” The government did not make a contemporaneous objection, but argued

to the court during a break that this statement was inappropriate. The court ruled that counsel could argue using the terms

of the jury instructions that certain evidence was “not before”

the jury, and stated that “there is more than enough in this

record to argue the schemes are not proven based on the

weight of the record itself, and that’s where the argument

ought to be.” This ruling did not prevent Lazarenko from dispelling any impression, however faint, that may have been left

with the jury that all of Lazarenko’s wealth was obtained illegally. Understandably, the district court required that the

argument, however, would have to be based on the evidence.

The counts we have dismissed fall of their own weight and

those we have affirmed stand on their own. The district court

did not abuse its discretion in denying the motion for a new

trial based on retroactive misjoinder, nor did the court

improperly limit Lazarenko’s closing argument. 

We affirm Lazarenko’s convictions on count 1 for conspiracy, counts 2 through 5 for money laundering, and counts 6

through 8 for money laundering. We reverse Lazarenko’s

convictions on counts 25 through 29 for wire fraud, and count

31 for interstate transportation of stolen property. Because we

reverse on six of the fourteen counts of which Lazarenko was

13844 UNITED STATES v. LAZARENKO
convicted, we vacate the sentence and remand for resentencing on the remaining eight counts as to which we affirm the

conviction. 

AFFIRMED IN PART, REVERSED IN PART, AND

REMANDED.

UNITED STATES v. LAZARENKO 13845