Court Opinion

ID: 2966607
Source: CourtListenerOpinion
Date Created: 2015-09-22 00:52:01.956389+00
Date Added: 2024-06-11T11:43:10.707387
License: Public Domain

PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

UNITED STATES OF AMERICA,
Plaintiff-Appellee,

v.                                                                    No. 95-5796

SALOMON S. LOAYZA,
Defendant-Appellant.

Appeal from the United States District Court
for the Eastern District of Virginia, at Newport News.
Raymond A. Jackson, District Judge.
(CR-95-11)

Argued: October 31, 1996

Decided: February 25, 1997

Before WIDENER and HALL, Circuit Judges, and THORNBURG,
United States District Judge for the Western District of
North Carolina, sitting by designation.

_________________________________________________________________

Affirmed by published opinion. Judge Thornburg wrote the majority
opinion, in which Judge Hall joined. Judge Widener wrote a dissent-
ing opinion.

_________________________________________________________________

COUNSEL

ARGUED: Oldric Joseph LaBell, Jr., Newport News, Virginia, for
Appellant. Alan Mark Salsbury, Assistant United States Attorney,
Norfolk, Virginia, for Appellee. ON BRIEF: Helen F. Fahey, United
States Attorney, Norfolk, Virginia, for Appellee.

_________________________________________________________________
OPINION

THORNBURG, District Judge:

Appellant, Salomon S. Loayza, assigns numerous errors to the
court below in connection with his convictions for mail fraud in viola-
tion of 18 U.S.C. § 1341.

Loayza and co-defendant Robert Shirey owned or co-owned and
operated several investment management companies. They devised a
Ponzi-type scheme whereby individuals were persuaded to invest in
these companies by representations that their funds would be invested
in reputable mutual funds guaranteed to earn tax-free interest and
dividends.1 The investors were also assured the original principal
investment ultimately would be returned in full. The money actually
was used to pay the personal and business expenses of appellant and
Shirey. Periodically, funds from new "investments" were used to
make "interest payments" to the earlier investors. The availability of
investment funds was assured by the use of the mail. Eleven investors
were defrauded for a total of $628,000.

I.

Appellant's first attack is on the bill of indictment. Prior to trial,
he moved to dismiss the indictment as legally insufficient. The trial
court denied the motion but ordered the government to file a bill of
particulars.

Because appellant moved against the sufficiency of the indictment
at trial, this court applies a de novo standard of review. United States
v. Darby, 37 F.3d 1059, 1060 (4th Cir. 1994), cert. denied, 115 S. Ct.
1826 (1995). "[H]eightened scrutiny" is applied because the motion
attacking the sufficiency was made prior to the verdict. Id., at 1063.
_________________________________________________________________

1 A "Ponzi" scheme typically refers to one in which early investors are
paid off with money received from later investors in order to prevent dis-
covery and to encourage additional and larger investments. It is named
for the alleged 1920's swindler, Charles A. Ponzi.

                     2
Appellant attacks the indictment primarily on the ground that the
names and addresses of the victims were not included in each count.
Counsel conceded at oral argument, however, that appellant was not
prejudiced by the omission if the indictment is otherwise sufficient.
He also claims it failed to give adequate notice of the charges
because, while the counts refer to the amounts of the investment
checks sent through the mail, the indictment does not state to whom
they were payable, upon what banks drawn, the persons sending the
check, the persons to whom sent, and the places of receipt.

In order to be legally sufficient, "[a]n indictment must contain the
elements of the offense charged, fairly inform a defendant of the
charge, and enable the defendant to plead double jeopardy as a
defense in a future prosecution for the same offense." United States
v. Daniels, 973 F.2d 272, 274 (4th Cir. 1992), cert. denied, 506 U.S.
1086 (1993). If the indictment does not contain every essential ele-
ment of the offense, it is invalid; and, a bill of particulars cannot cure
the defect. Darby, 37 F.3d at 1063; United States v. Price, 857 F.2d
234, 236 (4th Cir. 1988) (citing Russell v. United States, 369 U.S. 749
(1962)). In essence, then, the bill of indictment insures that a defen-
dant does not face incarceration "except on presentment or indictment
of a grand jury;" thus, if it is insufficient, a prosecutor cannot cure the
defects. Darby, supra; United States v. Floresca, 38 F.3d 706 (4th
Cir. 1994).

The essential elements of mail fraud are "(1) the existence of a
scheme to defraud, and (2) the mailing of a letter, etc., for the pur-
poses of executing the scheme." United States v. United Medical and
Surgical Supply Corp., 989 F.2d 1390, 1404 (4th Cir. 1993). The
indictment here alleged that from March 1989 through December
1993, the appellant devised a scheme to defraud persons by inducing
investments in specified investment management companies which he
owned or co-owned. It also alleged intentional fraudulent representa-
tions by appellant as to future investments, interest rates, the return
of original principal, the diversion of funds, and the cover-up of the
scheme by partial "interest" payments. Eleven unidentified investors
were alleged to have been defrauded for a total of $628,000. The
checks used in the scheme were identified by the amount and as hav-
ing been received through the mail on specified dates because of

                     3
appellant's representations. The essential elements of the charge thus
are clearly specified.

Moreover, in order to obtain a conviction for mail fraud, the indict-
ment must

          furnish the accused with such a description of the charge
          against him as well enable him to make his defence .. .".
          [I]ndictments which do not identify specific mail fraud vic-
          tims by name [are sufficient].

United States v. Mizyed, 927 F.2d 979, 981 (7th Cir.), cert. denied,
500 U.S. 937 (1991) (citations omitted); accord , United States v.
Hatch, 926 F.2d 387 (5th Cir.), cert. denied , 500 U.S. 943 (1991) (an
indictment for mail fraud is sufficient despite the failure to identify
the victim); accord, United States v. Arlen, 947 F.2d 139, 145 (5th
Cir. 1991), cert. denied, 503 U.S. 939 (1992) (discussing a violation
of 21 U.S.C. § 333) ("[t]he prosecution must prove beyond a reason-
able doubt that a defendant intended to defraud or mislead someone,
but the indictment need not specify the intended victim; the focus is
on defendant's intent, not the victim's identity"). The indictment here
was sufficiently specific. The time period, the scheme, the purported
investment companies, the "cover-up" of the diversion of funds, and
the use of the mail to carry out the scheme are all alleged. Id. The
identity of the fraud victims is not an essential element of the crime.

Nonetheless, the appellant is entitled to assurance that the indict-
ment and prosecution were in fact for the same violations. In other
words, upon what basis may it be determined that the grand jury
returned a bill of indictment charging mail fraud of the same investors
used by the prosecution to prove his case. Darby , supra; Floresca,
supra.

