Court Opinion

ID: 2964633
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:28:38.375181+00
Date Added: 2024-06-11T15:01:52.533815
License: Public Domain

USCA1 Opinion

	

                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT
                                 ____________________

        No. 96-1396
        No. 96-1397

                              UNITED STATES OF AMERICA,

                                      Appellee,

                                          v.

                                GEORGE R. JORDAN, JR.,

                                Defendant, Appellant.

                                 ____________________

                    APPEALS FROM THE UNITED STATES DISTRICT COURT

                              FOR THE DISTRICT OF MAINE

                     [Hon. D. Brock Hornby, U.S. District Judge]
                                            ___________________

                                 ____________________

                                        Before

                                 Selya, Circuit Judge,
                                        _____________

                       Aldrich and Cyr, Senior Circuit Judges.
                                        _____________________

                                 ____________________

            Jane Elizabeth Lee for appellant.
            __________________
            George R. Jordan, Jr. on supplemental brief pro se.
            _____________________                       ___ __
            F. Mark Terison, Assistant United States Attorney,  with whom John
            _______________                                               ____
        S.  Gleason  III,  Assistant  United   States  Attorney,  and  Jay  P.
        ________________                                               _______
        McCloskey, United States Attorney, were on brief for appellee.
        _________

                                 ____________________

                                    April 29, 1997
                                 ____________________

                      ALDRICH, Senior Circuit  Judge.   This case  arises
                               _____________________

            from   the  conviction  of   defendant  George   Jordan,  Jr.

            ("Jordan")  after two  trials, on  various charges  of fraud,

            money laundering, tax evasion,  and filing false tax returns.

            He  appeals his convictions and sentences.  We affirm in part

            and reverse in part.

                                    I.  Background
                                        __________

                      Jordan  was  employed  as  a risk  manager  by  the

            Pioneer  Plastics Corporation ("Pioneer")  from 1989 to April

            1993.   His primary responsibility was  the investigation and

            resolution  of claims  filed by  Pioneer employees  under its

            self-insured workers compensation program.  The investigation

            phase  included ongoing,  surreptitious "activity"  checks on

            disabled employees  to verify  that they  were, in  fact, not

            able to  work.  Toward this  end, in 1990, he  formed his own

            investigation    company,    PineTree   Insurance    Services

            ("PineTree"), and  began submitting invoices  to Pioneer  for

            investigations  and   activity  checks.     Jordan  submitted

            invoices on behalf of  PineTree, approved them, mailed checks

            on behalf of  Pioneer to PineTree's P.O. Box,  and ultimately

            endorsed  and  deposited  these   checks  into  his  personal

            checking  account.    The  relationship  between  Jordan  and

            PineTree violated Pioneer's  prohibition against  undisclosed

            outside business interests with the potential to influence an

            employee's judgment in the performance of his duties.

                                         -2-

                      In  early  1993,   a  manager  at  Pioneer   became

            concerned  about the  high level  of  PineTree expenses.   An

            internal   investigation  ensued.     When   another  manager

            attempted  to contact  PineTree  he could  find no  telephone

            number  or   street  address.     Jordan's  secretary,   when

            questioned, revealed that  Jordan hand-delivered the invoices

            which contained  only  a  P.O. box  address.    Upon  further

            investigation,  the box  was discovered  to be  registered to

            Jordan.  On the day following this discovery, Jordan resigned

            from  Pioneer.    After  his  departure,  a  Pioneer  officer

            searched    Jordan's    office   and    discovered   PineTree

            investigative reports printed in "one big long document."

                      Six  months  later,  Jordan was  indicted  on  five

            counts of  mail fraud,  18 U.S.C.     1341, 1342,  1346, four

            counts of wire fraud, 18 U.S.C.   1343, and a single count of

            money laundering,  18  U.S.C.   1956(a)(1)(B)(ii).   After  a

            three  day  jury trial  he was  acquitted  of the  wire fraud

            charges.  A mistrial was declared when the jury was unable to

            reach a verdict on the remaining counts.

                      In August 1995, while  awaiting retrial, Jordan was

            indicted  on four  counts of  income tax  evasion, 26  U.S.C.

