Source: https://www.scribd.com/document/146752544/Judge-s-Order-on-Tyrone-Freeman-s-Request-for-Acquittal-on-14-Criminal-Counts-5-30-2013-US-District-Court-Central-District-of-California-USA-vs-Ty
Timestamp: 2017-10-22 08:46:30
Document Index: 476965962

Matched Legal Cases: ['§ 1341', '§ 501', '§ 1341', '§ 501', '§ 1341', '§ 501', '§ 501', '§ 501', '§ 501', '§ 2314', '§ 911', '§ 501', '§ 501', '§ 501', '§ 501', '§ 501', '§\n501', '§ 501', '§ 501', '§ 501', '§ 501', '§ 501', '§ 1014', '§ 7206']

Judge's Order on Tyrone Freeman's Request for Acquittal on 14 Criminal Counts. 5-30-2013. US District Court, Central District of California. USA vs Tyrone Freeman | Reasonable Doubt | Indictment
Description: A 41-page ruling in response to Tyrone Freeman's motion for acquittal of 14 criminal counts including embezzlement, theft of union assets, mail fraud, filing false tax returns and others. The judge...
A 41-page ruling in response to Tyrone Freeman's motion for acquittal of 14 criminal counts including embezzlement, theft of union assets, mail fraud, filing false tax returns and others. The judge upheld 11 of the guilty counts and vacated three of them. May 30, 2013.
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Pending before the Court is Defendant Tyrone Freeman’s (“Defendant”) Motion for Judgments of Acquittal or, in the Alternative, For a New Trial (“Motion,” docket no. 161) filed on March 11, 2013. Reply. The Government filed an Opposition and Defendant filed a For the following v. TYRONE R. FREEMAN, Defendant. UNITED STATES, Plaintiff, CR 12-00734 ABC ORDER RE: DEFENDANT’S MOTION FOR JUDGMENTS OF ACQUITTAL, OR IN THE ALTERNATIVE, A NEW TRIAL UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION
Oral argument will not be necessary.
reasons, the Court GRANTS in part and DENIES in part the Motion.
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A. Motion for Acquittal
Defendant Tyrone Freeman was convicted by a jury on fourteen counts of a fifteen count Indictment1. Verdict Form) and 1 (Indictment). See docket nos. 143 (Redacted
Defendant now moves under Fed. R.
Crim. P. 29 for a judgment of acquittal, or, in the alternative, under Fed. R. Crim. P. 33, for a new trial on all counts. The Court will
follow Defendant’s grouping of the counts into five categories, and will address each group in turn.
Fed. R. Crim. P. 29(c) allows a defendant to move for a judgment of acquittal on the ground that the evidence presented at trial was insufficient to support a guilty verdict. The court must assess the
“constitutional sufficiency of the evidence to support a criminal conviction under the framework set out in Jackson v. Virginia, [] which requires [the court] to determine whether ‘after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.’” United States v. Nevils, 598 F.3d 1158,
1163-64 (9th Cir. 2010) (quoting Jackson v. Virginia, 443 U.S. 307, 319 (1979). The Ninth Circuit has expressed the Jackson analysis as a twostep inquiry, as follows. “First, a reviewing court must consider the
evidence presented at trial in the light most favorable to the
Before the jury began its deliberations, the Court granted a motion to dismiss count fifteen of the Indictment. 2
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prosecution.[]
[The court] may not usurp the role of the finder of
fact by considering how it would have resolved the conflicts, made the inferences, or considered the evidence at trial. []” at 1164 (references omitted). Nevils, 598 F.3d
Instead, when “‘faced with a record of
historical facts that supports conflicting inferences” the court “must presume-even if it does not affirmatively appear in the record-that the trier of fact resolved any such conflicts in favor of the prosecution, and must defer to that resolution.’” Jackson, 443 U.S. at 326). “Second, after viewing the evidence in the light most favorable to the prosecution, the reviewing court must determine whether this evidence, so viewed, is adequate to allow ‘any rational trier of fact [to find] the essential elements of the crime beyond a reasonable doubt.’” Nevil, 598 F.3d at 1164 (quoting Jackson, 443 U.S. at 319). This second step is necessary because “a properly instructed jury may occasionally convict even when it can be said that no rational trier of fact could find guilt beyond a reasonable doubt[.]” U.S. at 317. More than a “mere modicum” of evidence is required to support a verdict. Id. at 320 (rejecting the rule that a conviction be affirmed Jackson, 443 Id. (quoting
if “some evidence” in the record supports the jury's finding of guilt). A reviewing court may not, however, “‘ask itself whether it
believes that the evidence at the trial established guilt beyond a reasonable doubt,’ only whether ‘any’ rational trier of fact could have made that finding.” 443 U.S. at 318-319). Nevil, 598 F.3d at 1164 (quoting Jackson,
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Motion for a New Trial Under Fed. R. Crim. P. 33(a), a district court may “vacate any
judgment and grant a new trial if the interest of justice so requires.” Fed. R. Crim. P. 33(a). “A district court’s power to
grant a motion for a new trial is much broader than its power to grant a motion for judgment of acquittal.” United States v. A. Lanoy
Alston, D.M.D., P.C., 974 F.2d 1206, 1211 (9th Cir. 1992) (internal citation omitted). A new trial is appropriate where procedural errors “‘materially affected the fairness of the trial.’” United States v. Aichele, 941
F.2d 761, 765 (9th Cir. 1991) (discussing prosecutorial misconduct; quoting United States v. Smith, 893 F.2d 1573, 1583 (9th Cir. 1990)). A new trial may also be granted because the verdict is against the weight of the evidence. When evaluating a weight of the evidence
motion, “‘[t]he district court need not view the evidence in the light most favorable to the verdict; it may weigh the evidence and in so doing evaluate for itself the credibility of the witnesses.’” (quoting United States v. Lincoln, 630 F.2d 1313, 1319 (8th Cir.1980)). However, a new trial “should be granted ‘only in Id.
exceptional cases in which the evidence preponderates heavily against the verdict.’” United States v. Pimentel, 654 F.2d 538, 545 (9th Cir.
1981) (citation omitted, emphasis added).
Counts One through Eight: the “CUHW Counts” Counts One through Four of the Indictment allege that Defendant
violated 18 U.S.C. § 1341 by using the mails to defraud Service Employees International Union (“SEIU”) Local 6434 (“Local 6434”) and 4
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California United Homecare Workers (“CUHW”) by accepting four $2,500 checks from CUHW that CUHW resolved to pay Local 6434. 1:1-8:12. Indictment
Counts Five through Eight allege that Defendant violated 29
U.S.C. § 501(c) by embezzling funds belonging to Local 6434 “by diverting to himself payments from CUHW intended for Local 6434.” Indictment 9:1-16. Specifically, on January 16, 2007, CUHW’s
Executive Board passed a resolution that stated, “BE IT RESOLVED that in submission of such proof of activities, CUHWU [CUHW] shall reimburse the ULTCWU [Local 6434] $2500 per month for the payment towards the salary of the President [Defendant] for his time away from the duties of the ULTCWU.” Opp’n 7:5-11 (citing Gov’t Exh. 13).