The indictment's preamble to Count One contains a detailed
description of the scheme used by appellant to defraud investors,
including the fact that appellant both solicited checks directly from
the victims and also induced them to "liquidate their legitimate invest-
ment holdings and transfer the funds to the defendant and his compa-
nies." J.A. at 13. The indictment also states that eleven investors were
defrauded of a total of approximately $628,000. Id., at 14. Count One

                    4
goes on to allege that on September 11, 1990, appellant received from
the mail a check in the amount of $10,000 "which was mailed by an
investor." Id. Each of the remaining counts incorporates the preamble
text to Count One. Count Two alleges that on April 8, 1992, the
appellant received in the mail a check in the amount of $10,000 which
had also been mailed by an investor. Id., at 15. Likewise, Count Three
specifies the receipt on June 4, 1991, of a check in the amount of
$10,000 mailed by an investor. Id., at 15-16. The specification of the
dates on which these checks were received by appellant, the amounts
thereof, and the mailing thereof by investors assures that the grand
jury, in returning charges on these counts, had in mind the investors
who ultimately testified against appellant.

Such assurance is also certain as to Counts Four and Five. Those
counts as well incorporate the preamble text to Count One. Count
Four charges that on December 18, 1991, the appellant caused "to be
delivered by mail according to the direction thereon, a check in the
amount of $20,000.00, which was mailed by Keystone Fund to an
investor solicited on the basis of the false and fraudulent statements
and representations described" in the preamble text. J.A. at 16. When
read together with paragraph 2 in Count One, it is clear that appellant
induced the victim in Count Four to liquidate a legitimate investment
in the Keystone Fund in order to place the investment with his compa-
nies and that he used the mail to do so. Count Five charges the same
conduct, on a different date, involving a check in the amount of
$5,000, again mailed by Keystone Fund to an investor for investment
with appellant. As noted above, the specification of the dates, the
amounts of the checks, and the identification of the legitimate invest-
ment company from which the checks were sent assures that the
grand jury presented an indictment based on the investors who testi-
fied at trial.

While it is possible, as appellant argued, that he received large
numbers of checks from various investors, the indictment's identifica-
tion of the dates, the check amounts and their receipt from investors
or investment companies was sufficient to place him on notice of the
charges. Appellant,

          understandably, wants the government to disclose its theory
          of the case and the supporting evidentiary facts."That is not

                    5
          and never has been required at the indictment stage.. . . The
          ready remedy of a motion for a bill of particulars[under
          Fed. R. Crim. P. 7(f)] is available to add specifics beyond
          those required for the indictment to pass constitutional mus-
          ter. . . ." Here, the indictment "taken as a whole . . . ade-
          quately apprised [appellant] of the charges so that [he]
          might prepare a defense."

Arlen, 947 F.2d at 145 n.7 (citations omitted). Thus, the indictment
informed the appellant of the charges and caused double jeopardy to
attach for the purposes of any future prosecution. Daniels, 973 F.2d
at 274.

It nonetheless bears noting that the addition of the victims' identi-
ties could easily have been included in the indictment. Indeed, such
a simple addition would have negated the motion to dismiss below
and thus, a portion of this appeal.

II.

Appellant next claims the government engaged in prosecutorial
misconduct. During closing argument, the prosecutor stated his belief
that a certain government witness was telling the truth. J.A. at 290.
Defense counsel's contemporaneous objection was overruled. A pros-
ecutor's remarks where an objection has been raised are reviewed in
their entirety for harmless error. Fed. R. Crim. P. 52(a). "Any error
. . . which does not affect substantial rights shall be disregarded." Id.

Appellant also claims, for the first time on appeal, that other
remarks of the prosecutor were improper. Where no objection was
raised below, the remarks are reviewed for plain error. Fed. R. Crim.
P. 52(b). "Plain errors or defects affecting substantial rights may be
noticed although they were not brought to the attention of the court."
Id.

          When the defendant has made a timely objection to an error
          and Rule 52(a) applies, the court of appeals normally
          engages in a specific analysis of the district court record--
          a so-called "harmless error" inquiry--to determine whether

                     6
          the error was prejudicial. Rule 52(b) normally requires the
          same kind of inquiry, with one important difference: It is the
          defendant rather than the Government who bears the burden
          of persuasion with respect to prejudice.

United States v. Olano, 507 U.S. 725, 734 (1993) (citations omitted).
"Stated somewhat differently, had [appellant] preserved this issue for
appeal, we would still be called upon to determine whether the gov-
ernment's remarks were prejudicial in resolving whether the remarks
constituted reversible error." United States v. Moore, 11 F.3d 475,
481 (4th Cir. 1993), cert. denied, 114 S. Ct. 1864 (1994).

Considering first the prosecutor's remark concerning the veracity
of a witness, "[it is] improper for a prosecutor to directly express his
opinion as to the veracity of a witness." Moore, 11 F.3d at 481. More-
over, "[a]ny statement of personal belief jeopardizes the integrity of
the trial process." United States v. Harrison , 716 F.2d 1050, 1052 (4th
Cir. 1983), cert. denied, 466 U.S. 972 (1984). Nonetheless, comments
made by a prosecutor during closing arguments will not warrant a
new trial unless they "so infected the trial with unfairness as to make
the resulting conviction a denial of due process." United States v.
Francisco, 35 F.3d 116, 120 (4th Cir. 1994), cert. denied, 115 S. Ct.
950 (1995). In other words, were the remarks indeed improper and is
it more likely than not that the remarks materially affected the appel-
lant's substantial rights. Id.; United States v. Bennett, 984 F.2d 597,
608 (4th Cir.), cert. denied, 508 U.S. 945 (1993) (applying this test
where counsel objected to the remarks).

The government concedes the comments here were improper. The
issue then is whether those remarks materially affected the verdict. In
resolving that issue, we consider first, whether the comments misled
the jury and prejudiced the appellant; second, were they isolated or
extensive; third, absent the remarks, what was the weight of the evi-
dence against the accused; and fourth, were the prosecutor's remarks
deliberate. Moore, 11 F.3d at 482 (citing Olano, supra); see also
Bennett, 984 F.2d at 608. The comment here was prejudicial but the
trial court's curative instruction prevented it from misleading the jury.2
_________________________________________________________________

2 The court charged the jury as follows:

                    7
Francisco, 35 F.3d at 120 ("[W]e follow the presumption that the jury
obeyed the district court's limiting instructions."). The remark was
isolated and the evidence against appellant was overwhelming. More-
over, the remark clearly was not intentional since the prosecutor was
not aware the word "I" had been used and when so advised, immedi-
ately apologized. J.A. at 334-35.