              7201, and two counts  of filing a false income  tax return,

            26 U.S.C.   7206(1), stemming from the PineTree scheme.  Over

            his  objection, the court allowed the  government to join for

            trial the tax  indictments and the  remaining mail fraud  and

                                         -3-

            money laundering charges.  This time  Jordan was convicted on

            all  counts and  sentenced to  72 months  imprisonment, three

            years  supervised release,  special  assessments of  $600 and

            restitution to Pioneer of $158,603.10.

                              II.  Joinder and Prejudice
                                   _____________________

                      Jordan  renews here  his earlier  objection to  the

            court's  decision  to  allow   the  government  to  join  the

            outstanding charges from the first trial with the tax evasion

            counts.  We note at the outset that  instead of responding to

            the government's motion  for joinder under  Fed. R. Crim.  P.

            13, defendant used his response to argue prejudice under Fed.

            R.  Crim. P. 14, most often  utilized in a separate motion to

            sever.   Although  these may  involve different  standards of

            review, see United  States v.  Edgar, 82 F.3d  499, 503  (1st
                    ___ ______________     _____

            Cir.),  cert.  denied,  ___ U.S.  ___,  117  S.  Ct. 184,  65
                    _____________

            U.S.L.W. 3237 (U.S.  Oct. 7, 1996)  (No. 96-178), and  United
                                                                   ______

            States  v. Alosa, 14 F.3d 693, 695 (1st Cir. 1994), basically
            ______     _____

            our issue is abuse  of discretion with respect to  prejudice.

            Jordan, correctly,  does not dispute that, substantively, all

            offenses  could have been joined in a single indictment under

            Fed. R.  Crim. P. 8(a).   See United  States v. Clayton,  450
                                      ___ ______________    _______

            F.2d  16, 18  (1st Cir.  1971).   This said,  we turn  to the

            question whether the grant of joinder unduly prejudiced.

                      In order to prevail on this claim, Jordan must make

            "a  strong showing of prejudice."  United States v. Gray, 958
                                               _____________    ____

                                         -4-

            F.2d 9, 14 (1st Cir. 1992).  In United States v. Scivola, 766
                                            _____________    _______

            F.2d 37 (1st  Cir. 1985),  we observed that  there are  three

            types  of  prejudice  that  can  emerge  from  this  type  of

            situation:

                      (1) the defendant may  become embarrassed
                      or  confounded   in  presenting  separate
                      defenses;  (2)  proof  that defendant  is
                      guilty  of one  offense  may be  used  to
                      convict  him  of a  second  offense, even
                      though such proof  would be  inadmissible
                      in  a  separate  trial  for   the  second
                      offense; and  (3) a defendant may wish to
                      testify in  his own behalf on  one of the
                      offenses but not another, forcing  him to
                      choose   the   unwanted  alternative   of
                      testifying as to both or testifying as to
                      neither.

            Id.  at 41-42  (internal citations  omitted).   Jordan argues
            ___

            here  that joinder subjected him  to the latter  two types of

            prejudice.

                      Jordan  did  not  testify  in   either  trial,  and

            contends that  by allowing  the joinder  of the fraud,  money

            laundering and  tax  counts, he  was  deprived of  his  Fifth

            Amendment right to testify as to certain counts but not as to

            others.  In support, he relies on our opinion in Alosa, ante,
                                                             _____  ____

            where we remarked  that "a defendant may deserve  a severance

            of counts where [he]  makes a convincing showing that  he has

            both  important testimony  to give  concerning one  count and

            strong need to  refrain from  testifying on the  other."   14

            F.3d  at 695  (internal  citations omitted).    To make  this

            showing, a defendant must  timely offer enough information to

                                         -5-

            the court to allow it to weigh the needs  of judicial economy

            versus  "'the  defendant's  freedom  to  choose   whether  to

            testify' as to  a particular charge."   Id. (quoting Scivola,
                                                    ___          _______

