Court Opinion

ID: 9499445
Source: CourtListenerOpinion
Date Created: 2023-08-05 17:48:28.754921+00
Date Added: 2024-06-11T17:59:30.227648
License: Public Domain

WALLACE, Senior Circuit Judge,
dissenting.
Although the government’s case was less than overwhelming, the evidence was sufficient for a reasonable jury to find that Milwitt possessed the requisite fraudulent intent beyond a reasonable doubt. This is all that is required to sustain a conviction against a sufficiency of the evidence challenge.
Additionally, the majority unnecessarily reaches the issue of whether intent to defraud an identifiable victim is required, which neither party raised. It resolves the issue in a manner directly contradicted by our precedents.
I therefore respectfully dissent.
I.
As outlined by the majority, the evidence that Milwitt committed fraud is overwhelming. In order to appear effective, Milwitt filed fraudulent bankruptcy petitions on behalf of his clients without their consent, forged their signatures, and gave false accounts of their financial status. Many of these petitions misspelled the tenants’ names or gave inaccurate so-cial security numbers. A government expert testified that these inaccuracies would make it more difficult for creditors to assert their rights.
Milwitt filed the bankruptcy petitions in order to have the bankruptcy court enter “automatic stays” against the petitioners’ creditors, here the landlords. These stays forced the landlords to halt any legal proceedings against the tenants, including eviction proceedings and the default judgments caused by Milwitt.
In several of the fraudulent bankruptcy petitions, Milwitt specifically listed the applicable landlords by name as creditors, subjecting them to the automatic stay. In at least one instance, Milwitt also served a landlord-creditor with a “Notice of Bankruptcy Stay.”
Milwitt also told at least one of the tenants, Janice Daniels, that she could pay Milwitt’s fees in lieu of paying her rent. Daniels further testified that Milwitt told her that she could withhold rent payments and that all of the legal fees that she paid to Milwitt came out of rent money she would have otherwise paid her landlord.
After the jury convicted Milwitt on all five counts of bankruptcy fraud, Milwitt moved for a judgment of acquittal, which the district court denied.
We review the district court’s denial of a motion for judgment of acquittal based on insufficient evidence de novo. United, States v. Carranza, 289 F.3d 634, 641 (9th Cir.2002). Our review of the underlying jury verdict is much more deferential, however. We must defer to a jury’s guilty verdict if, “after viewing the evidence in the light most favorable to the prosecution, *1162any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.” Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979). This “standard of review is a highly deferential one.” United States v. Henson, 123 F.3d 1226, 1236 (9th Cir.1997) (internal quotations omitted); accord United States v. Nyemaster, 116 F.3d 827, 828 (9th Cir.1997) (“A challenge to the sufficiency of the evidence is reviewed under a highly deferential standard”) (internal quotations omitted).
Importantly, “this inquiry does not require a court to ask itself whether it believes that the evidence at the trial established guilt beyond a reasonable doubt.” Jackson, 443 U.S. at 318-19, 99 S.Ct. 2781 (internal quotations omitted). Instead, “[t]his familiar standard gives full play to the responsibility of the trier of fact fairly to resolve conflicts in the testimony, to weigh the evidence, and to draw reasonable inferences from basic facts to ultimate facts.” Id. at 319, 99 S.Ct. 2781.
We have long recognized that “[i]t is often difficult to prove fraudulent intent by direct evidence and it must be inferred in such cases from a pattern of conduct or a series of acts.... ” United States v. Lothian, 976 F.2d 1257, 1267 (9th Cir.1992) (internal quotations omitted). Therefore, “[i]t is settled law that intent to defraud may be established by circumstantial evidence.” United States v. Rogers, 321 F.3d 1226, 1230 (9th Cir.2003); see also United States v. Bucher, 375 F.3d 929, 934 (9th Cir.2004) (“Culpable intent can be inferred from the defendant’s conduct and from the surrounding circumstances”) (internal quotations and alterations omitted).
II.