Defendant caused CUHW to make these payments to himself instead of to Local 6434. Defendant also caused Local 6434 to send CUHW an
additional $2,500, but Defendant had CUHW pay him that money. Consistent with Defendant’s grouping, the Court will refer to all of these as the CUHW Counts. Section 1341 makes it a crime to use the mails to engage in a scheme to defraud or obtain money or property by false promises. U.S.C. § 1341. 18
The Court instructed the jury that mail fraud consists
of the following four elements: (1) “the defendant knowingly participated in, devised, or intended to devise a scheme or plan to defraud [Local 6434 or CUHW], or a scheme or plan for obtaining money or property from Local 6434 or CUHW, by means of false or fraudulent pretenses, representations, or promises;” (2) that “the statements made or facts omitted as part of the scheme were material; that is, they had a natural tendency to influence, or were capable of influencing, a person to part with money or property;” (3) that “the defendant acted with the intent to defraud, that is, the intent to 5
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deceive or cheat; and” (4) that “the defendant used, or caused to be used, a private or commercial interstate carrier to carry out or attempt to carry out an essential part of the scheme.” Instruction No. 21.2 Section 501(c) makes it a crime to embezzle from a labor organization in the private sector. 29 U.S.C. § 501(c). The Court See Jury
instructed the jury that this crime consists of the following four elements: (1) that “Local 6434 or, as to Count 9, SEIU Local 434b, was a labor organization engaged in an industry affecting interstate or foreign commerce;” (2) that “[t]he defendant was an officer of, or was employed by, the labor organization;” (3) that “[t]he defendant embezzled or stole or abstracted or converted to his own use or to the use of another, the moneys, funds, property, or other assets of the labor organization; and” (4) that “[t]he defendant acted unlawfully, willfully, and with the intent to defraud.” 22. Defendant seeks acquittal on the § 1341 and § 501(c) charges on the ground that the evidence was insufficient to prove that he acted with an intent to defraud, which is an element of both crimes. Alternatively, Defendant seeks a new trial on the ground that the verdicts were contrary to the weight of the evidence, because of instructional errors, and because the Government prejudicially misstated the evidence during its rebuttal argument. 1. The Evidence was Sufficient to Support the Jury Verdict. See Jury Instruction No.
Citing United States v. Thordarson, 646 F.2d 1323 (9th Cir. 1981), Defendant argues that he must be acquitted of the CUHW charges
The Jury Instructions are docketed as document no. 132. 6
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because the evidence presented cannot support a finding that by accepting the payments from CUHW, Defendant took “another person’s property knowing that the other person would not have wanted that to be done.” Thordarson, 646 F.2d at 1336. Specifically, Defendant
contends that CUHW’s Executive Board approved the payments to him and never objected. Defendant also argues that Local 6434 never objected
that Defendant, and not itself, received the payments from CUHW. Defendant’s position rests largely on the testimony of Flora Walker. Walker was an Executive Vice President of CUHW and signed all Walker testified that
of the checks CUHW issued to Defendant.
Defendant asked to be paid personally, and she understood that Defendant was to receive a stipend from CUHW. 1/15/2013 am (Walker), 95:2-23, 113:13-15.) (Reporter’s Transcript3
Defendant relies on
Walker’s testimony to show that the payments to him were “open and transparent,” that is, disclosed to and approved by the CUHW Executive Board. However, Walker was not present at the January 16, 2007
Executive Board meeting at which the Board passed the resolution upon which the payments to Defendant were based, nor did Walker attend subsequent board meetings. In addition, when she signed the checks,
Walker appeared to be relying on Defendant’s own representations concerning the propriety of issuing the checks to him. Doug Moore, Walker’s proxy, did attend the Executive Board meetings, and he testified about the Board’s intentions. Moore
understood that the January 16 Resolution was to reimburse Local 6434 for Defendant’s time, not to provide Defendant a stipend. (1/16/2013
(“RT”).
All trial testimony citations are to the Reporter’s Transcript The Court will omit “RT” from the remaining citations. 7
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am (Moore), 27:20-28:19).
Defendant did not disclose to the Board Id. Moore also testified that the
that the payments would go to him.
Board never authorized the direct payment of any moneys to Defendant, and that as a Board Member, he would not have voted to approve any such payments. (Id. at 38:16-39:19.)
Moore also testified that after it came to his attention that these payments were going to Defendant, he questioned Defendant about it at the June 25, 2008 CUHW Board meeting because Defendant’s receipt of those payments was contrary to the January 16 resolution. (1/16/2013 pm, 12:3-12; 1/16/2013 am, 124:14-125:6.) Defendant said
that the payment was going to him to compensate for his loss of pay from Local 6434 for the time he was spending doing CUHW work. (1/16/2013 am (Moore), 30:25-32:23.) Defendant said that when his
time with CUHW reached 60 hours a month, Local 6434 would prorate his salary because the time spent for CUHW was time away from Local 6434. (Id. at 125:9-127:13.) The import of Defendant’s representation was
that there was no reason for CUHW to reimburse Local 6434 for Defendant’s salary because Local 6434 cut Defendant’s salary; the payment should go to Defendant instead. Moore sought to clarify how
much money Defendant was getting paid in total, and asked whether, because of these payments from CUHW, Defendant’s salary went up; Defendant said his salary did not go up, that he was not getting additional compensation on top of what he would normally be paid. (Id. at 127:4-13.) However, Local 6434 had not, in fact, reduced Defendant’s salary. (Id. at 32:24-33:2.)
Moore conceded that all the payments to Defendant were disclosed to CUHW’s Executive Board in the financial reports presented at Board meetings, and that the Board voted to approve the expenses. 8 However,
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the financial reports were not reviewed in detail at the Board meetings, and the Board did not carefully review the payments to Defendant; furthermore, it never was, and never became, the Board’s intention to pay Defendant a stipend. 12:2.) (1/16/2013 pm (Moore), 11:5-
Furthermore, Moore’s testimony supports the conclusion that,
to the extent the Board approved payments to Defendant when it approved the financial reports generally, it did so because Defendant misled the Board about his compensation. Moore’s testimony suggests
that because of Defendant’s representations, the Board was under the impression that CUHW made payments to Defendant to make up for the fact that Local 6434 cut Defendant’s salary because his work for CUHW took him away from Local 6434. (1/16/2013 am (Moore), 124:14-127:13.) It is therefore
As noted, Local 6434 did not cut Defendant’s salary.
reasonable to conclude that if the Board assented to paying Defendant, that assent was based on false information Defendant provided. Moore further testified that Defendant never asked the Board to pay him a stipend, and the board never voted to pay him a stipend. (1/16/2013 pm (Moore), 7:12-8:3.) Rather, the Board voted to Id. Id. Defendant could Defendant also
reimburse 6434 for part of Defendant’s salary. have asked CUHW for a stipend, but he did not. signed off on his own check requests.
(Id. at 8:24-10:4.)
Moore’s testimony supports a finding that Defendant caused CUHW to pass the resolution to reimburse Local 6434 $2,500 a month for Defendant’s salary, then caused CUHW personnel to make those payments directly to him instead of to Local 6434. When Moore later confronted
Defendant about these payments to him at the June 2008 CUHW Board Meeting, Defendant justified the CUHW payments going to him on the ground that Local 6434 had actually cut his salary for the time he 9
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spent on CUHW business.
However, this justification was false because Because Defendant’s
Local 6434 did not cut Defendant’s salary.
representation was false, CUHW’s Board could not have authorized or ratified these payments to Defendant. In short, Moore’s testimony
supports a finding that Defendant intended to deceive CUHW and Local 6434, and caused payments from CUHW intended for Local 6434 to go to him instead, and that neither CUHW nor Local 6434 would have wanted that to be done. Finally, the Court is not persuaded that because “Local 6434 and CUHW both received the services to which they were entitled,” that forecloses a finding that Local 6434 and CUHW would not have wanted their funds to be used to pay him. Mot. 10:23-24. Defendant’s
argument is purely speculative: there are no facts or evidence in the record supporting this conclusion. In contrast, the jury was
presented with specific evidence that the unions would not have wanted their funds used this way. As set out above, Moore testified that the
CUHW Board intended the $2,500 payments to reimburse Local 6434, that CUHW never intended to pay Defendant a stipend, that Moore would not have voted to pay Defendant a stipend, and that Defendant obtained the $2,500 payments from CUHW by misrepresenting that Local 6434 had reduced his salary. Furthermore, that Defendant engaged in this
deception in order to divert the funds to himself gives rise to the inference that he doubted that he would have been able to obtain the same payments honestly. For the foregoing reasons, the Court finds that the jury verdict was supported by the evidence presented at trial.
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Defendant also argues that the Court made a number of legal errors that warrant a new trial on the CUHW charges. a. Admission of Draft Minutes Into Evidence was not Error.