            766 F.2d at 43).

                      In his objection to the government's motion to join

            indictments, Jordan  argued his need  to testify in  order to

            produce a "good faith" defense to the tax charges.  See Cheek
                                                                ___ _____

            v. United States, 498 U.S. 192, 203-04 (1991) (holding that a
               _____________

            defendant is  entitled to present his  subjective belief that

            he   did  not  violate  the  law,  even  if  such  belief  is

            objectively unreasonable).   To  bolster  this assertion,  he

            included an offer of proof  reciting the testimony that would

            constitute his defense.1

                                
            ____________________

            1.  Jordan's  offer   of   proof  contained   the   following
            assertions:

                           3) It is anticipated that in the tax
                      prosecution  the Defendant  would testify
                      that he  has in the past  handled his own
                      tax   filings.    He   has  read  various
                      instructions  provided  by  the  Internal
                      Revenue   Service   and  has   done  some
                      independent research  regarding tax laws.
                      George  Jordan  was of  the  opinion that
                      funds  paid  to   him  from  the  Pioneer
                      Plastics Workers' Compensation Trust were
                      not taxable pursuant to  Internal Revenue
                      Code Section 501(c)(9).

                           4)  Jordan  would testify  that upon
                      filing  for  a  Chapter   13  bankruptcy,
                      Jordan, upon advice of bankruptcy counsel
                      filed certain forms 1040-X.

                           5)  Jordan filed form  1040 for 1992
                      and  receive  (sic)  a  refund  check  of

                                         -6-

                      It  is difficult  to  dismiss these  grounds.   The

            unique circumstances  of this case distinguish  it from Alosa
                                                                    _____

            where the defendant  sought to  sever a gun  count from  drug

            trafficking and  conspiracy charges.    There, the  defendant

            wanted to testify  on the gun charge  simply to deny  that he

            had used the guns for drug trafficking  and that he owned the

            guns "for fun."   14 F.3d at  695.  We  upheld the denial  of

            Alosa's  severance  motion because  that testimony  was "some

            distance from  . . . a credible alibi that only the defendant

            can  supply showing him to have been elsewhere at the time of

            the  crime."  Id.  Here, we believe  that Jordan's subjective
                          ___

            testimony on  the tax charges  is analogous to  the "credible

            alibi"  we  found  lacking in  Alosa.    Only  he can  supply
                                           _____

            testimony  of his  subjective belief  as permitted  by Cheek,
                                                                   _____

            forthrightly subjecting himself to cross-examination.   We do

            not accept  the government's contention that  this belief was

            adequately before the jury in the form  of Jordan's statement

            on his amended tax form that the income was not taxable.

                      Nor do  we accept its contention  that Jordan could

            have proffered the testimony of his bankruptcy attorney, from

            whom Jordan received legal advice, as an effective substitute

                                
            ____________________

                      approximately $1000, and  in addition,  a
                      form  1040-X  regarding  the   Pine  Tree
                      income  and  exemptions  under  501(c)(9)
                      were filed.

                           6)  Forms 1040-X were filed for  the
                      years 1990, 1991, 1992, and 1993.

                                         -7-

            for  Jordan's own  testimony.   While it  is likely  that the

            attorney's   testimony  also  would   have  been  helpful  in

            establishing a Cheek defense,  Jordan contends in his proffer
                           _____

            that  he  previously handled  his  own tax  affairs  and also

            relied on his own independent legal research.  See supra note
                                                           ___ _____

            1.   On balance, therefore,  we conclude that  joinder likely

            had the  effect of  eviscerating Jordan's planned  defense to

            the tax charges.2

                      The surrender  of this privilege was  capped by the

            government's maneuvering that got  before the mail fraud jury

            the  allegedly fraudulent  tax returns.   The  government had

            made  substantial efforts  at the  original trial  seeking to

            introduce  the tax  returns as  proof of  intent.   The court

            twice  ruled   that  possible  prejudice  from   these  forms

            outweighed  their relevance under Fed. R. Evid. 403.  We have

            here the type of  prejudice outlined in Scivola, 766  F.2d at
                                                    _______

            41-42,  that of evidence  presented that would  not have been

            admissible  at   a  separate  trial.    By  the  joinder  the

            government has circumvented the court's ruling.  Jury-wise it

            could be thought better off with evidence that would point in

                                
            ____________________

            2.  We  emphasize,  however,  that  we  do  not  hold  that a
            defendant's  mere  assertion of  a  Cheek  defense invariably
                                                _____
            requires severance of an  indictment charging tax and non-tax
            offenses.  Rather,  the court must  undertake, on a  case-by-
            case  basis,  to  weigh   "'the  considerations  of  judicial
            economy' against  the defendant's 'freedom  to choose whether
            to testify.'"  Alosa, 14 F.3d at 695 (citations omitted).
                           _____

                                         -8-

            an  improper  direction  tied to  an  instruction  not to  so

            consider it, than not to have it at all.

