Opinion ID: 3160112
Heading Depth: 5
Heading Rank: 6

Heading: Nelson’s Proffered Testimony About His

Text: Daughter’s Birth Nelson argues that the district court erred in excluding his testimony about his daughter’s birth and the role it played in motivating him to stay sober, law-abiding, and employed. UNITED STATES V. LLOYD 61 Nelson argues that he followed Slanaker’s instructions not because he intended to violate the law, but because he was determined to keep his job. In his opening statement, Nelson’s counsel stated: [B]ehind [an] alcohol soaked haze, behind [a] dumpster, [Nelson] realized that he was about to be a father. He realized that his girlfriend was about to give birth to his daughter. . . . [he found out] that his girlfriend [was] going to give the baby up for adoption [and that] he’s going to lose his parental rights, and there is something that he can do about that, and he does something about that. He was unable to contest the adoption, but he [was] able to somehow retain his parental rights. The next day, a juror asked to be excused because he “might have a problem being completely objective in regards to the prosecution’s case against [Nelson] because of the far-reaching ramifications [another prosecution] had on my own family.” The juror remained as an alternate, but the government asked the district court for a limine order excluding evidence about the birth of Nelson’s daughter. The government argued that this evidence was intended only to elicit sympathy, was irrelevant to the legal and factual issues before the jury, and would encourage jury nullification. Nelson responded that the evidence was relevant to show his lack of mens rea. The court denied the government’s limine request in part and granted it in part, allowing Nelson to testify about his history of alcoholism, homelessness, and joblessness. The court allowed Nelson to testify that during this period, “some 62 UNITED STATES V. LLOYD things [were] happening” that motivated him to become and stay sober, out of jail, and employed. The court refused to let Nelson identify those “things” or provide details. The court reasoned that the evidence about Nelson becoming a father and achieving a relationship with his daughter was “designed to improperly appeal to the sympathy of the jury,” and concluded that “the probative value is substantially outweighed by the risks of unfair prejudice.” Nelson argues that the court’s ruling prevented him from presenting a complete and meaningful defense, violating the Due Process Clause, see California v. Trombetta, 467 U.S. 479, 485 (1984), and Federal Rule of Evidence 401. Nelson contends that this testimony was crucial to explain his “history and state of mind in the time period leading up to his employment at Cinamour.” We disagree. As the experience with the juror who remained as the alternate demonstrates, this testimony carried a high risk of evoking an emotional response. The jury heard undisputed evidence that Nelson stayed sober, out of jail, and employed throughout his time at Cinamour. The jury also heard undisputed testimony that Nelson was so determined to keep his job at Cinamour that he continued to work despite the abuse he took from Slanaker. Given the testimony the jury did hear, the additional testimony about the birth of Nelson’s daughter was only marginally relevant to show his mens rea and was cumulative of other evidence. Because the prejudicial impact outweighed the probative value, the district court did not abuse its discretion in excluding this testimony. UNITED STATES V. LLOYD 63 2. The Jury Instructions a. Baker’s Claim that the Instructions Constructively Amended the Indictment “A constructive amendment 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. Ward, 747 F.3d 1184, 1190 (9th Cir. 2014) (internal quotation marks omitted). The mail- and wire-fraud counts alleged that Baker “knowingly and with the intent to defraud” participated in and executed a scheme “to obtain money from [] investors by means of materially false and fraudulent pretenses, representations, and promises, and the concealment of material facts.” The district court instructed the jury that [a] statement or representation is “false or fraudulent” for purposes of mail and wire fraud if known to be untrue, or made with reckless disregard as to its truth or falsity, and made or caused to be made with the intent to deceive. The court gave a similar instruction on Baker’s good-faith defense: The defendant does not have the burden of proving he acted in good faith. The government must prove beyond a reasonable doubt that the defendant acted with the intent to defraud and did not act in good faith. Proof that a defendant acted with reckless disregard 64 UNITED STATES V. LLOYD as to the truth or falsity of material misrepresentations he may have made is inconsistent with good faith. Baker argues that the district court constructively amended the indictment by using the term “reckless disregard,” which permitted the jury to convict on a lesser mental state than “knowing.” When a defendant makes a constructive-amendment objection at trial, our review is de novo. Ward, 747 F.3d at 1190. The government argues that plain-error review applies because although Baker objected to the instruction, it was on the basis of an improper variance, not a constructive amendment. Our precedent does not support the government’s argument. In Ward, we reviewed the defendant’s constructive-amendment argument on appeal de novo despite his failure to use specific words, including “the term ‘Fifth Amendment,’” when he objected at trial. We reasoned that “the substance of the objection”—the fear that the jury would convict on the basis of conduct not alleged in the indictment—“was patently clear.” 