Defendant argues that the Court erred by admitting into evidence draft minutes of CUHW’s June 2008 Board meeting. The Court found at
trial that the draft minutes were a record of a regularly conducted activity under Fed. R. Evid. 803(6) and were therefore excepted from the hearsay rule. Contrary to Defendant’s argument, Amelia Faulan,
who was Executive Assistant to Defendant, and Douglas Moore provided sufficient foundation to support the admission of the draft minutes. In brief, on questioning by Defendant, Faulan testified to how CUHW prepared and distributed its minutes for a series of meetings, and testified as to all the elements to establish the business records exception. (1/15/2013 am (Faulan), 59:14-64:8.) On Defendant’s
motion, those records were admitted into evidence. The Government then elicited from Faulan similar testimony concerning the draft minutes of the June 2008 Board meeting, Government’s Exibit 54. (Id. 72:22-74:13.) Faulan testified that the
document was the minutes for the June 2008 meeting, and they were different from previous minutes in that they were “taken from a recording, and the stuff that was on the previous exhibit were like the summaries, maybe.” (Id. at 74:4-13.) Doug Moore further
corroborated the business records nature of the document by testifying that it accurately reflected the events that occurred at the meeting. (1/16/13 pm (Moore), 38:11-15.) That the minutes did not undergo a
final review and approval by the Board was relevant to the weight of the evidence, not its admissibility. 11
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The Government’s “Fronting” Argument did Not Materially Affect the Fairness of the Trial.
Defendant contends that the Government’s argument in closing that 3 Defendant “fronted” the issue of the $2,500 payments at the June 2008 4 Board meeting prejudicially misrepresented the evidence and defied the 5 Court’s instruction that the draft minutes not be treated as a 6 transcript. 7 misconduct. 8 “To succeed on a motion for a new trial based on prosecutorial 9 misconduct, a defendant must show first that the prosecution engaged 10 in improper conduct and second that it was more probable than not that 11 the prosecutor’s conduct materially affected the fairness of the 12 trial.” 13 (internal citation omitted). 14 The Court has reviewed the entirety of Moore’s testimony and has 15 reviewed the Government’s discussion of “fronting” in its closing 16 argument. 17 the Government argued that Defendant himself, unprompted, raised the 18 issue of his $2,500 payments at the June 2008 Board meeting, but the 19 evidence is that Moore first raised the issue, and Defendant responded 20 to Moore. 21 CUHW payments; he responded to someone else’s questions. 22 Assuming the prosecutor’s argument misrepresented the evidence, 23 however, the misstatement was not so significant that it likely 24 materially affected the fairness of the trial. 25 argument was somewhat relevant to Defendant’s good faith defense, but 26 the jury was presented with more than sufficient evidence independent 27 of the prosecutor’s “fronting” argument to disbelieve Defendant’s good 28 12 The “fronting” In other words, Defendant did not “front” the issue of his It does appear that the Government mis-stated the evidence: United States v. Aichele, 941 F.2d 761, 765 (9th Cir. 1991) Defendant seeks a new trial based on prosecutorial
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faith defense.
All of the above-referenced testimony from Doug Moore For
is circumstantial evidence of Defendant’s lack of good faith.
example, Moore testified that Defendant did not disclose at the January 16 meeting that the funds CUHW designated for reimbursing Local 6434 would instead be sent to Defendant, and that Defendant represented to the Board that his receipt of the payments was justified because Local 6434 prorated his salary – which was untrue. Both facts are highly probative of Defendant’s lack of good faith. Finally, the Government’s “fronting” argument was brief and, frankly, rather muddled. The Court thus finds it unlikely, and certainly not
more probable than not, that the jury was influenced by this part of the Government’s closing argument. Defendant’s argument thus fails to
satisfy his burden on his motion for a new trial. c. The Court Did Not Err by Limiting Dierdre Sherman’s Testimony About her Pre-Trial Meeting with the Government.
During Defendant’s case-in-chief, Dierdre Sherman testified to the effect that CUHW’s Board authorized Defendant to be paid personally for his work for CUHW. Defendant also wished to elicit
from Sherman testimony that, during an interview with the Government shortly before trial, she felt that the Government was pressuring her to change her story. The Court excluded as irrelevent Sherman’s
testimony concerning how she felt during the interview with the Government. The Court maintains that ruling. The proffered evidence The
was not meaningfully probative of the issues before the jury.
evidence may have been somewhat probative of Sherman’s credibility, but it would have invited the jury to speculate that the Government acted inappropriately. The defense proffered only evidence of
Sherman’s subjective feelings, but no evidence that the Government in 13
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fact acted inappropriately.
As such, the risk of undue prejudice
under Rule 403 outweighed the evidence’s marginal probative value. Thus, it was not error to exclude Sherman’s testimony about her pretrial interview with the Government. d. Not Giving Defendant’s Requested Authorization Charges was Not Error.
Defendant argues that the Court erred by not giving the jury his 7 proposed instructions concerning his authorization defense to the 8 embezzlement charges, and by not giving his proposed instruction that 9 CUHW’s Board’s approval constituted a complete defense to the mail 10 fraud charges. 11 Although the Court did not adopt all of Defendant’s proposed 12 instructions, it did instruct the jury on authorization. 13 gave substantial instructions as to authorization and good faith as 14 they related to the embezzlement charges. 15 26, 27. 16 instructions on authorization, but within the elements instruction for 17 the mail fraud charge, the Court instructed the jury that “[i]n 18 determining whether or not the defendant acted with an intent to 19 defraud, you may consider whether he had a good faith belief that he 20 was authorized to receive the payments. 21 defense to the charges of mail fraud. . .” 22 These “instructions fairly and adequately cover the issues presented, 23 [and the] formulation of those instructions or choice of language is a 24 matter of discretion.” 25 (9th Cir. 1996). 26 27 28 14 These instructions were sufficient. United States v. Melvin, 91 F.3d 1218, 1224 Jury Instruction 21. Good faith is a complete As to the mail fraud charges, the Court did not give separate See Jury Instruction Nos. The Court
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The Court Did Not Err by Allowing the Jury to Consider whether CUHW was a Victim of Mail Fraud as Alleged in Counts One Through Four.
Defendant contends there was no evidence that CUHW received less than all services it was due, and that therefore it could not have been a victim of mail fraud as charged in Counts One through Four. Defendant thus contends that Jury Instruction No. 21 should not have referred to both CUHW and Local 6434, but should have limited the charge to Local 6434 only. This argument is unpersuasive.
That CUHW might have received services from Defendant does not mean that his scheme to obtain payment from CUHW was not fraudulent. Indeed, Defendant points to no authority to support his argument. Crediting the evidence supporting the jury verdict, as discussed above, Defendant represented to CUHW that the payments he asked CUHW to make to Local 6434 were to reimburse Local 6434 for Defendant’s time. Defendant then caused CUHW personnel to issue the checks to him When confronted by Doug Moore,
personally instead of to Local 6434.
Defendant justified receiving the payments himself by falsely representing to CUHW that Local 6434 had prorated his salary. Accordingly, Defendant caused CUHW to issue payments to him by making misrepresentations. The foregoing supports the jury’s determination
that Defendant acted with fraudulent intent in his conduct towards CUHW. That Defendant performed services for CUHW is not inconsistent
with the jury’s determination that he fraudulently obtained payments from CUHW, nor does it negate fraudulent intent as a matter of law. B. Count 9: The Hawaii Expenses Account Count Nine of the Indictment also charged Defendant with violating 29 U.S.C. § 501(c). The Indictment alleges that, in
September 2006, as “an employee of Local 6434,” Defendant embezzled 15
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from “Local 6434 by causing Local 6434 to pay” personal expenses relating to his wedding in Hawaii, “all of which was unrelated to any business of Local 6434.” Indictment, p. 10. However, as the
Government acknowledges, the evidence presented at trial concerned Local 434b, not Local 6434. Notably, Local 6434 was established in
November 2006, after the charged conduct occurred. Over Defendant’s objection, the Court instructed the jury that it could convict on Count Nine based on Defendant’s conduct vis a vis either Local 6434 or Local 434b. See Jury Instruction No. 22, 25:10-
12 (instructing the jury that to convict on a § 501(c) charge, it must find the following first element beyond a reasonable doubt: that “Local 6434 or, as to Count 9, SEIU Local 434b, was a labor organization engaged in an industry affecting interstate or foreign commerce. . .”). Defendant contends that allowing the jury to convict
based on his conduct towards Local 434b was either a constructive amendment of the indictment, or an unconstitutional variance, entitling him to an acquittal on this count. 1. The Court agrees.