The prosecutor also stated during closing argument that the appel-
lant, who took the stand, was trying to "con" or "dupe" the jury. At
another point during defense counsel's summation, the prosecutor
said "that's not even close (to the evidence)." Defense counsel failed
to object to these comments. Thus, appellant bears the burden of
showing plain error; i.e., that the error affected his substantial rights.
Olano, supra; United States v. Adam , 70 F.3d 776 (4th Cir. 1995);
Mitchell, 1 F.3d at 240.

          To reverse for plain error, we must: (1) identify an error; (2)
          which is plain; (3) which affects substantial rights; and (4)
          which "seriously affect[s] the fairness, integrity or public
          reputation of judicial proceedings."

Moore, 11 F.3d at 481 (quoting Olano, 507 U.S. at 736).

Under the evidence in this case, the prosecutor's argument that the
appellant, on trial for mail fraud, attempted to"con" the jury into
believing his version of the events at issue was not plain error. "It is
undisputed that closing argument is not merely a time for recitation
of uncontroverted facts" and argument may rely on inferences from
the evidence. Francisco, 35 F.3d at 120.
_________________________________________________________________
          Ladies and gentlemen, I caution you here at this point that during
          the course of closing argument both counsel perhaps from time
          to time used the phrase "I believe" or "I think," or this or that in
          referring to the evidence. That is not evidence. What counsel
          believes or thinks doesn't matter. It is what you believe and what
          you find to be the evidence. You are the judges of the facts. So
          I caution you of that.

J.A. at 334.

                     8
While it was improper for the prosecutor to make an exclamation
during the closing argument of defense counsel, it cannot be said the
remark constituted error. It would have been entirely appropriate for
the prosecutor to argue during summation that the defense version of
the events at issue "were not even close" to the evidence presented.
Thus, the remark, while perhaps a breach of courtroom etiquette, was
not error.

Moreover, the appellant has not identified the impairment of a sub-
stantial right which seriously affected the fairness and integrity of the
judicial process. Moore, supra. Thus, the remarks did not constitute
prosecutorial misconduct giving rise to reversible error.

III.

Appellant also claims the trial court erred in the admission of evi-
dence pursuant to Federal Rule of Evidence 404(b) in the absence of
a notice by the government that such evidence would be presented.3
Inherent in appellant's claim is a showing that the evidence at issue
is indeed Rule 404(b) evidence.

          It is well-settled that decisions regarding the admission and
          exclusion of evidence are peculiarly within the province of
          the district court, not to be reversed on appeal absent an
          abuse of discretion. [A]ny error in [the] admission or exclu-
          sion [of evidence] is subject to the harmless error test.

Francisco, 35 F.3d at 118 (citations omitted).
_________________________________________________________________
3 Rule 404(b) provides in pertinent part:

          Evidence of other crimes, wrongs, or acts is not admissible to
          prove the character of a person in order to show action in confor-
          mity therewith. It may, however, be admissible for other pur-
          poses, such as proof of motive, opportunity, intent, preparation,
          plan, knowledge, identity, or absence of mistake or accident,
          provided that upon request by the accused, the prosecution in a
          criminal case shall provide reasonable notice in advance of trial,
          . . . of the general nature of any such evidence it intends to intro-
          duce at trial.

                     9
Robert Shirey testified that he and appellant co-owned Provident
Capital Management. Irvin Kuhn, an alleged victim, testified that he
invested funds with Provident Capital Management in late 1992 and
early 1993. J.A. at 76-78, 83-87. Appellant objected to this evidence,
claiming that Kuhn actually gave the investments to Shirey who
invested them in Provident Capital Management, a company in which
appellant had no ownership. In addition, appellant argued the time
frame of these investments was outside the scope of the indictment.
Thus, appellant claims this testimony amounted to improper use of
Rule 404(b) evidence to show a propensity to commit mail fraud.

However, the indictment alleged the scheme continued from March
1989 through December 1993. It also alleged, and the evidence at trial
showed, that Loayza and Shirey co-owned Provident Capital Manage-
ment. The last date in the indictment when appellant was alleged to
have used the mail was March 1992. However, his participation in the
scheme with Shirey later that year was simply direct evidence of the
scheme to defraud, not Rule 404(b) evidence.

          It is well-established, however, that the mere fact that the
          evidence involved activities occurring [after] the charged
          time frame of the [offense] does not automatically transform
          that evidence into "other crimes" evidence. . . . "There is no
          requirement that all the Government's evidence fall within
          the time period of the indictment, providing it is relevant to
          the charges." Rather, evidence of uncharged conduct is not
          considered "other crimes" evidence if it "arose out of the
          same . . . series of transactions as the charged offense, . . .
          or if it is necessary to complete the story of the crime (on)
          trial."

United States v. Kennedy, 32 F.3d 876, 885 (4th Cir. 1994), cert.
denied, 115 S. Ct. 939 (1995) (citations omitted); United States v.
Dozie, 27 F.3d 95, 97 (4th Cir. 1994) (evidence concerning fraudulent
conduct occurring within the time frame of the conspiracy to defraud
admissible to prove involvement in the scheme, not to prove similar
acts).

IV.

At trial, the government used summary charts of bank records
which were introduced after the testimony of thirteen prosecution wit-

                    10
nesses occurring over a three day period. Among the 130 government
exhibits admitted during this time were the complete bank records of
all the companies used by Loayza and Shirey to instigate and perpetu-
ate the fraudulent scheme. Appellant's only argument against the
admission of the summary charts is that they "unduly showe[d] the
evidence. The jury should be making their judgment from the original
records." Appellant's Br. at 29.

The admission of summary charts "will not be overturned on
appeal unless [the] decision is shown to be arbitrary or irrational."
United States v. Johnson, 54 F.3d 1150, 1156 (4th Cir.), cert. denied,
116 S. Ct. 266 (1995). Summary charts are admissible if they aid the
jury in ascertaining the truth. Id., at 1159. The complexity and length
of the case as well as the numbers of witnesses and exhibits are con-
sidered in making that determination. Id. While the potential preju-
dice to a defendant must be considered, prejudice may be dispelled
by giving the defendant an opportunity to cross-examine the individ-
ual who prepared the chart. Id. In addition, a cautionary jury instruc-
tion may be requested and given. Id.

The court below applied these factors. It elicited from defense
counsel that he had pretrial access to the original documents from
which the summary charts were prepared. J.A. at 215. Counsel also
had the benefit of the charts themselves prior to trial and an opportu-
nity to cross-examine the testifying agent. Id. ; Johnson, supra.

In addition, the trial court gave the jury a cautionary instruction
regarding the use of the charts. Appellant claims this instruction was
erroneous because it "invited" the jury to"accept the checks as genu-
ine because they were on the chart." Appellant's Br. at 31. In fact, the
trial court laboriously reviewed this instruction with both counsel and
included language designed to answer appellant's concern. ("Charts
and summaries are only as good as the underlying evidence that sup-
ports them." J.A. at 351.) Moreover, counsel accepted and agreed to
this instruction. J.A. at 280. Viewing the instruction as a whole, it
clearly "informed the jury that the chart represented the Government's
analysis, and the jurors must weigh the evidence and determine the
witnesses' credibility on their own." Johnson , 54 F.3d at 1161. "With-
out evidence to the contrary, we follow the presumption that the jury
obeyed the limiting instructions." Id.