747 F.3d at 1189. Similarly, although Baker did not use the words “constructive amendment” in objecting, he did state that “the government in no way alleged a theory of reckless indifference as a mental state on any defendant’s part in the indictment.” The substance of Baker’s objection was clear. Our review is de novo. “[A] constructive amendment occurs when ‘the crime charged [is] substantially changed at trial, so that it [is] impossible to know whether the grand jury would have indicted for the crime actually proved.’” United States v. Pisello, 877 F.2d 762, 765 (9th Cir. 1989) (quoting United UNITED STATES V. LLOYD 65 States v. Von Stoll, 726 F.2d 584, 586 (9th Cir. 1984)). In United States v. Love, 535 F.2d 1152 (9th Cir. 1976), “the indictment charged [the defendant] with certain fraudulent representations while ‘well knowing’ that the representations were falsely made.” Id. at 1157. The defendant appealed, arguing that the district court impermissibly varied from the indictment by instructing the jury that [a] statement or representation is false and fraudulent within the meaning of the statute if known to be untrue or made with reckless indifference as to its truth or falsity and made or caused to be made with the intent to deceive. Id. (emphasis added). Applying de novo review, the court rejected the argument, reasoning that in a mail-fraud prosecution, “‘[o]ne who acts with reckless indifference as to whether a representation is true or false is chargeable as if he had knowledge of its falsity.’” Id. at 1158 (quoting Irwin v. United States, 338 F.2d 770, 774 (9th Cir. 1964)).13 The instruction at issue here was clearer than the instruction in Love in that it required the jury to find the statement “known to be untrue, or made with reckless disregard as to its truth or falsity, and made or caused to be made with the intent to deceive.” An indictment charging that a defendant knowingly participated in a scheme to defraud does not necessarily charge that defendant with making specific false statements. See United States v. Woods, 13 Although Love was a variance challenge, courts have applied its reasoning to constructive-amendment challenges similar to Baker’s. See United States v. Hathaway, 798 F.2d 902, 911 (6th Cir. 1986). 66 UNITED STATES V. LLOYD 335 F.3d 993, 999 (9th Cir. 2003) (“[A] scheme to defraud . . . may or may not involve any specific false statements.”). We conclude that the district court’s instruction did not constructively amend the indictment. b. Nelson’s Claim that the District Court Erred in Rejecting His Definition of “Reckless Disregard” Nelson argues that the district court erred by not including his timely submitted instruction defining reckless indifference. “In reviewing jury instructions, the relevant inquiry is whether the instructions as a whole are misleading or inadequate to guide the jury’s deliberation.” United States v. Dixon, 201 F.3d 1223, 1230 (9th Cir. 2000). “A single instruction to a jury may not be judged in artificial isolation, but must be viewed in the context of the overall charge.” Id. De novo review applies to determining “whether the district court’s instructions adequately presented the defendant’s theory of the case” or “misstate[] the elements of a statutory crime.” Id.; United States v. Frega, 179 F.3d 793, 807 n.16 (9th Cir. 1999). Review for abuse of discretion applies to the district court’s “precise formulation” of the instructions. Dixon, 201 F.3d at 1230 (quoting United States v. Knapp, 120 F.3d 928, 930 (9th Cir. 1997)). Nelson asked the court to instruct the jury that a person acts with reckless indifference as used in these instructions if he consciously disregards a substantial and unjustifiable risk that his statements are false or misleading—that is, if he deliberately closes UNITED STATES V. LLOYD 67 his eyes to what would otherwise have been obvious to him. The government has the burden of showing reckless indifference beyond a reasonable doubt. The district court instead told the jury that [a] statement or representation is “false or fraudulent” for purposes of mail and wire fraud if known to be untrue, or made with reckless disregard as to its truth or falsity, and made or caused to be made with the intent to deceive. The court did not define “reckless disregard.” Nelson contends that the district court erred in failing to include the deliberate-blindness or deliberate-ignorance instruction he submitted because leaving the meaning to lay understanding could lead the jury to convict based on negligence. We have repeatedly held that similar “reckless indifference” or “reckless disregard” instructions sufficiently protect against this risk. See, e.g., United States v. Munoz, 233 F.3d 1117, 1135–36 (9th Cir. 2000), superseded by statute on other grounds, 18 U.S.C. § 1341; United States v. Gay, 967 F.2d 322, 326–27 (9th Cir. 1992). Recklessness in this context is “within the comprehension of the average juror” and needs no special definition. United States v. Tirouda, 394 F.3d 683, 688–89 (9th Cir. 2005) (“‘[C]riminal recklessness under Alaska law relates essentially to the common-sense definition of recklessness, which the average juror could understand and apply without an instruction.’” (quoting Walker v. Endell, 850 F.2d 470, 475 (9th Cir. 1987)). 68 UNITED STATES V. LLOYD The court’s instructions, considered as a whole, clearly told jurors that they could not convict Nelson unless they unanimously found that the government had proven beyond a reasonable doubt that he acted with intent to defraud—the intent to deceive or cheat—and did not act in good faith. The instructions told the jury that they could not convict on the basis of negligence. We find no basis for reversal on this ground. c. Nelson’s Claim that the District Court Erred in Instructing on the Alleged Securities-Law Violations Nelson argues that the district court erred in instructing the jury on the counts alleging that he violated 15 U.S.C. § 77e, which forbids the offer or sale of unregistered securities, and § 77x, which punishes “willful[]” violations of the securities laws.