Constructive Amendments and Variances
The Fifth Amendment guarantees a criminal defendant “[the] right to stand trial only on charges made by a grand jury in its indictment.” Cir. 2002). United States v. Garcia-Paz, 282 F.3d 1212, 1215 (9th After an indictment has been returned and criminal
proceedings are underway, the indictment’s charges may not be broadened by amendment except by the grand jury itself. See Stirone
v. United States, 361 U.S. 212, 215-16 (1960); United States v. Pazsint, 703 F.2d 420, 423 (9th Cir. 1983). Where the charges have
nevertheless been broadened, a constructive amendment or variance may have occurred, thus calling into question the constitutionality of a 16
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resulting conviction. “An amendment of the indictment occurs when the charging terms of the indictment are altered, either literally or in effect, by the prosecutor or a court after the grand jury has last passed upon them.” United States v. Von Stoll, 726 F.2d 584, 586 (9th Cir. 1984); see also United States v. Dipentino, 242 F. 3d 1090, 1094 (9th Cir. 2001) (“A constructive amendment ‘involves a change, whether literal or in effect, in the terms of the indictment.’”). By contrast, a variance
“occurs when. . . the evidence offered at trial proves facts materially different from those alleged in the indictment.” Von
Stoll, 726 F.2d at 586 (quoting United States v. Cusmano, 659 F.2d 714, 718 (6th Cir.1981)). Although the difference between a constructive amendment and a variance can be difficult to discern, see, e.g., United States v. Antonakeas, 255 F.3d 714, 722 (9th Cir. 2001) (“[t]he distinction between an amendment to an indictment and a variance is blurred”), the distinction matters because, “whereas a constructive amendment always requires reversal, ‘a variance requires reversal only if it prejudices a defendant’s substantial rights.’” United States v. Adamson, 291 In Adamson, the
F.3d 606, 615 (9th Cir. 2002) (citation omitted).
Ninth Circuit set forth guidelines for distinguishing between a constructive amendment and a variance; the following statements of the law are derived in large part from Adamson. An indictment has been constructively amended where “(1) ‘there is a complex of facts [presented at trial] distinctly different from those set forth in the charging instrument,’ or (2) ‘the crime charged [in the indictment] was substantially altered at trial, so that it was impossible to know whether the grand jury would have indicted for the 17
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crime actually proved.’
[See, e.g.,] United States v. Carlson, 616
F.2d 446, 447-48 (9th Cir. 1980) (constructive amendment where indictment charged defendant with misapplying bank funds by causing loan to be made for personal use, but evidence and instructions permitted conviction for misapplying bank funds by causing loan to be made knowing that it was inadequately secured); Howard v. Dagget, 526 F.2d 1388 (9th Cir. 1975) (finding constructive amendment where indictment charged defendant with inducing two named women to engage in prostitution but evidence and instructions allowed jury to convict defendant of inducing women neither named nor mentioned in indictment.)” Adamson, 291 F.3d at 615 (citations omitted).
While a constructive amendment usually involves a complex of facts, a variance occurs “where the indictment and the proof involve only a single, though materially different, set of facts. See Von Stoll, 726 F.2d at 586 (finding nonfatal variance where indictment charged defendant with ‘transporting in interstate commerce $10,000 that was taken by fraud from Ron McCallum’ but proof and instructions allowed jury to convict defendant of taking $10,000 from McCallum’s business partner); United States v. Tsinhnahijinnie, 112 F.3d 988, 990-92 (9th Cir. 1997) (finding fatal variance where indictment charged defendant with sexual abuse of child occurring on Indian reservation during summer of 1992, but proof fluctuated between placing the abuse at place and time in indictment and placing it off reservation in 1994); [United States v. Olson, 925 F.2d 1170, 1174-75 (9th Cir. 1991)] (finding nonfatal variance, in mail fraud prosecution, where indictment charged ‘a scheme to defraud and to obtain money’ but jury instructions required proof that defendants schemed to defraud by obtaining ‘money or property’); Jeffers v. 18
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United States, 392 F.2d 749, 752-53 (9th Cir. 1968) (finding fatal variance where indictment alleged that money solicited by religious group was used for non-religious purposes, but evidence failed to prove that use was non-religious, instead showing that use was merely contrary to representations made when money was collected).” 291 F.3d at 615. 2. Jury Instruction No. 22 Created a Constructive Amendment, or, Alternatively, an Unconstitutional Variance. Adamson,
The indictment differed from the proof at trial as to one central 9 fact: the identity of the labor union from which Defendant allegedly 10 embezzled. 11 nature and identity of the union. 12 Defendant on Count Nine, the Grand Jury had to find probable cause to 13 believe: (1) that Local 6434 was a labor organization engaged in an 14 industry affecting commerce; (2) that Defendant was an officer or 15 employee of Local 6434; (3) that Defendant embezzled or stole money or 16 property from Local 6434; and (4) that Defendant acted willfully and 17 with the intent to defraud. 18 U.S.C. § 501(c). 19 By contrast, the evidence the Government presented at trial was 20 tied to only Local 434b. 21 from Local 434b, three of the four elements for which the Grand Jury 22 found probable cause to indict would have been materially different 23 because they would have been tied to Local 434b, and the Grand Jury 24 would have had to consider different evidence to make its probable 25 cause determinations. 26 labor union engaged in an industry affecting commerce and that 27 Defendant was an officer or employee of Local 6434 would necessarily 28 19 For example, the evidence that Local 6434 was a To have indicted Defendant for embezzling See Indictment, Count Nine; see also 29 Specifically, in order to indict Three of the four elements of the charge incorporate the
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be different from the evidence bearing on whether Local 434b was a labor union and whether Defendant was an officer or employee of Local 434b. Although the Government concedes that “legally, Local 434B and [Local] 6434 may have been separate entities,” it contends that the difference does not matter because “practically speaking, Local 6434 was treated as a continuation of Local 434B under a new name.” 25:21-24. Upon review, this argument fails. Opp’n
Local 6434 did not exist
at the time of the charged conduct: the charged conduct occurred in September 2006, and Local 6434 was not established until November 13, 2006. See Gov’t Exh. 156. In addition, even if Local 6434 represented
most of the workers formerly represented by Local 434b, Local 434b continued to exist after 6434 was established, and the two entities were not co-extensive. For example, Local 434b represented 100,000
members in the Los Angeles area, while Local 6434 was larger, with 150,000 members, and encompassed additional counties as far north as Mendocino. See docket no. 96, 2:1-13. Moreover, the two unions had
different boards and different charters, and they registered separately with government agencies. See Reply 11:14-18.