                    11
V.

Appellant claims there is insufficient evidence to sustain his con-
victions of Counts Four and Five because there was no evidence to
show he caused the mailings involved in those counts. According to
appellant, the evidence failed to show that Mrs. Vaillancourt, one of
the victims, told him she had investments in the Keystone Fund. Thus,
there was no showing that he knew the mail would be used.

          In reviewing the sufficiency of the evidence to support
          [appellant's] conviction, this court must view the circum-
          stantial and direct evidence in the light most favorable to the
          government and determine whether any rational trier of fact
          could have found the essential elements of the crime beyond
          a reasonable doubt.

United States v. Lowe, 65 F.3d 1137, 1142 (4th Cir. 1995), cert.
denied, 117 S. Ct. 49 (1996).

Mrs. Vaillancourt testified that in 1991 the appellant and Shirey
visited her at her home because they wanted her to invest in their
company, Salomon Roberts Company. J.A. at 49. As a result, she
withdrew money from the Keystone Fund and a check in the amount
of $20,000 was made payable to her from that fund and mailed to her.
Id., at 51-52. She then endorsed that check to appellant. Id. Appellant
claims her testimony failed to establish that he knew the Keystone
Fund would use the mail for the transactions.

However, the mail fraud statute does not require such knowledge.

          The question is whether the jury could have reasonably con-
          cluded that the mailings were for the purpose of executing
          the scheme. . . . The mails were "used prior to, and as one
          step toward, the receipt of the fruits of the fraud." . . .
          "Where one does an act with knowledge that the use of the
          mails will follow in the ordinary course of business, or
          where such use can reasonably be foreseen, even though not
          actually intended then he `causes' the mails to be used."

                    12
United States v. Snowden, 770 F.2d 393, 397 (1985) (citations omit-
ted); see also, Schmuck v. United States , 489 U.S. 705, 710-11 (1989)
("It is sufficient for the mailing to be `incident to an essential part of
the scheme,' or `a step in [the] plot'"); United States v. Maze, 414
U.S. 395, 400 (1974). A reasonable jury could have found that appel-
lant's solicitation of Mrs. Vaillancourt's investment was done with
knowledge that use of the mails would follow in the ordinary course.
Thus, the evidence was sufficient to support the convictions in Counts
Four and Five.

VI.

Finally, appellant claims the sentencing court committed error in
the computation of loss. The circuit reviews " de novo the district
court's legal interpretation of the term `loss' under the Sentencing
Guidelines, but `to the extent that the determination of the amount of
loss is a factual matter, we review only for clear error.'" United States
v. Castner, 50 F.3d 1267, 1274 (4th Cir. 1995). Only a preponderance
of the evidence need support these factual findings. United States v.
Engleman, 916 F.2d 182, 184 (4th Cir. 1990).

In calculating the total amount of loss attributable to appellant, the
sentencing court included the "interest" payments made to the early
investors. The evidence at trial showed that appellant and Shirey
made such periodic payments to dispel investors' complaints and to
keep the scheme active. However, the funds used for those payments
came from defrauding other investors. Appellant argues the amount
of loss attributed to him should have been reduced by these sums
which totalled approximately $96,000.

"Loss" is defined as "the value of the property taken, damaged, or
destroyed." U.S.S.G. § 2F1.1, comment (n.7) (1994); U.S.S.G.
§ 2B1.1, comment (n.2) (1994). "[I]f an intended loss that the defen-
dant was attempting to inflict can be determined, this figure will be
used if it is greater than the actual loss." U.S.S.G. § 2F1.1, supra. It
does not appear this Circuit has addressed the application of these
definitions to the issue at hand. Both parties note the Seventh Circuit
has addressed the point in a case involving an almost identical
scheme. United States v. Holiusa, 13 F.3d 1043 (7th Cir. 1994).
There, the defendant solicited over $11,000,000 for investment in

                     13
fraudulent companies. Because of complaints from the early inves-
tors, over $8,000,000 in payments were returned to them before the
scheme was uncovered. The sentencing court charged the defendant
with the full amount of $11,000,000; but, on appeal, the Circuit
reversed holding that only the "net" loss should be charged. See e.g.,
United States v. Menichino, 989 F.2d 438, 441-42 (11th Cir. 1992);
United States v. Smith, 951 F.2d 1164, 1168 (10th Cir. 1991); United
States v. Kopp, 951 F.2d 521, 534-35 (3d Cir. 1991); but see, United
States v. Orton, 73 F.3d 331, 334 (11th Cir. 1996) (invoking a case-
by-case approach).

The government, however, encourages us to adopt the approach of
the dissent in Holiusa which noted that at the time the defendant was
engaged in the fraudulent conduct, he clearly intended to receive the
full amount. Thus, the definition of "loss" provided in the Guidelines
resolves the issue. "This process of partial return was an essential part
of [the defendant's] `Ponzi' scheme, and any comparison to a legiti-
mate pledge or security is unfounded." Holiusa, 13 F.3d at 1048-49
(footnote omitted) (Manion, J., dissenting).

The Second Circuit has declined to adopt a "net" loss theory. In
dealing with a Ponzi scheme, that court held:

          Under section 2F1.1, loss does not always equal the actual
          financial harm suffered by the victim. Where the"intended"
          loss is greater than the "actual loss", intended loss will be
          used. U.S.S.G. § 2F1.1 Application Note 7."Under the
          Guidelines, `loss' includes the value of all property taken,
          even though all or part of it was returned." Applying these
          principles, [defendant's] sentence was properly enhanced.
          Although he returned some of [one victim's] money, and
          repaid [two other victims], he did so as part of a meretri-
          cious effort to maintain their confidences. He is therefore
          not entitled to credit for sums returned, or for sums spent for
          [the first victim's] benefit.

United States v. Mucciante, 21 F.3d 1228, 1238 (2d Cir. 1994), cert.
denied, 115 S. Ct. 361 (1994) (citations omitted).

Here, the trial court also found the appellant never intended his vic-
tims should ultimately keep the sums paid as "interest".

                     14
          [T]he defendant, without question, participated in a scheme
          where a total of $643,575.14 was taken. However, during
          the course of the preparation of the scheme, around $98,000
          was returned to the defrauded investors clearly for the pur-
          pose of continuing to defraud them, to perpetrate the
          scheme. So it was not returned out of any good faith change
          of mind or any concern about restoring something to the vic-
          tims, but merely to perpetrate the scheme. . . . It just does
          not appear to the court that this defendant ought to be able
          to profit from monies that just happened to be back in the
          victim's hand while he was perpetrating the scheme because
          he never had any intent for them to keep the money. It was
          all designed so that he could continue to steal money from
          his victims.