Offer or Sale of Unregistered Securities The parties agreed to, and the court gave, the following instruction on15 U.S.C. § 77e and 18 U.S.C. § 2: In order for a defendant to be found guilty of the illegal sale or distribution of unregistered securities as charged in the Indictment, the government must prove each of the following elements beyond a reasonable doubt: First, that the securities which the defendant sold were not registered with UNITED STATES V. LLOYD 69 the [S]ecurities and Exchange Commission; Second, that the securities sold were required to be registered with the Securities and Exchange Commission— that is, that the transactions were not exempt from registration; Third, that, knowing the securities were not registered and not exempt, the defendant willfully sold or caused them to be sold to the public; and Fourth, that the defendant used or caused to be used the mails or the means and instrumentalities of interstate commerce to sell the securities. Nelson contends that this instruction failed to convey the government’s burden to prove that he knew that the unregistered securities he was selling had to be registered. Nelson contends that it was not enough for the government to prove his knowledge that the securities were not exempt from the registration requirement. Because Nelson agreed to the instruction without objection, plain-error review applies. See United States v. Feldman, 853 F.2d 648, 652 (9th Cir. 1988). Nelson cites no authority for his argument, and we have found none. In context, the difference between knowing that the law required registering the securities in order to sell them and knowing that the unregistered securities were not exempt from the registration requirement is not material. We find no reversible error. 70 UNITED STATES V. LLOYD
Federal Securities Laws The court gave the following instruction of “willfully” in instructing the jury on the alleged 15 U.S.C. § 77x violation: A person acts “willfully” under the federal securities laws by intentionally undertaking an act that one knows to be wrongful. “Willfully” does not require that the person know specifically that the conduct was unlawful. Nelson renews the objection he made at trial that the instruction would allow conviction without proof that he knew his conduct violated the securities laws. He contends that because 15 U.S.C. § 77e forbids offering or selling unregistered securities, which is not inherently wrongful, this proof is required to show a “willful[]” violation of 15 U.S.C. § 77x. We rejected a similar argument in United States v. Reyes, 577 F.3d 1069 (9th Cir. 2009), an appeal from a conviction for knowingly falsifying “book[s], record[s], and account[s],” in violation of 15 U.S.C. § 78m(b)(5). The defendant argued that because “the knowing falsification of books, records, and accounts is not ‘inevitably nefarious,’” she could not be convicted without proof that she knew her conduct violated the law. Id. at 1080. We held that her argument was “foreclosed” by United States v. Tarallo, 380 F.3d 1174 (9th Cir. 2004), and other cases “reject[ing] the argument that, in the context of the securities fraud statutes, willfulness requires a defendant know that he or she was breaking the law.” Reyes, 577 F.3d at 1080 (citing Tarallo, 380 F.3d at UNITED STATES V. LLOYD 71 1187–88; United States v. Charnay, 537 F.2d 341, 351–52 (9th Cir. 1976)). The district court “correctly instructed the jury that it had to find that” the defendant “was aware of the falsification and did not falsify through ignorance, mistake, or accident,” but “[t]here is no higher standard for a willful violation of the securities laws.” Id. (quotation marks omitted). Nelson attempts to distinguish Reyes by arguing that it involved “securities fraud” under § 78m, not “regulatory violations” under § 77e that are not “inherently bad acts.” But both § 78m and § 77e use the scienter standard under 15 U.S.C. § 77x, which allows conviction if a person “willfully violates” the securities laws. There is no basis in the statutory language or in our cases to read a higher level of scienter into § 77x when the alleged violation is under § 77e. The district court did not commit reversible error in instructing the jury on the counts alleging that Nelson violated the securities laws. d. The Rule 404(b) Instruction Nelson argues, without citing authority, that the district court erred in instructing the jury on the Rule 404(b) evidence of his telemarketing work at Big Gunn after the FBI raided the Cinamour office where he worked. Although we find it error to admit the evidence, we find no error in the instruction, which tracked the Ninth Circuit model jury instruction for Rule 404(b) evidence: You have heard the evidence that defendant Nelson committed other acts not charged here. You may consider this evidence for its bearing, if any, on the question of defendant 72 UNITED STATES V. LLOYD Nelson’s intent, knowledge, absence of mistake and absence of accident and for no other purpose. You may not consider this evidence against any other defendant on trial. See Ninth Cir. Crim. Model Jury Instructions § 4.3 (2010 ed.). According to Nelson, the language “not charged here” implies that the uncharged acts could have been charged. We find that the instruction, considered as a whole, accurately and clearly stated the law. We have recently cited this model instruction with approval. United States v. Hardick, 766 F.3d 1051, 1054, 1056 (9th Cir. 2014) (the district court did not abuse its discretion in admitting Rule 404(b) evidence in part because the court “gave a limiting instruction at the close of evidence” describing “‘other acts not charged here’” that mirrored the “legally correct model instruction.”). The district court did not abuse its discretion in giving the Rule 404(b) instruction.