The fact that the Indictment’s General Allegations include a statement that Local 6434 was “aka SEIU Local 434b” does not remedy this problem. See Indictment ¶ 1. To say that Local 434b was an
“aka” of 6434 means only that sometimes, some people said Local 434b when they were in fact referring to the later-established, and legally distinct Local 6434. Perhaps this usage reflected confusion on the
part of the speaker, or that the difference did not matter to the speaker, but that misconception, even were it common, does not render the two entities legally the same in fact. 20 At bottom, Count Nine
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refers to Local 6434, and the Grand Jury must have indicted based on evidence supporting that count; the evidence at trial pertained to Local 434b, and the Court has no way of knowing whether the Grand Jury heard evidence about Local 434b, and the Court cannot presume that the Grand Jury would have indicted if it had. See Russell v. United
States, 369 U.S. 749, 770 (1962) (“To allow the prosecutor, or the court, to make a subsequent guess as to what was in the minds of the grand jury at the time they returned the indictment would deprive the defendant of a basic protection which the guaranty of the intervention of a grand jury was designed to secure. For a defendant could then be
convicted on the basis of facts not found by, and perhaps not even presented to, the grand jury which indicted him.”). In the alternative, if allowing the jury to substitute Local 6434 for Local 434b was not a necessarily unconstitutional constructive amendment and was only a “variance,” the Court finds that that variance prejudiced Defendant’s substantial rights. One of the
primary purposes of an indictment is to inform a defendant of “what he is accused of doing in violation of the criminal law, so that he can prepare his defense.” Tsinhnahijinnie, 112 F.3d at 991; see also
Olson, 925 F.2d at 1175 (requiring proof to remain true to the indictment “serves notice related-functions of protecting against unfair surprise, enabling the defendant to prepare for trial and permitting the defendant to plead the indictment as a bar to later prosecutions”). This purpose was not served here. The Indictment specified that
a certain union (Local 6434) was the victim of the embezzlement alleged in Count Nine, and therefore failed to put Defendant on notice that the trial would in fact focus on his conduct with respect to a 21
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different union (Local 434b).
Based on the Indictment, Defendant’s
defense was that he could not have embezzled from Local 6434 because it did not exist at the time and was not Local 434b’s legal successor. Allowing the jury to substitute Local 6434 for Local 434b and return a guilty verdict based thereon in effect nullified Defendant’s defense to this count, and accordingly, this was a prejudicial variance. See,
e.g., Adamson, 291 F.3d at 616 (prejudicial variance where indictment specified different misrepresentation from that presented a trial on ground that “[h]aving specified a different particular misrepresentation [] the indictment not only failed to inform the defendant of the actual misrepresentation that would be shown at trial, but it also affirmatively misled the defendant and obstructed his defense at trial.”); United States v. Marolda, 615 F.2d 867, 869872 & n. 2 (9th Cir. 1980) (where indictment alleged that defendant embezzled union funds “without proper authorization and without benefit to said Local,” and where defendant’s defense was to show that “his expenditures were properly authorized and served a union purpose,” jury instructions that permitted a finding of guilt without finding that the expenditures were unauthorized was a prejudicial variance requiring judgment to be reversed). Finally, the cases in which an indictment’s misidentification of the victim (or other person involved with the crime) were not found to be constructive amendments or fatal variances are not persuasive here. In those cases, the exact identity of the misidentified person was simply irrelevant to the crime charged. See, e.g., Von Stoll, 726
F.2d at 587 (holding that a variance between the identity of the victim in the indictment and the identity of the victim proved at trial did not constitute a constructive amendment because “[t]he 22
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identity of the defrauded person is irrelevant to a conviction under 18 U.S.C. § 2314.”); see also United States v. Romero-Avila, 210 F.3d 1017, 1020 (9th Cir. 2000) (indictment misindentified the border official to whom defendant lied about his citizenship status, but this was not a fatal variance because “[t]he exact identity of the border official to whom Romero-Avila lied is not an element of the offense under 18 U.S.C. § 911.”). Here, by contrast, the identity of the
union victim is central to three of the four elements of the § 501(c) charge. Those elements require a specific finding about the nature of
the victim union (that it was engaged in interstate commerce), a specific finding about the Defendant’s relationship with that union (that he was an officer or employee of that union), and a specific finding about Defendant’s conduct towards that union (that he embezzled money from that union). As discussed above, the evidence to
prove these elements with respect to one union must necessarily be different from the evidence used to prove these elements with respect to any other union. Thus, the identity of the union is a keystone
upon which the charge is based. It appears that at the time it sought the Indictment, the Government did not recognize that Local 434b and Local 6434 were different unions and instead believed they were interchangeable, and for that reason, the Indictment stated that Local 434b was an “aka” of Local 6434, and identified the wrong union in Count Nine. The Court’s
instructions likewise erroneously allowed the jury to treat the unions as interchangeable. The Court’s instruction constructively amended Alternatively, even if this instruction
the flawed indictment.
amounted to a mere variance, it prejudiced Defendant’s substantial rights. Accordingly, the Court must vacate Defendant’s conviction on 23
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Count Nine and enter a judgment of acquittal. C. Counts Ten and Eleven: The Housing Corporation Counts Counts Ten and Eleven of the Indictment charged Defendant with embezzlement from a labor organization in violation of 29 U.S.C. § 501(c) “by requesting the Local 6434 Executive Board to make payments to LTCHC [Long Term Care Housing Corporation] without disclosing to the Local 6434 Executive Board that [he] would then divert those funds to himself by causing LTCHC to pay [him].” Indictment 11:3-14. The
allegedly diverted payments were $2,416.66 on June 9, 2008, and $14,499.96 on June 12, 2008. Id. at 11: 15-17. Defendant moves for
acquittal on the legal ground that he received the money from the LTCHC, which is not a “labor organization,” so he could not have violated § 501(c) by accepting these payments. Defendant also argues
that the evidence at trial was otherwise insufficient to support a guilty verdict. 1. Defendant Was Charged with Embezzling from Local 6434, not from the LTCHC.
Defendant’s legal argument that he received these payments from 18 the LTCHC and not from Local 6434, and therefore could not have 19 violated § 501(c), has some surface appeal. 20 dispelled by the Government’s theory, which is, as set forth in the 21 Indictment, that Defendant caused Local 6434 to make payments to the 22 LTCHC, and then, through his control of the LTCHC, caused those funds 23 to be diverted to himself. 24 union entity4 before Defendant obtained them does not immunize him as 25 26 27 28 The parties strenuously argue about the nature of the LTCHC and direct the Court to a number of very fact-specific cases to support their views. The Court finds it unnecessary to engage in extensive analogizing because it is clear that the LTCHC was not a 24
However, that appeal is
That the funds first passed through a non-
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a matter of law, because the Government’s theory was that Defendant himself, with fraudulent intent, directed the money to flow from the union to himself in this sequence. To find that channeling union
funds through a non-union conduit negates a § 501(c) charge would be to reward and effectuate money laundering. Furthermore, although §
501(c) by its terms punishes embezzlement from unions, nothing in the statute excuses embezzlement from a union so long as the funds pass though a non-union intermediary before they reach the embezzler. Accordingly, the Court finds that the Government’s legal theory is consistent with § 501(c). Whether the Government presented sufficient
evidence to prove this theory at trial is a different question. 2. The Jury Verdict was Supported by Evidence.
The Government’s theory is that Defendant “mislead [sic] Local 6434 into giving funds to the LTCHC so that [he] could then divert those union funds to his personal use.” Opp’n 37:22-25. Defendant
contends that the evidence at trial was insufficient to show that Local 6434 did not want him to receive the money it gave to the LTCHC, and that, relatedly, the evidence was insufficient to show Defendant acted with fraudulent intent. When viewed as a whole in the light
most favorable to the prosecution, the Court finds that the evidence presented at trial was sufficient to support the verdict. As Defendant notes, “the essence of the § 501(c) crime, like the
union or a union entity. As set forth in Defendant’s papers and the evidence cited therein, the LTCHC was a separate corporate entity with its own bylaws, board, and officers, and its purpose was to serve a community broader than the union membership. That the LTCHC was largely – although not exclusively – supported by Local 6434 does not render the LTCHC a “union” or render its assets union assets. But, as discussed infra, the fact that the LTCHC was not a union does not automatically entitle Defendant to an acquittal on these counts. 25
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older crimes of embezzlement and larceny is the ‘tak(ing) (of) another’s property knowing that the other person would not have wanted that to be done.’” Thordarson, 646 F.2d at 1333. This
characterization is not formally an element of § 501(c), but instead is a different way of describing the third and fourth elements, that is, that the defendant converted money from a union with fraudulent intent. See id. (quoting the above characterization and concluding
“[t]hus, it is well established that proof of a specific criminal intent to deprive the union of its funds is required to make out a § 501(c) violation.”). The following testimony of Local 6434 Executive Board Member Derek Smith supports the jury verdict: Defendant himself presented Local 6434’s Executive Board with the December 17, 2007 resolution to donate to the LTCHC the $2,416 monthly stipend Defendant had been receiving from the SEIU’s International Executive Board (“IEB”), but which the IEB would henceforth pay directly to Local 6434 instead (1/09/2013 pm (D. Smith), 81:8-11); Defendant did not tell the Executive Board that the LTCHC would pay that exact same amount to him starting the very next month (Id. at 101:8-11); Defendant characterized the IEB’s policy change as his getting “a salary reduction,” meaning that Defendant would no longer receive these funds (Id. at 103:2-6); Smith understood that the payment would be going to the LTCHC (Id. at 69:14-70:10); Local 6434 could have paid that money to Defendant (Id. at 71:6-24), but Defendant was not entitled to the money and it was “supposed to go to” and was a “contribution to” the LTCHC (Id. at 100:14-101:7); Defendant “directed” Smith to pay him and operated the LTCHC on a day-to-day basis (Id. at 119:12-20); Defendant caused the LTCHC to issue him monthly checks starting in January 2008 26
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but did not provide invoices or timesheets until the summer of 2008, which was around the time that the union was being audited by the IEB (Id. at 77:21-78:8, 82:23-83:11). The foregoing evidence supports all of the following facts and reasonable inferences that favor the prosecution. By introducing the
resolution to Local 6434’s Executive Board to donate the money it received from the IEB to the LTCHC, and by indicating that he was getting a salary reduction and would no longer get the stipend, Defendant led the Executive Board to believe that he would not ultimately get the money. Thereafter, and contrary to the impression
Defendant gave at the Executive Board meeting, Defendant caused the LTCHC to then pay that same money to him. Defendant was able to A
obtain the LTCHC’s compliance because he, in effect, ran the LTCHC.