J.A. at 404-05. Thus, the sentencing court found the appellant
intended the total amount to be defrauded. This approach which holds
a defendant responsible for the amount of loss which was intended,
not the actual loss ultimately sustained, is appropriate in cases where
the payments are vital to the longevity of the scheme. Thus in such
factual scenarios, this court will decline to follow the approach of "net
loss" and will hold defendants responsible for the value of all property
taken, even though all or a part is returned. Where the "intended loss"
is greater than the "actual loss," the intended loss should be used.

Finally, in appellant's case, giving him credit for the $96,000 of
"interest" payments does not change the calculation of his offense
level. Even if the payments are deducted from the total amount
defrauded, the loss exceeds $500,000 and a 10-level increase in
offense level is warranted. U.S.S.G. § 2F1.1(b)(1)(K).

CONCLUSION

The court has reviewed appellant's other contentions and finds
them to be without merit. For the reasons set forth herein, the judg-
ment of the district court is hereby

AFFIRMED.

                    15
WIDENER, Circuit Judge, dissenting:

I respectfully dissent.

While it is true that by the time the courtroom proceedings before
the jury commenced Loayza had notice of the acts with which he was
charged and that following the trial, a reference to the whole record,
including the bill of particulars, would suffice to sustain a plea of for-
mer jeopardy in any future trial, it is not true that the Fifth Amend-
ment's requirement, that the indictment show that he was indicted by
a grand jury on account of the same acts for which he was tried, was
complied with. In that connection, it is plain that the requirement of
Rule 7(c)(1) of the Federal Rules of Criminal Procedure, which give
effect to the Fifth Amendment to the Constitution, that "[t]he indict-
ment . . . shall be a plain, concise and definite written statement of
the essential facts constituting the offense charged" has been violated,
as I will demonstrate.

I.

At trial Loayza moved for the dismissal of all the counts of the
indictment (ONE-SIX) for failing to name and describe the investors
designated; failing to describe the nature of the misrepresentation
made to each of said investors and the date and manner in which it
was made; and failing to describe sufficiently the item placed in or
taken from the mail. Additionally, he moved to dismiss Counts
FOUR, FIVE, and SIX for failure to allege venue within the jurisdic-
tion of the court. The district court denied Loayza's motion, but
ordered the government to file a bill of particulars. There is no ques-
tion on appeal with respect to venue or the nature of misrepresenta-
tion made to the investors.

The six-count indictment1 alleges that Loayza solicited 11 investors
and took from them a total of $628,000 pursuant to his fraudulent
scheme.
_________________________________________________________________

1 The sixth count, drafted in similar fashion to Counts FOUR and
FIVE, was dismissed before trial.

                     16
In each of Counts ONE, TWO and THREE,2 the indictment
includes the allegations with respect to the Ponzi scheme and then
alleges that Loayza, on a given date,

          did take and receive . . . from the mail, a check in the
          amount of $10,000, which was mailed by an investor

solicited on the basis of the fraudulent Ponzi scheme. The indictment
does not disclose the name of the investor, neither does it otherwise
identify the investor. The indictment does not disclose the date of the
check; it does not disclose the serial number of the check; it does not
disclose the drawer of the check; it does not disclose the bank on
which the check was drawn; it does not disclose the payee of the
check; it does not disclose the date of mailing of the check; or to
whom the check was mailed; where the check was mailed from; nei-
ther does it disclose where the check was taken from the mail other
than the Eastern District of Virginia.

Counts FOUR and FIVE fare no better.3 They reallege the Ponzi
_________________________________________________________________
2 Counts ONE, TWO and THREE are identical in their lack of detail,
only the date of taking from the mail differs. Typical of these three
counts, Count TWO states:

COUNT 2

          THE GRAND JURY CHARGES THAT:

           1. Paragraphs 1, 2, 3, 4, 5 and 6 of Count One of this indict-
          ment [describing the Ponzi scheme] are hereby realleged and
          incorporated herein by reference as though fully set forth herein.

           2. On or about April 8, 1991, in the Eastern District of Vir-
          ginia, for the purpose of executing the aforesaid scheme and arti-
          fice and attempting to do so, SALOMON S. LOAYZA did take
          and receive and cause to be taken and received from the mail, a
          check in the amount of $10,000.00, which was mailed by an
          investor solicited on the basis of the false and fraudulent state-
          ments and representations described above.

           (In violation of Title 18, United States Code, Section 1341 and
          Section 2.)
3 Counts FOUR and FIVE are identical except as to the dates of caus-
ing to be delivered and amounts of the checks. Count FOUR provides:

                    17
scheme and then provide that on a given date in the Eastern District
of Virginia, Loayza

          did knowingly cause to be delivered by mail according to
          the direction thereon, a check in the amount of . . . [$____,]
          which was mailed by Keystone Fund to an investor

solicited on the basis of the fraudulent representations of the Ponzi
scheme.

The indictment does not disclose the bank on which the check was
drawn, the date of the check, the number of the check, the drawer of
the check, the name of the investor, the date of mailing to the inves-
tor, nor does it disclose the date of mailing by the investor at Loayza's
direction.4 The indictment also does not otherwise identify the inves-
_________________________________________________________________

COUNT FOUR

          THE GRAND JURY FURTHER CHARGES THAT:

           1. Paragraphs 1, 2, 3, 4, 5 and 6 of Count One of this indict-
          ment [describing the Ponzi scheme] are hereby realleged and
          incorporated herein by reference as though fully set forth herein.

           2. On or about December 18, 1991, in the Eastern District of
          Virginia, for the purpose of executing the aforesaid scheme and
          artifice and attempting to do so, SALOMON S. LOAYZA did
          knowingly cause to be delivered by mail according to the direc-
          tion thereon, a check in the amount of $20,000.00, which was
          mailed by Keystone Fund to an investor solicited on the basis of
          the false and fraudulent statements and representations described
          above.

           (In violation of Title 18, United States Code, Section 1341 and
           Section 2.)
4 A fair reading of Counts FOUR and FIVE of the indictment indicates
that each count refers to two mailings, one from the Keystone Fund to
an investor, and another from the investor to Loayza. After the bill of
particulars was filed and proof was taken in the case, it has turned out
that the government has depended on only one mailing, from the Key-
stone Fund to the investor. Who can tell what was presented to the grand
jury?

                    18
tor or which Keystone Fund is involved. Even a rural newspaper lists
in its daily financial mutual fund section 12 entries under Keystone,
each obviously representing a different mutual fund belonging to a
family of funds. See e.g. Bristol Herald Courier/Virginia-Tennessean
7b, Dec. 11, 1996. Without more, one can only assume the indictment
refers to the Keystone Management, Inc. company, but of that one
cannot be certain.