The majority’s holding that “18 U.S.C. § 157 requires a specific intent to defraud an identifiable victim or class of victims of the identified fraudulent scheme,” maj. op. at 1156, will come as somewhat of a surprise to the parties, as neither side has raised the issue. “Courts generally do not decide issues not raised by the parties. If they granted relief to petitioners on grounds not urged by petitioners, respondents would be deprived of a fair opportunity to respond, and the courts would be deprived of the benefit of briefing.... ” Galvan v. Alaska Dep’t of Corr., 397 F.3d 1198, 1204 (9th Cir.2005) (footnote omitted). That is true here. The majority has provided no reason for its deviation from the normal rules of our adversarial system.
In this case, the government has only argued that it did in fact show that Milwitt intended to defraud the landlords. I would require the government to prove intent to defraud the landlords to the jury. I do not view the government’s statement as an invitation to address an issue not briefed by either party.
Because the majority insists on deciding this “argument,” I will address the merits of the majority’s holding. I agree with the majority that there is a substantial similarity between wire fraud and bankruptcy fraud; I would apply United States v. Crawford, 239 F.3d 1086 (9th Cir.2001), and hold that an identifiable victim is not an element of bankruptcy fraud. Crawford squarely rejected the requirement that the government prove intent to defraud a specific victim or class of victims as an element of wire fraud. See id. at 1092-93. The majority in Crawford also specifically rejected the argument that McNally v. United States, 483 U.S. 350, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987), and United States v. Mitchell, 867 F.2d 1232 (9th Cir.1989), the only two supporting cases cited by the majority here, require proof of an identifiable victim. See Crawford, 239 F.3d at 1093 n. 6. In short, we decided this issue five years ago.
*1163In one brief footnote, the majority attempts to distinguish Crawford. Neither of its two rationales is valid. First, the majority argues that “in Crawford, the fraudulent scheme was identified and proven, and the government established that Crawford knew that she had no ownership interest.” Maj. op. at 1159 n. 6. But the same is true here. The evidence that Milwitt was engaged in a fraudulent scheme is nothing short of overwhelming. Milwitt was fraudulently representing himself as a lawyer and fraudulently filing bankruptcy petitions on his “clients’ ” behalf without authorization, using phony information. Milwitt was also fraudulently representing his activities to his clients. The only question in this appeal is whether the government actually proved the intent to defraud the landlords as well as the tenants. That Milwitt was engaged in a fraudulent scheme, which has been “identified and proven,” cannot be debated seriously. The majority’s attempt to distinguish Craioford on the basis that the existence of a fraudulent scheme has not been proven is therefore perplexing.
The majority also attempts to distinguish Craioford on the basis that Milwitt’s “indictment was based on an entirely different fraudulent scheme and victims.” Maj. op. at 1159 n. 6. The majority does not explain what the material differences are — except for the implausible contention that the existence of a fraudulent scheme has not been proved in this appeal. It is impossible to discern from its opinion a rationale for the distinction drawn by the majority.
What then has the majority accomplished? The majority has effectively adopted the legal position advanced by the dissenting opinion in Crawford. That dissent begins by stating its disagreement with the majority: “I dissent because the majority reads an essential element out of the crime of wire fraud and because the evidence is insufficient to prove that essential element. Up to now, it has been the law that this crime requires an identifiable victim .... ” 239 F.3d at 1094 (Tashima, J., dissenting) (emphasis added).
Similarly, while the dissent tried to use McNally and Mitchell in an identical manner as the majority does here, see 239 F.3d at 1094 (Tashima, J., dissenting), the majority in Crawford explicitly rejected the argument that McNally and Mitchell require an identifiable victim. See 239 F.3d at 1093 n. 6. After specifically distinguishing McNally and Mitchell, the majority in Crawford stated that “we have never held [an identifiable victim] to be an element of the offense of mail fraud.” Id. The majority’s attempt to resurrect an argument that we have already unambiguously rejected is startling. As a three-judge panel, we lack the authority to change a dissent into controlling law. See United States v. Rodriguez-Lara, 421 F.3d 932, 943 (9th Cir.2005) (“a three-judge panel may not overrule [circuit precedents] absent intervening Supreme Court or en banc authority”).
