Opinion ID: 20108
Heading Depth: 1
Heading Rank: 2

Heading: the challenge to the indictment

Text: Braugh argues for the first time on appeal that the superseding indictment did not meet constitutional standards. He relies on the recent decision of United States v. Neder, 527 U.S. 1, 119 S. Ct. 1827 (1999), holding that the “materiality of falsehood is an element of the federal mail fraud [and] wire fraud . . . statutes.” Id. at 1841. Braugh contends that because the indictment did not specifically allege that the misrepresentations he made were material, it failed to allege an essential element of wire fraud and mail fraud. “To be sufficient, an indictment must allege every element of the crime charged.” United States v. Fitzgerald, 89 F.3d 218, 221 (5th Cir. 1996). A challenge to the sufficiency of the indictment 15 is reviewed de novo. See United States v. Cabrera-Teran, 168 F.3d 141, 143 (5th Cir. 1999). “An indictment’s failure to charge an offense is a jurisdictional defect.” Id. Because the sufficiency of an indictment is a prerequisite to jurisdiction, a “defendant[] at any time may raise an objection based on failure to charge an offense.” Id. However, when a challenge to the sufficiency of the indictment is made for the first time on appeal, “a court should read the indictment with ‘maximum liberality’ and find it sufficient ‘unless it is so defective that by any reasonable construction, it fails to charge the offense for which the defendant is convicted.’” United States v. Lankford, 196 F.3d 563, 569 (5th Cir. 1999)(quoting Fitzgerald, 89 F.3d 218, 221 (5th Cir. 1996)). “Maximum liberality” is the appropriate standard of review when, as here, “the appellant does not assert prejudice, that is, [when the appellant] had notice of the crime of which he stood accused.” Fitzgerald, 89 F.3d at 221; see also Lankford, 196 F.3d at 569. In determining the sufficiency of the indictment, “[t]he law does not compel a ritual of words.” United States v. Wilson, 884 F.2d 174, 179 (5th Cir. 1989)(quoting United States v. Purvis, 580 F.2d 853, 857–858 (5th Cir. 1978). “The test of the validity of an indictment is ‘not whether the indictment could have been framed in a more satisfactory manner, but whether it conforms to minimal constitutional standards.’” Wilson, 884 F.2d at 179(quoting United States v. Webb, 747 F.2d 278, 284 (5th Cir. 1984)). In Neder, the Court defined “materiality of falsehood” in a footnote: 16 The Restatement instructs that a matter is material if: “(a) a reasonable man would attach importance to its existence or nonexistence in determining his choice of action in the transaction in question; or (b) the maker of the representation knows or has reason to know that its recipient regards or is likely to regard the matter as important in determining his choice of action, although a reasonable man would not so regard it.” Neder, 119 S. Ct. at 1840 n. 5(quoting Restatement (Second) of Torts § 538 (1976)).4 This court applies this definition to determine whether, by any reasonable construction, the superseding indictment charged Braugh with making materially false representations. In United States v. McCough, 510 F.2d 598 (5th Cir. 1975), this court considered a similar challenge to an indictment. In that case, the indictment charged a violation of 18 U.S.C. § 1001, which prohibits the making of false statements to a department or agency of the United States. The indictment in McCough alleged that a utility cooperative had submitted false financial statements to a federal agency in a loan application. The defendants argued that the indictment insufficiently alleged the materiality of the falsehoods under section 1001. The court stated that “[i]f the facts alleged in the indictment warrant an inference that the false 4 The definition of materiality quoted above refers to the statements themselves, not whether the recipients of the statements actually relied on them. Although allegations of actual reliance appear to allege materiality, the standards are different. A recipient might actually rely on a false representation, but the representation might not be one to which “a reasonable man would attach importance . . . in determining his choice of action,” or one that “the maker of the representation knows or has reason to know that its recipient regards or is likely to regard the matter as important in determining his choice of action, although a reasonable man would not so regard it.” Neder, 119 S. Ct at 1840 n. 5. 17 statement is material, the indictment is not fatally insufficient for its failure to allege materiality in haec verba.” Id. at 602; see also United States v. Fern, 155 F.3d 1318, 1324 (11th Cir. 1998); United States v. Pommerening, 500 F.2d 92, 98 (10th Cir. 1974); United States v. Olin Corp., 465 F. Supp. 1120, 1131–32 (W.D.N.Y. 1979). The McCough indictment alleged that the financial statements substantially misstated the value of the cooperative’s assets and described specific entries in the financial statements that contained misrepresentations. The court held that the indictment sufficiently alleged the materiality of the false financial statements because it alleged specific misstatements that were significant and “could conceivably have the capacity to influence the [agency’s] function in overseeing the status of the security of a large public investment.” Id. at 603. The superseding indictment in this case alleged false representations of specific facts that also “warrant an inference that the false statement[s] [were] material.” Id. at 602. The indictment detailed the specific false representations and promises defendants allegedly made to “induce the Investors to deliver to the Defendants cashier’s check and checks.” Paragraph Six of Count One of the indictment alleged: ROGER S. BRAUGH, AL RICHARDS, and KURT LATRASSE would and did represent falsely to certain individuals, including but not limited to Bert Hayes, Gail Schwinger, and Brandon Blackwelder (the “Investors”), that they had contacts with European banks and lenders and that the Investors would receive a substantial return on an investment involving transactions between banks within a matter of weeks or months. 