jury could infer fraudulent intent from Defendant’s representation at the Executive Board meeting that the IEB’s changed stipend policy caused him a salary reduction; from Defendant’s failure to disclose to the Executive Board that he would have the LTCHC pay that money to him; from testimony that Defendant could have asked, but did not ask, the Executive Board to resolve to pay him directly, and instead asked the Board to donate the money to the LTCHC, an entity that he apparently controlled; and from Defendant’s failure to provide the LTCHC with invoices before getting paid, and his submission of invoices months later near when the LTCHC was being audited. Based on
the foregoing, the jury could have found that Defendant violated § 501(c) as charged in the Indictment. Of course some of the above evidence could give rise to different inferences, and there is evidence in the record that could support a different conclusion. However, the Court finds that the verdict is 27
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not contrary to the weight of the evidence, and therefore a retrial is not warranted. D. Count Twelve: The Home Mortgage Count Count Twelve of the Indictment charged Defendant with violating 18 U.S.C. § 1014 by wilfully submitting false statements to Countrywide Bank in connection with a mortgage application. The
Indictment alleges that Defendant falsely represented to Countrywide that his employer, Local 6434, paid two of Defendant’s personal American Express credit cards, and that it made the monthly lease payments on his personal Land Rover vehicle. Defendant seeks
acquittal on the ground that the evidence does not show that he wilfully submitted false statements to Countrywide. In the
alterative, Defendant seeks a new trial because he was prejudiced by instructional and evidentiary errors. 1. Defendant’s Evidentiary Arguments
Defendant argues that the evidence at trial demonstrated that he was not responsible for American Express “accounts” ending in numbers 8603 and 2793 that appeared on his credit report. Defendant points to
the testimony of Kurt Sippman, American Express’s custodian of records, to the effect that Defendant did not own accounts ending in these numbers. context. It is true that Sippman testified that these numbers, which appeared on Defendant’s credit report, were not actual credit card numbers. However, Sippmen explained that these were “global external However, Defendant cites this testimony out of
numbers” (“GEN”) that American Express reports to credit bureaus instead of actual account numbers, and that it reports in this manner for security purposes. (1/17/2013 am (Sippman), 14:6-15:8.) 28 Each
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credit account has its own GEN number, and when there is a credit inquiry, for security purposes that GEN number instead of the actual account number is reported to the credit agencies. Sippman also
testified that the two accounts in issue here were attributable to Defendant. (Id. at 7:21-8:11:22). The foregoing evidence was
sufficient to establish that the actual accounts underlying the GEN numbers that appeared on Defendant’s credit report in fact existed and were attributable to Defendant. Defendant also argues that the evidence does not show that he did not know that Local 6434 did not pay these accounts, or that he knew that he was responsible for these accounts. In other words, Defendant
argues that the evidence does not disprove that he made an honest mistake about these accounts. This argument is unavailing. Penny
Pitts-Duyan, who was a Regional First Vice President at Countrywide and who was involved in evaluating Defendant’s loan application, testified about a conversation with Defendant in which she asked him about the American Express accounts because they disqualified him from a loan. In response, Defendant simply stated that the union paid (1/11/13 pm (Pitts-Duyan), 44:12-45:17.) Notably,
these debts.
Defendant did not disavow these debts, or claim that the accounts belonged not to him but to the union. On July 22, 2008, the same day
Defendant and Pitts-Duyan spoke, at Defendant’s request Alicia Carrera sent Countrywide a letter from Local 6434 certifying that Local 6434 paid these American Express bills and paid Defendant’s Land Rover lease. (1/10/13 am (Carrera), 67:13-68:24, Exh 118.) Carrera
testified that she knew that Local 6434 did not make these payments, but she stated otherwise in the letter because Defendant asked her to. Id. Previously, Defendant had Carrera send Countrywide a letter dated 29
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May 14, 2008, stating that the union paid the American Express accounts and that it paid him a $1,000 monthly stipend. 63:14-67:3.) Based on the foregoing evidence that the American Express accounts appeared on Defendant’s personal credit report, that Countrywide specifically asked Defendant about them because they disqualified him from a loan, that in response Defendant stated that Local 6434 paid these accounts and did not claim that their appearance on his credit report was an error, and that Defendant directed Carrera to send a letter to Countrywide to certify that Local 6434 paid these accounts, a jury could conclude that Defendant knew the American Express accounts were his, and knew that Local 6434 did not pay them. 2. The Land Rover (Id. at
Defendant argues that his July 22, 2008 statement to Pitts-Duyan that Local 6434 paid for his Land Rover was not a misstatement because although the union did not make these payments directly, it provided him with a stipend to offset travel and automobile expenses, and that this stipend covered the amount of the Land Rover payments. 43:15-17. This position is not supported by the evidence. Mot.
First, the misrepresentation that Defendant himself made to Countrywide was that Local 6434 paid his Land Rover lease directly. Similarly, the July 22, 2008 certification letter that Carrera testified to preparing and sending to Countrywide at Defendant’s behest stated, “I hereby certify that SEIU Local 5434 [sic] pays the monthly lease for Mr. Tyrone Freeman’s Land Rover in the amount of $962 per month.” (1/11/13 pm (Pitts-Duyan), 32:12-16. Accordingly,
Defendant represented to Countrywide that the Union paid his lease directly, not indirectly via a stipend. 30
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Other documents give context to the July 22, 2008 statements and tend to show that Defendant’s misrepresentations were not honest mistakes. First, in a letter dated May 14, 2008 that Defendant caused
Carrera to send to Countrywide to verify his income, Carrera represented to Countrywide that the union paid Defendant’s American Express cards, and “offers him a monthly stipend of $1,000” as part of his income. (1/10/13 am (Carrera), 64:22-67:3, Exh. 115.) Carrera
testified that she made these representations at Defendant’s request. While it was true that the Union was paying Defendant a $1,000 monthly stipend, the letter represented this stipend as income, which is inconsistent with Defendant’s argument at trial that he believed the $1,000 monthly stipend was a car payment. In short, Defendant’s July
22, 2008 representation that the union directly paid his $962 Land Rover monthly payment is inconsistent with Defendant’s post-trial argument that he did not intend to deceive Countrywide because he believed the monthly stipend was the union’s way of paying for his Land Rover lease indirectly. Second, union bank statements that Defendant caused the union to send to Countrywide on July 28, 2008 showed checks to Ford Motor Credit, purportedly as payments for Defendant’s Land Rover. pm (Pitts-Duyan), 33:19-34:13, Exhs. 116, 120.) (1/11/13
These were not,
however, payments for Defendant’s Land Rover but instead were payments for the union’s own fleet of Ford vehicles. The union did not pay for (1/10/13 am
any personal vehicles, including Defendant’s Land Rover. (Carrera), 67:13-25. Exh. 118.)