Additionally, it appears that the majority opinion in Crawford is in accord with every other circuit to decide this issue. See United States v. Munoz, 430 F.3d 1357, 1369 (11th Cir.2005) (“The crime of mail fraud does not include an element requiring a contemplated harm to a specific identifiable victim”) (internal quotations omitted); United States v. Henningsen, 387 F.3d 585, 590 (7th Cir.2004) (same); United States v. Loayza, 107 F.3d 257, 260 (4th Cir.1997) (“Indictments which do not identify specific mail fraud victims by name are sufficient”) (internal quotations and alterations omitted). The majority’s holding therefore simultaneously creates unjustifiable intra-circuit and inter-circuit conflicts.
*1164I therefore dissent from the majority’s unnecessary, unwise, and unsupported conclusion that bankruptcy fraud requires an identifiable victim or class of victims.
III.
This appeal therefore should turn on whether a reasonable jury could have found that Milwitt possessed an intent to defraud the landlords. We have previously defined the requisite “intent to defraud” as “to act willfully, and with the specific intent to deceive or cheat for the purpose of either causing some financial loss to another, or bringing about some financial gain to oneself.” United States v. Cloud, 872 F.2d 846, 852 n. 6 (9th Cir.1989). A reasonable jury could easily have concluded that Milwitt acted with “specific intent to deceive or cheat” the landlords (as well as the tenants) in order to benefit himself financially.
The success of Milwitt’s scheme to collect legal fees was dependent in large measure on the landlords being successfully defrauded of rent money and forestalled from asserting their rights against the tenants. A reasonable jury could have readily concluded that if the landlords had not been fraudulently prevented from evicting the tenants and collecting on the default judgments caused by Milwitt, the tenants would have discovered that Milwitt was defrauding them. When the tenants discovered that Milwitt was defrauding them, they stopped paying his “legal fees,” as Milwitt undoubtedly feared. The collection of his legal fees was thus based on Milwitt’s ability to appear productive in the tenants’ disputes with the landlords, which in turn was based on his ability to defraud the landlords successfully.
Milwitt specifically listed the landlords on several of the fraudulent bankruptcy petitions, which caused the landlords to be subject to the automatic stay. Milwitt even served one of them with a “Notice of Bankruptcy Stay.” Milwitt was undoubtedly aware that the effect of the bankruptcy petition was to cause the automatic stay, and a reasonable jury was entitled to infer as much. Because the successful halting of the landlord’s eviction proceedings was essential to Milwitt’s ability to collect legal fees, a reasonable jury could also have concluded that Milwitt possessed the intent to defraud the landlords, as well as the tenants. This alone is sufficient evidence to support the jury’s verdict.
The government also produced testimony that established that misspelling the tenants’ names, as well as giving false social security numbers, would make it more difficult for the landlord-creditors to invalidate the fraudulently-obtained stays. The government further produced evidence that Milwitt was familiar with bankruptcy law and likely knew of this effect. This evidence therefore further supports the jury’s verdict.
The jury’s verdict is also supported by the testimony of Janice Daniels, who testified that Milwitt told her to pay Milwitt’s legal fees instead of paying rent to her landlord. A reasonable jury could have concluded that Milwitt intended to defraud the landlords by having his “legal fees” paid at their expense, which is precisely what occurred. Viewing the evidence in the light most favorable to the government, this testimony reveals clear intent to defraud the landlords and obtain financial gain at their expense.