Keystone Management, Inc. oversees at least 31 different mutual
funds that hold some $9.5 billion in assets. Keystone's largest fund
contains assets valued at $1.4 billion (Keystone Custodian Funds, Inc.
K-1 Series) and even the smallest fund is worth $5.1 million (Key-
stone America Texas Tax Free Fund). See Investment Company Insti-
tute, 1995-1996 Directory of Mutual Funds (1995) (listing individual
funds and asset value as of Sept. 10, 1994). As of September 30,
1996, another mutual fund reporter which tracks funds and their dif-
ferent classes listed no less than 67 entries for Keystone with assets
totaling approximately $9.6 billion. Johnson's Charts, Quarterly Per-
formance Report 46 (Sept. 30, 1996). In light of these massive hold-
ings the indictment's bald statement that "Keystone Fund" mailed a
check does nothing to increase the specificity of the indictment.
Which Keystone fund, if any, was the drawer of the check is nowhere
disclosed. In fact, the recital of the mailing of the check by one of 31
Keystone funds only serves to underscore the vagueness of these defi-
cient counts. As Loayza argued in his pretrial challenge to the indict-
ment, from the too meager recitals of the indictment it is impossible
to identify the checks and transactions involved. One may only guess
at how many dozens, hundreds, or thousands, of checks Keystone
causes to be delivered by mail on a daily basis in the managing of its
multi-billion dollar holdings, either in the specified amounts or any
other amount.

This said, Counts FOUR and FIVE also fail to state to whom the
checks were payable, upon what banks they were drawn, to whom
they were sent, or the places of either mailing or receipt.

II.

Rule 7(c)(1) of the Federal Rules of Criminal procedure requires
that every indictment contain "a plain, concise and definite written

                    19
statement of the essential facts constituting the offense charged." This
rule acts to guarantee several constitutional protections, and thus the
sufficiency of the indictment may be evaluated according to whether
it actually serves each of these functions. In Russell v. United States
the Court stated, first, that to ensure the defendant's Sixth Amend-
ment right to know what he is charged with, the indictment must con-
tain the elements of the offense intended to be charged and
"sufficiently apprise[ ] the defendant of what he must be prepared to
meet." Russell v. United States, 369 U.S. 749, 763-64 (1962). Second,
to guarantee a defendant's Fifth Amendment protection against dou-
ble jeopardy "the record [must] show[ ] with accuracy to what extent
he may plead a former acquittal or conviction." 369 U.S. at 764. Dou-
ble jeopardy protection is not at issue here because, as mentioned
above, when the bill of particulars was included and evidence was
taken, the record sufficiently identified the specific transactions for
which he was convicted to protect him against any subsequent prose-
cution. Russell, 369 U.S. at 764; see Wright, 1 Federal Practice and
Procedure § 125 n.6 (citing Russell ). And Loayza also knew from the
indictment he was being charged with mail fraud, but the indictment
is far too vague in describing the acts with which Loayza was charged
to pass either procedural or constitutional muster.

Central to the deficiency of the instant indictment, is the Fifth
Amendment's requirement that "[n]o person shall be held to answer
for a capital, or otherwise infamous crime, unless on a presentment
or indictment of Grand Jury. . . ." This provides another standard for
the sufficiency of an indictment. See 8 Moore, Federal Practice
¶ 7.02 (1996).

The Court in Russell explained that "The very purpose of the
requirement that a man be indicted by a grand jury is to limit his jeop-
ardy to offenses charged by a group of his fellow citizens acting inde-
pendently of either prosecuting attorney or judge." Russell, 369 U.S.
at 771 (quoting Stirone, 361 U.S. at 218 (1960)). This fundamental
protection "is designed as a means, not only of bringing to trial per-
sons accused of public offenses upon just grounds, but also as a
means of protecting the citizen against unfounded accusation, whether
it comes from the government, or be prompted by partisan passion or
private enmity. No person shall be required . . . to answer for any of
the higher crimes unless . . . [the grand jury] shall declare . . . that

                    20
there is good reason for his accusation and trial." Stirone, 361 U.S.
at 218 n.3 (quoting Ex parte Bain, 121 U.S. 1, 11 (1887)). The Court
has stressed that the indictment must be complete and definite in its
charges because

          [t]o 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 defen-
          dant of a basic protection which the guaranty of the inter-
          vention 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.

Russell, 369 U.S. at 770.

In Stirone v. United States, 361 U.S. 212 (1960), the defendant was
charged with one violation of federal law (interference with interstate
transport of sand) while at trial proof of another basis for the violation
was permitted (interference with interstate steel shipments). The
Court reversed the conviction, finding that the defendant's Fifth
Amendment rights were abrogated because it was impossible to tell
whether the defendant was convicted for the same violations for
which he was indicted. Stirone, 361 U.S. at 219. Similarly, even if the
record at trial makes clear which transactions the jury considered in
convicting Loayza, from the indictment we have no indication of
what evidence of which transactions were presented to the grand jury
in its decision to indict. The sparse indictment does not specify the
serial numbers of the checks involved, the investors involved, the
banks on which the checks were drawn, to whom the checks were
payable, the dates of the checks, the dates or place of mailing in all
of the counts, the date of receipt in Counts FOUR and FIVE, or which
one of the 30-odd Keystone funds was the drawer of the check.

Indeed, exhibiting to the grand jury any check in the amount of
$10,000, regardless of the date, number, bank, payee or drawer, and
whether paid or unpaid, would have satisfied Counts ONE and TWO
of the indictment. Almost the same difficulty is present for Counts
FOUR and FIVE. For each of those counts, any check ever written
in the amounts indicated in the indictment by any of the 30-odd Key-

                     21
stone funds, regardless of date, number, bank, or payee, upon being
presented to the grand jury would have satisfied the vague require-
ments of the indictment. And it is even doubtful, at best, that such
check should have been drawn by any of the Keystone funds because
the indictment provides in Counts FOUR and FIVE only that the
checks were "mailed by Keystone," not made or drawn by Keystone.

Thus we cannot say "with certainty that . . .[Loayza] was con-
victed solely on the charge made in the indictment the grand jury
returned." Stirone, 361 U.S. at 217.

III.

While the majority opinion does recognize that a bill of particulars
cannot cure a defective indictment, it is well to emphasize that the
Supreme Court has so held in Russell v. United States, 369 U.S. 749
(1962).