That Defendant had the union send
these bank statements to Countrywide to show that it made his car payments demonstrates that Defendant did not believe at the time that the monthly stipends the union paid him were car payments. 31 This
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evidence therefore discredits Defendant’s argument at trial that he was under the honest misimpression that the stipends were car payments and that he did not make purposeful misrepresentations to Countrywide In light of the evidence and the inconsistencies in Defendant’s position, it was reasonable for the jury to find that Defendant intentionally misrepresented to Countrywide that the union paid his Land Rover lease directly, and that Defendant’s representation that he believed his monthly stipend was actually a car payment was not an honest mistake. 3. Instructional Errors
Defendant also argues that the “on or about” language in Jury Instruction No. 16 prejudiced him because it allowed the jury to convict him for statements other than the July 22, 2008 statement charged in the Indictment. Defendant points to documents Defendant
provided to Countrywide on July 28, 2008 after his loan had already closed, and argues that the “on or about” instruction could have allowed the jury to convict based on those documents. These documents
were bank statements showing that the union made payments on its fleet vehicles. Defendant argues that the Government’s reference to these
statements in its closing argument invited the jury to view those documents as the false statement he was charged with. This is not persuasive. First, in its closing argument, the
Government clearly identified Defendant’s false statements as being made on the same day, to Putts-Duyan on July 22, 2008, and that, in substance, those statements were that Local 6434 paid for his American Express cards and made the lease payments on his Land Rover. (1/23/2013 am (Fernandez), 52:20-54:7.) The Government clarified to
the jury that the bank statements were not sent on July 22, 2008, and 32
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the Court admonished the jury that these “later documents. . . are not part of the charged conduct.” (1/23/2013 am (Court), 72:8-17.) The
Government’s clarification and the Court’s admonition were clear and readily understandable, so the Court must assume that the jury understood that the bank records sent to Countrywide on July 28, 2008 were not the false statements Defendant was charged with making in his conversation with Pitts-Duyan on July 22, 2008. Furthermore, as discussed above, the July 28, 2008 bank statements were referenced to show Defendant’s state of mind, specifically, that he made his prior false statements intentionally and that he was not honestly mistaken that the monthly stipends he received from the union were car payments. For the foregoing reasons, it was not error to give an “on or about” instruction in Jury Instruction No. 16, and the Government’s closing argument did not prejudice Defendant. Accordingly, Defendant
is not entitled to a new trial on Count Twelve. E. Counts Thirteen and Fourteen: The Tax Counts Counts Thirteen and Fourteen of the Indictment charged Defendant with violating 26 U.S.C. § 7206(1) by underreporting his income by $23,487.79 for tax year 2006 (Count Thirteen), and by $39,500 for tax year 2007 (Count Fourteen). Defendant seeks acquittal on the ground
that the evidence is insufficient to sustain the convictions because the Government did not prove that he understated his income on his tax returns. In the alternative, Defendant seeks a new trial on the
ground that the verdict was against the weight of the evidence. 1. The 2006 Tax Year Count (Count Thirteen)
The Government alleged that Defendant’s 2006 tax return falsely reported his total taxable income as $178,784 when he received 33
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approximately $23,787.795 more than that in taxable income.
taxable income Defendant reported, $29,558 was from the SEIU, and $149,170 was from Local 464b; the SEIU and Local 464b reported these amounts on the W2s they issued. Defendant is accused of
underreporting his income from the Local only, so his income from SEIU is not in issue and the Court need not address evidence pertaining to the SEIU. The income Defendant is accused of not reporting consisted of: (1) $12,000 in stipends from Local 434b (referred to in the record as “local E-Board stipends”) for which Local 434b submitted a 1099 form to the IRS; (2) $3,682.74 in benefits from Local 434b in the form of a February 2006 trip to Hawaii to plan a wedding and attend the Pro Bowl; and (3) $8,105.05 in benefits in the form of an August 2006 personal trip and wedding in Hawaii. 2. The 2007 Tax Year Count (Count Fourteen)
The Government alleged that Defendant’s 2007 tax return falsely reported his total taxable income as $190,953.57 when in fact he received approximately $39,500 more than that in taxable income. above, Defendant reported $29,557 in wages from the SEIU, and approximately $161,395 from Local 6434; these wages were reflected on W2s issued by the employers. Local 6434 actually issued two W2s from As
Defendant in 2007: one showing $32,208 in earnings, and another showing $129,187 in earnings. Defendant is accused only of
underreporting his income from the Local and from CUHW, so his income
Although the Indictment states the unreported income as $23,487.79 and the Opposition states the unreported income as $23,487.19, the specific amounts the Government claims Defendant did not declare actually add up to $23,787.79. 34
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from SEIU is not in issue and the Court need not address evidence pertaining to the SEIU. The income Defendant is accused of not reporting consisted of (1) $12,000 in monthly E-board stipends from Local 6434, (2) $7,500 (3 x $2,500) in stipends from Local 6434, and (3) $20,000 in stipends from CUHW. 3. The Unexplained Gap Between Defendant’s Salary in Each Year and the Amount of Income He Declared Each Year Compels a Judgment of Acquittal on Counts Thirteen and Fourteen. Drawing all inferences in favor of the verdict, the Government’s evidence was sufficient to show that Defendant received all of the
10 allegedly unreported stipends from both years. 11 expert Mei-Lin Chan gave detailed testimony showing that Defendant 12 received the stipend payments from both years. 13 am (Chan), 68:16-72:5 (monthly $1,000 stipends from Local 434b in 2006 14 and from Local 6434 in 2007); id. at 66:21-67:14 (the three $2,500 15 stipend checks from Local 6434 in 2007); 1/18/2013 pm (Chan), 23:1716 30:4 (further tracing monthly $1,000 stipends from Local 6434 in 17 2007); and id. at 35:22-50:19 (2007 payments from CUHW). 18 also sufficient evidence that these stipends were taxable income 19 because they were payments for services rendered. 20 55:8 (citing testimony). 21 The evidence was also sufficient to show that Defendant’s 2006 22 trips to Hawaii were not legitimate business trips and were, instead, 23 for Defendant’s personal benefit, specifically, to plan and attend his 24 wedding, and that therefore the amounts Local 434b reimbursed 25 Defendant for these trips was taxable income. 26 Opposition cites the testimony of Chan, Nicole Ward, Amelia Faulan, 27 Alicia Walker, Katinka Walker, Kim Kawamura, and Alice Li supporting 28 35 The Government’s See Opp’n 54:17There was See, e.g., 1/17/2013 The Government’s tax
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See Opp’n 55:8-57:35.