I must therefore respectfully, but forcefully, disagree with the majority’s contention that “[n]o evidence was presented concerning any scheme to defraud creditors, only debtors.” Maj. op. at 1158. Absent from the majority opinion is any demonstration of how the above evidence does not support the government’s argument *1165that Milwitt intended to defraud the landlords. While the majority argues that “[tjhere was no proof that Milwitt received or sought any money or other consideration from the landlords, only that he defrauded the tenants,” maj. op. at 1158, a reasonable jury could have easily concluded Milwitt intended to receive money at the expense of the landlords — which is precisely what the jury did. Notably, Cloud only requires “intent to deceive or cheat for the purpose of either causing some financial loss to another, or bringing about some financial gain to oneself.” 872 F.2d at 852 n. 6 (emphasis added). Milwitt need not have “received or sought any money” directly from the landlords, as long as he intended to “bring[ ] about some financial gain to [himjself,” id., at their expense. I conclude that the second type of fraudulent intent under Cloud — which the majority ignores — is plainly supported by sufficient evidence.
Although the majority’s opinion initially states the Jackson standard of review, its application strays from the Supreme Court’s direction. The only relevant question is what a reasonable jury could have found, not how the majority would weigh the evidence from a cold record. For example, the majority argues that “[tjhe proof, in fact, tended to show that the landlords were ‘slum lords’ with a despicable record of repair and maintenance.” Maj. op. at 1158 (emphasis added). The relevant question is not what the evidence tends to show to our panel of judges, however. In relying on the premise that the landlords were not owed rent based on what the evidence “tended to show” two appellate judges, the majority fails to view the evidence in the “light most favorable to the prosecution.” Jackson, 443 U.S. at 319, 99 S.Ct. 2781.
The majority similarly states that “the evidence showed that the tenants were likely justified in not paying the landlords.” Maj. op. at 1158 (emphasis added). The majority later argues that “[hjad the tenants consulted with a legitimate attorney, that attorney might well have recommended a legal course that involved a Chapter 13 bankruptcy filing.” Maj. op. at 1159 (emphasis added). Once again, the question is not what seems likely to us, or what “might well have” happened, but whether any reasonable jury could have concluded fraud exists. The majority’s use of “tended to show” and “were likely justified” and “might well have recommended” is indicative of the majority itself weighing the evidence and usurping the role of the jury. The majority’s analysis thus gravely misconstrues the nature of our review under Jackson.
The majority also appears to believe that Milwitt could not simultaneously possess the intent to defraud the tenants and the landlords. It is true that the government erroneously pursued a wrong trial theory in focusing on fraud on the tenants. However, the evidence reveals that Milwitt possessed no shortage of fraudulent intent. The rulings of the district judge pulled the government back and directed it to the right track. The case went to the jury under proper instructions requiring proof beyond a reasonable doubt that Milwitt defrauded the landlords. Because a reasonable jury could have concluded that Milwitt’s fraudulent intent was not solely directed toward the tenants, but also toward the landlords, Milwitt’s conviction must be affirmed.
Unfortunately, the majority opinion does not analyze the evidence from which the jury could have found fraud on the landlords. Instead, it substitutes a conclusory discussion, which, as discussed above, is incorrect. A new trial is not in order as the Double Jeopardy Clause will bar any retrial of Milwitt. See Smith v. Massa*1166chusetts, 543 U.S. 462, 466-67, 125 S.Ct. 1129, 160 L.Ed.2d 914 (2005) (collecting cases).
Because I believe that the evidence is sufficient to support the jury’s verdict, I would not reach the government’s argument regarding the ability of the debtors to pay off their debts.
IV.
The majority seriously exceeds our authority under Jackson and as a three-judge panel. Simply put, we should not be weighing evidence as if we were the jury. In addition, we are not an en banc court that has the power to change dissenting opinions into controlling law.
This undoubtedly would have been an easier case if the government had tried this case differently. Nonetheless, the government’s poor tactical choice should not result in reversal. The majority does not discuss critical evidence supporting the government’s case and fails to “view[ ] the evidence in the light most favorable to the prosecution.” Jackson, 443 U.S. at 319, 99 S.Ct. 2781. Under this “highly deferential” standard of review, I come out with the opposite result and would therefore affirm Milwitt’s conviction.
I also must dissent from the majority’s attempt to change the dissent in Crawford into the law of our circuit and its attempt to resurrect an argument based on McNally and Mitchell that Crawford explicitly rejected. Indeed, it is regrettable that the majority insisted on reaching an issue that neither party raised.