Along the same line, to any extent that the majority opinion, p.3,
relies on a lack of prejudice on account of the defective indictment,
that reliance is not well taken because we have decided, in United
States v. Daniels, 973 F.2d 272, 275 (4th Cir. 1992), that when there
has been, as here, ". . . a timely objection to the sufficiency of the
indictment, an absence of prejudice is irrelevant." As Daniels points
out, our en banc court decided the same question in United States v.
Hooker, 841 F.2d 1225 (4th Cir. 1988) (en banc), and United States
v. Pupo, 841 F.2d 1235 (4th Cir. 1988) (en banc).

IV.

The majority opinion depends on three cases to support its affir-
mance. They are: United States v. Mizyed, 927 F.2d 979, cert. denied,
500 U.S. 937 (1991); United States v. Hatch, 926 F.2d 387 (5th Cir.),
cert. denied, 500 U.S. 943 (1991); and United States v. Arlen, 947
F.2d 139 (5th Cir. 1991), cert. denied, 503 U.S. 939 (1992).

I suggest, however, that none of them support the conclusion of the
majority. Mizyed was a case in which the defendant was convicted of
mail fraud in connection with a scheme involving a false redemption

                    22
of food coupons from food manufacturers and others. The defendant
had admitted that he had submitted false information in question-
naires sent through the mail, the false information being that
J & J Foods, his employer, did accept coupons while, in fact,
J & J Foods did not accept coupons. The sole question raised as to
the indictment was that the names of the victims of the mail fraud
were not identified in the indictment. No other objection was made.
The court examined the indictment and found that it"properly
detailed the factual circumstances that caused Mizyed to run afoul of
the law." 927 F.2d at 981. The other terms of the indictment are not
made a part of the opinion, neither are they recited, so we do not
know what else it contained, but, since the only objection was the lack
of names, that opinion can stand for no more than if such is the sole
objection an indictment otherwise sufficiently identifying facts will
suffice and the indictment will stand. To use Count FIVE of the case
at hand as an example, one of the checks involved was No. 00231838,
dated March 27, 1992 and payable to Shirley L. Vaillancourt, in the
amount of $5,000, Keystone Series B-4, Account No. 46-
1004898042, drawn by Keystone Investor Resource Center [illegible]
Disbursement Agent /s/ Ralph L. Spaulding. Had that data, or enough
thereof to identify the transaction, been disclosed except the name of
Shirley L. Vaillancourt, the description in the indictment of course
should be held sufficient, and the mere omission of the name Shirley
L. Vaillancourt should not invalidate the indictment. But the govern-
ment here, having in its previous possession all of the data with
respect to the check, disclosed none of it except its amount.

In United States v. Hatch, a Louisiana sheriff, in legal possession
of the general fund for his office, authorized his chief civil deputy to
send a check to Hatch in the amount of $25,000, drawn on the general
fund. Such check was sent by mail. The $25,000 payment was for ser-
vices which Hatch did not actually provide, and the government's
contention was that Hatch and the sheriff planned to defraud the gen-
eral fund of the money. The indictment alleged a scheme to defraud
the Union Parrish Sheriff's Office of the money. Hatch contended that
since the general fund was not a separate legal entity from the sher-
iff's office, it was impossible to defraud the office. The court decided
that naming the sheriff's office as the party defrauded did not prevent
Hatch from ascertaining the charges against him. Indeed, the court
stated accurately the issue: "[s]ince the UPSO is not a legal entity

                    23
Hatch claimed that it is impossible to defraud the UPSO [Union Par-
rish sheriff's office]." 926 F.2d at 391. The only question decided in
that case was that it was possible to defraud the sheriff's office, there-
fore the Hatch opinion should have no effect on our decision at all.
The indictment in Hatch omitted or concealed nothing; only the legal
effect of the fact disclosed in the indictment was involved.

United States v. Arlen is much like United States v. Hatch. In the
Arlen case, the indictment charged that the defendant, with the intent
to defraud and mislead, had delivered for introduction into interstate
commerce certain prescription drugs without a prescription. The
indictment set forth the date of the delivery, the name of the drug, and
the recipient of the drug. The statute involved was 21 U.S.C.
§ 333(b), which required for the degree of the offense charged that the
violation be "with the intent to defraud or mislead." The court
instructed the jury that if it believed that violation was with the intent
to defraud or mislead the government in its regulation of drugs, that
was sufficient to satisfy the statute. The court simply held that since
the statute did not require any particular person or organization to be
defrauded, only that the intent be there, the indictment was sufficient
without specifying who must be defrauded.

Again, Arlen, as Hatch is similarly, is only a case of statutory con-
struction having little or nothing to do with identifying the transaction
involved. Indeed, a reference to the indictment in n.6 of the Arlen
opinion, 947 F.2d at 145, sets out exactly the transaction with which
Arlen was charged: the date of the act, the name of the drug, and the
recipient of the drug. But the government, here, even with all the
information at hand, chose not to identify with any reasonable cer-
tainty the acts with which Loayza was charged. Its omission of the
name is only a part of the deficiency, and a small part at that.

In this circuit, we have indeed arrived at a like conclusion as in
Hatch and Arlen in United States v. Darby, 37 F.3d 1059 (4th Cir.
1994), which involved the construction of a statute involving a threat-
ening communication in violation of 18 U.S.C. § 875(c). Neither
Hatch, nor Arlen, nor Darby involved the omission of sufficient fac-
tual information to identify the acts with which the defendant was
charged,5 the only decisions in those cases being the construction of
a statute or of a term used in the indictment.
_________________________________________________________________
5 The government does not depend on the same authority as does the
majority opinion. Rather, it relies solely on United States v. Caldwell,

                     24
V.

The decisions in this circuit and as well the decisions of other cir-
cuits are consistent with the teachings of Russell and Stirone, and
have, with considerable uniformity, dismissed indictments which did
not state the essential facts constituting the offense charged.

United States v. Hooker, 841 F.2d 1225 (4th Cir. 1988) (en banc),
was a RICO prosecution under 18 U.S.C. § 1962(c), which required
the enterprise involved be engaged in activities which affect interstate
commerce. The indictment omitted the allegation that the activities
charged, money laundering by Hooker, had an effect on interstate
commerce. The en banc court held that the indictment was deficient
not only for failing to state an offense but because it "did not satisfy
the Fifth Amendment requirement that all elements of the offense
have been considered and found by the grand jury." 841 F.2d at 1230.
We rejected arguments that such omission could be cured by a bill of
particulars or jury instructions or a reference to the statute.