18 Paragraph Ten of Count One of the indictment alleged: ROGER S. BRAUGH, AL RICHARDS, and KURT LATRASSE would and did continue to send and receive communications . . . to and from the Investors, even after the Investors had delivered their money to the defendants, for the purpose of lulling the Investors into a false sense of security by assurances that the promised services would be, or were being, performed, and that the investment was a worthwhile one, and that they would receive distributions, or return of it, at some future date; for the purpose of postponing inquiries, complaints, or legal action by the Investors, and lessening the suspect appearance of the fraudulent transactions; and, for the purpose of giving excuses for non-performance, thereby allowing additional investments or loans to be sought from the Investors. Paragraph 13 of Count One of the indictment listed twenty-eight overt acts, including specific communications with the investors describing the details of the investment program and later assuring the investors that the program was making money as promised. The allegations in Paragraphs Six, Ten, and Thirteen of Count 1 are incorporated by reference in all other counts of the indictment. The indictment in this case does not test constitutional limits in light of Neder. Read as a whole, the superseding indictment alleges specific facts that easily support an inference that the defendants made material misrepresentations and false promises. In particular, the allegations that the defendants misrepresented that the investment program existed, was free from risk of loss, and would generate large profits support an inference of materiality. A “reasonable man would attach importance” to assurances that the investments would take place as described and would return at least the invested funds, plus interest, within a short time, in determining whether to invest. The allegations in 19 the indictment are sufficient to charge the offenses of mail fraud, wire fraud, and conspiracy to commit mail fraud and wire fraud. III. THE CHALLENGE TO THE DENIAL OF BRAUGH’S MOTION TO SEVER Braugh argues that the district court improperly denied his motion to sever because the evidence presented at trial was so complicated that the jury had difficulty considering the evidence against each defendant separately. Braugh also argues that the defendants presented antagonistic defenses. The district court’s denial of a motion to sever is reviewed for an abuse of discretion. See United States v. Pena-Rodriguez, 110 F.3d. 1120, 1128 (5th Cir. 1997). Rule 8(b) of the Federal Rules of Criminal Procedure provides in relevant part: “Two or more defendants may be charged in the same indictment . . . if they are alleged to have participated . . . in the same series of acts or transactions constituting an offense or offenses.” Generally, “persons indicted together should be tried together, especially in conspiracy cases . . . .” United States v. Posada-Rios, 158 F.3d 832, 863 (1998), cert. denied, ___ U.S. ___, 119 S. Ct 1280 (1999), cert. denied, ___ U.S. ___, 119 S. Ct 1487 (1999), and cert. denied, ___ U.S. ___, 119 S. Ct. 1792 (1999) (quoting United States v. Pofahl, 990 F.2d 1456, 1483 (5th Cir. 1993)). Rule 14 of the Federal Rules of Criminal Procedure authorizes the trial court to grant a severance based on a showing of prejudice. To demonstrate that a district court abused its discretion in denying a motion to sever, the defendant “must show that: (1) the joint trial prejudiced him to such an extent that the district court could not provide adequate protection; and (2) the 20 prejudice outweighed the government’s interest in economy of judicial administration.” United States v. McCord, 33 F.3d 1434, 1452 (5th Cir. 1994)(quoting United States v. DeVarona, 872 F.2d 114, 120–21 (5th Cir. 1989)). This trial lasted two weeks and involved three defendants. This court has upheld a district court’s decision to deny severance in cases involving many more defendants, more evidence, greater complexity, and longer trials. See, e.g., Posada-Rios, 158 F.3d at 863–65(upholding district court’s denial of a motion to sever in a conspiracy case tried for six months against 12 defendants); United States v. Ellender, 947 F.2d 748, 753–755 (5th Cir. 1991)(upholding district court’s denial of a motion to sever in a conspiracy case tried for three months against 23 defendants, with 73 witnesses). A general description of the complexity of a trial is not sufficient to show the “specific and compelling prejudice” necessary for reversal of a district court’s denial of a motion to sever. United States v. McCord, 33 F.3d at 1452; cf. Posada-Rios, 158 F.3d at 863. Instead, an appellant must “isolate events occurring in the course of the joint trial and then . . . demonstrate that such events caused substantial prejudice.” Posada-Rios, 158 F.3d at 863(quoting Ellender, 947 F.2d 748, 755 (5th Cir. 1991)). Braugh has not identified specific events that caused prejudice and require reversal. Braugh’s argument that the jury’s conviction of all defendants on all counts shows that it did not separately consider the evidence as to each defendant is unavailing. This court has stated that “acquittals as to some defendants on some counts 21 support an inference that the jury sorted through the evidence and considered each defendant and each count separately.” Posada-Rios, 158 F.3d at 864 (quoting Ellender, 947 F.2d at 755). It does not necessarily follow, however, that conviction of all defendants on all counts shows that the jury failed separately to weigh the evidence as to each defendant. “Appropriate cautionary instructions can decrease the possibility that the jury will improperly transfer proof of guilt from one defendant to another.” Ellender, 947 F.2d at 755 (quoting United States v. Hogan, 763 F.2d 697, 705 (5th Cir. 1985)). “The pernicious effect of cumulation . . . is best avoided by precise instructions to the jury on the admissibility and proper uses of the evidence introduced by the Government.” United States v. Morrow, 537 F.2d 120, 136 (5th Cir. 1976). In this case, the trial court gave careful instructions during the trial about the limited purpose for which it admitted some of the evidence. The court included the limiting instructions in the final instructions to the jury. In the trial instructions, the court also admonished the jury as follows: A separate crime is charged against one or more of the defendants in each count of the indictment. Each count, and the evidence pertaining to it, should be considered separately. Also, the case of each defendant should be considered separately and individually. The fact that you may find one or more of the defendants guilty or not guilty of any of the crimes charged should not control your verdict as to any other crime or any other defendant. You must give separate consideration to the evidence as to each defendant. Similar instructions have been held sufficient to eliminate the possibility of undue prejudice. See Posada-Rios, 158 F.3d at 864; 22 United States v. Faulkner, 17 F.3d 745, 759 (5th. Cir 1994). “The remedy of severance is justified only if the prejudice flowing from a joint trial is clearly beyond the curative powers of a cautionary instruction.” Morrow, 537 F.2d at 136. Braugh offers no specific basis for concluding that the district court’s repeated and meticulous instructions failed to avoid legally cognizable prejudice. Braugh also argues that the district court should have severed his trial because Richards presented an antagonistic defense. Braugh points to three instances of purported antagonism. First, Richards’ attorney stressed in opening statements that Bert Hayes’s money was deposited into an account that Braugh, not Richards, controlled. Second, Richards’ attorney argued that the checks Braugh wrote to Richards with the notation “Bert Hayes payment” on the memorandum line were to pay Richards’ commissions, and that Braugh lied when he told Hayes that the checks were for him. Richards’ attorney argued that Braugh wrote “Bert Hayes payment” on the cashed and canceled checks after the fact. Braugh’s attorney contended that Braugh sent the money to Richards in order to pay Hayes. Third, during his cross-examination of Schwinger, Richards’ attorney asked questions about events that occurred after Richards’ involvement had ended, including actions Braugh took to make Schwinger continue believing that the roll program was legitimate. Braugh argues that these trial tactics were intended to blame Braugh and portray Richards’ involvement as innocent. “[S]everance is not automatically required merely because codefendants present mutually antagonistic defenses.” United States 23 v. Castillo, 77 F.3d 1480, 1491 (5th Cir. 1996); see also United States v. Matthews, 178 F.3d 295, 298 (5th Cir.), cert. denied, ___ U.S. ___, 120 S. Ct. 359 (1999). The decision is committed to the discretion of the trial court and will be reversed only if the defendant shows “specific and compelling prejudice” the joint trial caused his defense. This court has held that when defendants present antagonistic defenses, “instructions to consider the evidence as to each defendant separately and individually, and not to consider comments made by counsel as substantive evidence sufficed ‘to cure any prejudice caused when co-defendants accuse each other of the crime.’” United States v. Mann, 161 F.3d 840, 863 (5th Cir. 1998)(quoting United States v. Stouffer, 986 F.2d 916, 924 (5th Cir. 1993)), cert. denied, ___ U.S. ___, 119 S. Ct. 1766 (1999). The district court gave both these instructions in this case. In addition to the curative instructions, a close examination of Richards’ and Braugh’s defenses shows that they fall short of mutual antagonism. Defenses are antagonistic if they are “mutually exclusive or irreconcilable, that is, if the core of one defendant’s defense is contradicted by that of a codefendant.” United States v. Rojas-Martinez, 968 F.2d 415, 419 (5th Cir. 1992); see also United States v. Moser, 123 F.3d 813, 829 (5th Cir. 1997). Richards presented his belief that the roll program was legitimate as the core of his defense. The core of Braugh’s defense was that Al Sellars masterminded the “roll program” and Braugh believed it to be legitimate. The two defenses are not mutually antagonistic; the jury could have believed both. Specifically, the jury could 24 have found that Braugh wrote “Bert Hayes payment” on the canceled checks after Richards cashed them, as Richards’ attorney argued, and that Braugh believed the investment program was legitimate, as Braugh’s attorney argued. The evidence as to Braugh’s continued involvement with Schwinger’s investment after Richards’ participation ended similarly did not conflict with Braugh’s defense that he believed the investment program to be legitimate. Richards and Braugh did not present mutually antagonistic defenses, so as to require severance. The district court carefully instructed the jury separately to consider the evidence admitted against each defendant. Braugh has not demonstrated the “specific and compelling prejudice” necessary for reversal based on the district court’s denial of his motion to sever.