The Court will not rehash
this testimony, but has reviewed it and finds it more than sufficient to support the verdict. See also 1/18/2013 pm (Chan), 19:21-23:3
(summarizing evidence probative of purpose of trips and concluding that they had no business purpose, so the reimbursements were taxable income). Thus, insofar as Defendant’s Motion argues that the evidence
was insufficient to show that he received the alleged unreported income or that it was taxable, it is denied. However, there is a fatal absence of proof that Defendant’s 2006 and 2007 tax returns did not report these earnings as income. parties refer to this situation as the “gap” between the wages Defendant earned (as per his salary agreements), and the wages Defendant reported on his tax returns. This gap and its significance The
were discussed most clearly in Defendant’s re-cross-examination of Mei-Lin Chan, the Government’s tax expert. 20:23-33:15. a. The Gap Between Income from the Local that Defendant Reported on his 2006 Tax Return and His 2006 Income Reflected on the Local’s Payoll. See 1/18/2013 pm (Chan),
Through Chan’s testimony, Defendant demonstrated that his biweekly gross pay for tax year 2006 from Local 434b, as indicated on his paystubs, was $4,561.88. This amount multiplied by 26 (there are
26 pay periods in a year) equals $118,608, which is exactly what Defendant’s 2006 salary agreement said that his salary would be. Local 434b also paid Defendant vacation pay of $5,110 and a car payment of $1,560. Adding these three amounts together, a total of
$125,278 of taxable income is reflected on Defendant’s paystubs from Local 6434. However, the W2 form that Local 434b issued to Defendant
reported to the Government that Defendant’s “total wages” were 36
Case 2:12-cr-00734-ABC Document 181 Filed 05/30/13 Page 37 of 41 Page ID #:4456
$149,170; this is the amount that Defendant reported on his tax return. Thus, although Local 434b’s payroll records show that
Defendant was paid (salary, vacation, and car) $125,278, the W2 that Local 434b issued for Defendant reported $149,170 in total wages. This means that Local 434b’s W2 reported to the Government $23,892 more in total wages than what Local 434b’s paystubs showed that Local 434b actually paid Defendant. Chan conceded that she had “no idea”
how to account for this extra $23,892 that the W2 reported, and that, Defendant, in turn, reported on his tax return. See 1/17/13 pm
(Chan), 86:4-89:24; see also 1/18/2013 pm (Chan), 23:18-23 (“I don’t know what the difference between the salary agreement and the wages consists of.”). Notably, this “gap” amount of $23,892 is strikingly
close to (and slightly more than) the $23,787.19 that Defendant is accused of not reporting for tax year 2006. Because the Government
failed to account for this “gap,” there is no reason not to believe that it reflected Defendant’s allegedly unreported non-salary earnings from the Local. Because Defendant’s tax return reported approximately
$23,892 more in income than what Local 434b's payroll showed it paid Defendant, no rational jury could conclude that Defendant underreported his 2006 income, or underreported it by $23,787.19. Another way of demonstrating this failure of proof is to examine whether the Government showed that Defendant received the total amount of taxable income that it alleged he received – both the income he reported, and the income he is accused of not reporting. In order to
prove its case, the Government had to show that Defendant received $149,170 in taxable income from Local 434b – all of which Defendant reported – and that Defendant also received from Local 434b the $23,787 that Defendant is accused of not reporting. 37 Thus, the
Case 2:12-cr-00734-ABC Document 181 Filed 05/30/13 Page 38 of 41 Page ID #:4457
Government had to show that Defendant received a total of $172,965 from Local 434b. However, the Government showed that Defendant
received from the Local only the following earnings: $118,608 in salary, $5,110 of vacation pay, $1,560 as a car payment, $12,000 in stipends, $3,682.74 for the February 2006 trip to Hawaii, and $8,105.05 for the August 2006 trip to Hawaii, for a total of $149,065.79. This total amount is not close to the $172,965 that the
Government had to demonstrate to prove its case; this total amount that the Government showed Defendant received from the Local is, however, curiously close to (about $100 less) the amount that Defendant actually reported to the IRS that he received from the Local. Based on the foregoing, the Government’s proof failed in two related ways. First, because the Government did not put on any
evidence to explain the “gap” between what Local 434b’s payroll records show it paid Defendant and the higher amount that Defendant reported to the IRS, the Government has not shown that Defendant “underreported” his income by the amount alleged. Second, stated
differently, because the Government did not show that Defendant’s total income for 2006 was the amount that Defendant reported on his tax return plus the amount that he is accused of not reporting, the Government has not proven that Defendant in fact received unreported income. b. The Gap Between Income from the Local that Defendant Reported on his 2007 Tax Return and His 2007 Income Reflected on the Local’s Payoll.
For tax year 2007, the Government’s evidence suffered from the same kind of unexplained gap, which the Court will summarize more briefly. See 1/18/2013 pm (Chan), 30:18-33:15. 38 Defendant
Case 2:12-cr-00734-ABC Document 181 Filed 05/30/13 Page 39 of 41 Page ID #:4458
demonstrated that his 2007 bi-weekly gross pay from Local 6434, as indicated on his paystubs, was $5,027.65. This amount multiplied by
26 (there are 26 pay periods in a year) equals $130,718, an amount very close to $130,000, which is what Defendant’s 2007 salary agreement said that his salary would be. Thus, Defendant’s paystubs
from Local 6434 reflect $130,718 in taxable income for 2007. However, Local 6434 issued to Defendant two W2s: one showing $129,187 in earnings, and the other showing $32,208 in earnings, for a total of $161,395. Defendant reported the total of these two W2s on
his tax return, that is, that he earned approximately $161,395 from Local 6434 in 2007. This $161,395 that Defendant reported to the IRS
is about $31,000 more than the amount the Local’s payroll records reflect as Defendant’s salary payments. Again, the Government’s
witness conceded that she could not account for this $31,000 reflected on the W2s and reported on Defendant’s tax return. (Chan), 100:25-101:9.) (1/17/2013 pm
This $31,000 gap between what the Local’s
payroll records show it paid Defendant and Defendant’s tax return is approximately 75% of the amount Defendant is accused of not reporting. Accordingly, the Government failed to demonstrate that Defendant did not report $39,500 of income on his tax return. Stated differently,
the Government did not show that Defendant actually received from Local 6434 the $161,395 that he reported on his 2007 tax return, and the $39,500 that the Government accused Defendant of receiving but not reporting. In light of the failures of proof, no rational jury could
find that Defendant received from the Local approximately $39,500 more in earnings than he reported to the IRS. Finally, the Court notes that the Government did attempt to account for these gaps when it questioned Ms. Chan by suggesting the 39
Case 2:12-cr-00734-ABC Document 181 Filed 05/30/13 Page 40 of 41 Page ID #:4459
gaps were somehow attributable to the earnings Defendant received from the SEIU. (1/18/2013 am (Chan), 95:13-86:6.) However, on re-cross,
Chan explained that she was simply saying that the difference between the total income Defendant declared on his tax returns and what the Local reported on its W2s consisted of the wages that Defendant received from SEIU. (1/18/2013 pm (Chan), 20:23-24:9.) The
difference between the total income Defendant reported on his tax return and the amount the Local reported on its W2s is not the “gap” that is problematic; that Defendant received income from the SEIU and his manner of reporting it was non-controversial. The problematic
“gap” relates solely to Defendant’s income from the Local; that gap is the difference between what Defendant reported receiving from the Local and the amount that the Local’s payroll indicated it paid him through regular payroll. Chan testified that there was nothing wrong
with how Defendant declared his income from the SEIU, and agreed that the gap between Defendant’s salary from the Local and what the Local reported in its W2 had nothing to do with his earnings from SEIU. (Id. at 23:11-24:9.) Thus, the Government did not put on any evidence
that accounted for the gap. For the foregoing reasons, the jury verdict cannot be sustained. The evidence shows that Defendant reported to the IRS more income from Local 6434 than the amount the Local’s payroll records indicate it paid him through payroll. “gap.” The Government has not accounted for this
This amount in excess of his regular salary that Defendant
reported on his taxes could well have been the non-salary earnings he received from the Local. otherwise. The Government put on no evidence to show
In addition, the Government put on no evidence showing
that Defendant received from the Local all of the earnings the Local 40
Case 2:12-cr-00734-ABC Document 181 Filed 05/30/13 Page 41 of 41 Page ID #:4460
reported on its W2s and the allegedly unreported non-salary earnings the Government claims Defendant received. Due to the lack of evidence The Court
on these points, there is no reason to order a retrial.
must enter a judgment of acquittal on Counts Thirteen and Fourteen.
For the foregoing reasons, the Court GRANTS Defendant’s Motion as to Counts Nine, Thirteen, and Fourteen. The Court hereby VACATES
Defendant’s convictions on Counts Nine, Thirteen, and Fourteen and shall enter a judgment of acquittal as to them. Defendant’s Motion is DENIED as to all other counts.
______________________ AUDREY B. COLLINS UNITED STATES DISTRICT JUDGE
cc: PTS 18 19 20 21 22 23 24 25 26 27 28 41
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