United States v. Pupo, 841 F.2d 1235 (4th Cir. 1988) (en banc),
was a companion case to Hooker. The indictment was for possession
with intent to distribute and the distribution of cocaine. The statute
required that the distribution be knowingly or intentionally done.
Although the indictment referred to the statute, the fact that the distri-
bution was known or intentional was omitted from the indictment,
and we held the indictment must be dismissed on that account. We
held that "a mere citation to the applicable statute does not give a
defendant notice of the nature of the offense." 841 F.2d at 1239.
_________________________________________________________________

544 F.2d 691 (4th Cir. 1976). The indictment in Caldwell, however, pro-
vided in terms that the defendant, Caldwell by name,"on or about
August 14, 1970, knowingly and wilfully placed and caused to be placed
in the United States mails an envelope containing a check, said envelope
being addressed to `The Greenbrier, White Sulphur Springs, West Vir-
ginia, 24986'" for the purpose of executing the scheme to defraud. 544
F.2d at 700. Thus, the Caldwell indictment set out information from
which Caldwell could identify the transaction with which he was
charged, factual recitals not present here.

                    25
We followed Hooker and Pupo in United States v. Daniels, 973
F.2d 272 (4th Cir. 1992). Daniels was a case in which the defendant
was convicted of possessing and transferring a sawed-off shotgun.
The indictment described the shotgun and the transfer in detail but
omitted a reference to the code section permitting the transfer. The
district court permitted an amendment to the indictment merely to add
a reference to the code section. We held that this was in violation of
the Fifth Amendment's requirement that a defendant must be prose-
cuted for a capital or infamous offense only on indictment by a grand
jury. Since the indictment on which Daniels was tried did not include
the statutory reference, we held the indictment had to be dismissed.
Again, we acknowledged that the result was required although Dan-
iels had adequate notice of the charges and received a fair trial.

United States v. Hayes, 775 F.2d 1279 (4th Cir. 1985), was a case
of like effect which preceded Hooker, Pupo and Daniels. Hayes was
a case under the Travel Act in which 18 U.S.C. § 1952(a) required
that the travel be done with intent to carry on or facilitate the promo-
tion of an unlawful activity, the activity in the case being the bribery
of a public official in violation of state law. While the requirement of
the statute of travel for bribery was plainly set out in the indictment,
the indictment did not allege the fact that Hayes had thereafter
attempted to perform or performed the violation of state law which he
had been charged with traveling to do. We held that was a violation
of Fed. R. Crim. P. 7(c)(1) because it did not set forth an essential ele-
ment of the crime being charged.

Other circuits have come to the same conclusion. United States v.
Tomasetta, 429 F.2d 978 (1st Cir. 1970), was a prosecution for loan
sharking under 18 U.S.C. § 894 in which the defendant was charged
in the indictment that on a given date at Worcester he did "participate
in the use of extortionate means . . . namely an express and implicit
threat of use of violence to cause harm to the person or certain per-
sons to collect or attempt to collect extensions of credit." The court
held that indictment to be invalid under Rule 7(c) because, unless the
defendant could demonstrate he was not in the City of Worcester dur-
ing the entire day in question, he could not have provided an alibi
because the precise time and place were not specified in the indict-
ment, p. 980; because of the failure to specify the means by which the
alleged threats were communicated, p. 980; and because of the failure

                     26
to name the victim, p. 980. The court described the indictment as
accusing the defendant "of making threats by an unstated means to an
unnamed person on a particular day in a city of moderate size," p.
979. The court stressed that no one factor was determinative, but
when taken together, they made it unfair to require the defendant to
answer the charge. The indictment in Tomasetta is little different from
the indictment at hand. The victim in neither indictment is named.
While use of the mail is alleged in the indictment in this case, precise
or even reasonably certain dates of mailing are not disclosed. Neither
are any details with respect to the checks disclosed. All of this infor-
mation was in the hands of the government and I suggest it is at least
as unfair to require Loayza to answer the indictment in this case as
the First Circuit held it was unfair for Tomasetta to answer in that
case.

This quotation from the Tomasetta court is just as applicable here:

          On an indictment as vague as that at bar, it is possible, how-
          ever unlikely, for a prosecutor to obtain a conviction based
          wholly on evidence of an incident completely divorced from
          that upon which the grand jury based its indictment. The
          prosecution may not have the power to "roam at large" in
          this fashion.

Tomasetta, 429 F.2d at 980 (citing Russell v. United States, 369 U.S.
749, 768-771 (1962)).

In United States v. Cecil, 608 F.2d 1294 (9th Cir. 1979), an indict-
ment which gave the period of the conspiracy and named the conspir-
ators in a charge of conspiring to distribute marijuana gave no other
facts. The court required the dismissal of the indictment stating "our
decision is based upon the absence of any factual particularity within
the indictment." In Cecil, as here, the trial court had recognized the
short-coming of the indictment and required a bill of particulars,
which the court of appeals held could not save the invalid indictment.

United States v. Curtis, 506 F.2d 985 (10th Cir. 1974), was a mail
fraud case involving a Computer Matching Institute, in which the
defendant's scheme to defraud was based on a false representation
that he could match by computer people looking for dates or mar-

                    27
riages, when in fact he could not. The court required the dismissal of
the indictment because the unlawful scheme or plan was "masked, if
not concealed, by the conclusionary language of the indictment as
framed." p. 987. The court stated on p. 989 that"for all the indictment
shows, the grand jury may have had a concept of the scheme essen-
tially different from that relied upon by the government before the
trial jury." That same defect is present in the case at hand, among
other reasons, because of the vagueness of the indictment with respect
to the names of the investors and any even minor detail with respect
to the checks.

In United States v. Nance, 533 F.2d 699 (D.C. Cir. 1976), the court
required dismissal of an indictment which had charged the obtaining
of something of value by false pretenses with intent to defraud in vio-
lation of D.C. Code § 22-1301(a). While the indictment stated the
name of the victim, the date of the false representation and the
amounts involved, it did not state what was the false representation,
describing the same only as "the false representations" (italics in orig-
inal). The reason the court required the dismissal of the indictment
was that the United States Attorney would have a free hand to insert
the vital part of the indictment without reference to the Grand Jury,
p. 701. That same condition pertains here with respect to the unnamed
investors and inadequately described checks.

VI.

From the discussion set forth above, it follows that I would require
the indictment to be dismissed without prejudice to reindict Loayza.

I would not even find it necessary to decide the constitutional ques-
tion but would require the dismissal because the indictment is in vio-
lation of Fed. R. Crim. P. 7(c)(1). Ashwander v. Tennessee Valley
Authority, 297 U.S. 288, 341, 347 (1936) (Justice Brandeis, concur-
ring). Even if the key parts of the indictment are concise in that they
are terse, it is neither plain nor definite nor does it contain the essen-
tial facts constituting the offense charged as required by that rule.

If somehow or other a dependence on Rule 7(c) were not in order,
I would have no hesitation in holding the indictment invalid under the
grand jury requirement of the Fifth Amendment because the indict-

                     28
ment does not sufficiently identify the acts with which Loayza was
charged and it follows that there is no way to tell from the indictment
whether Loayza was convicted of the same acts for which he was
indicted by the grand jury.

                    29