                      We  have  an unusual  situation.    With the  Fifth

            Amendment  involved should  either, both,  or neither  of the

            mail fraud, etc. convictions, and tax evasion convictions, be

            set aside?   There are  recognized benefits (to  all, except,

            usually,   the   defendant)    in   having   joint    trials.

            Traditionally, defendants  may, to  an extent, have  to stand

            the  cost,  the  extent  to  be  determined  by  the  court's

            discretion.   In the second mail fraud trial, by choosing not

            to  take the  stand defendant  felt  only one  prejudice, the

            jury's knowledge of the tax cases.  At the original trial the

            court, in excluding evidence  of those charges, had described

            it as  of minimum value  to the  government.  While  we agree

            with Jordan that  it would have  been happier for him  not to

            have had that  evidence now get in  through the back  door by

            the joinder, we believe it was within the court's discretion,

            in the absence of a Fifth Amendment problem (such as infected

            the tax counts), to subject him  to the ordinary consequences

            of joinder of indictments.

                      This  is not to say that Jordan did not endure some

            loss.  There should be some  limit to the harm the government

            should impose to  meet the  court's Rule 403  finding in  the

            original action.  By bringing the tax indictment, and joining

            it with  the tax charges to  get the tax forms  before a mail

                                         -9-

            fraud  jury, it put Jordan in the proverbial bind -- testify,

            to your  loss in the mail  fraud case, or do  not testify, to

            your loss in the tax case.   Jordan had valid Fifth Amendment

            reasons for disliking both alternatives, and we do not  think

            the government should have it both  ways.  We allow one,  but

            it  should not  complain  that we  hold  it to  its  original

            decision of  non-joinder.   The convictions and  sentences on

            the tax counts are vacated.

                      III.  Requirements of a Scheme to Defraud
                            ___________________________________

                      Continuing with  the mail fraud  case, Jordan  next

            argues  that the government  failed to allege  and prove that

            Pioneer suffered actual harm or that he was unjustly enriched

            as a  result of  the fraud  as required under  the 42  U.S.C.

              1341.3      The   government   contends    that   defendant

            affirmatively  waived  this  ground  by   requesting  a  jury

            instruction  on the mail fraud count that did not include any

                                
            ____________________

            3.  18 U.S.C.   1341 reads in relevant part:

                      Whoever, having devised  or intending  to
                      devise any scheme or artifice to defraud,
                      or  for obtaining  money  or property  by
                      means of false  or fraudulent  pretenses,
                      representations,  or  promises . . .  for
                      the purpose  of executing such  scheme or
                      artifice  or attempting to  do so, places
                      in   any   post   office  or   authorized
                      depository for mail matter, any matter or
                      thing whatever to be sent to delivered by
                      the  Postal Service  . . .  or  takes  or
                      receives therefrom . . .  shall be  fined
                      under  this title or  imprisoned not more
                      than five years or both.

                                         -10-

            mention of actual harm or unjust enrichment.4  We agree.  See
                                                                      ___

            United States v. Mitchell,  85 F.3d 800, 808 (1st  Cir. 1996)
            _____________    ________

            (citing United States v. Marder, 48 F.3d 564, 571 (1st Cir.),
                    _____________    ______

            cert. denied,  ___U.S.___, 115 S. Ct. 1441,  63 U.S.L.W. 3721
            ____________

            (U.S. Apr. 3,  1995) (No. 94-8296)).  For the mail fraud case

            we add only the following.

                      Prior to the enactment of 18 U.S.C.   1346 in 1988,

            the Supreme Court had  held in McNally v. United  States, 483
                                           _______    ______________

            U.S.  350, 360 (1987), that schemes to defraud under the mail

            and  wire fraud  statutes  did not  encompass the  intangible

            right to  honest government  but were limited  to schemes  to

            defraud a victim of money or property.  Congress responded by

            enacting section  1346, expanding the definition  of fraud to

            include  "a scheme  or  artifice to  deprive  another of  the

            intangible right of honest services."

                      In light of the advent of   1346, in order to prove

            mail  fraud under   1341  the government must  show "that the

            defendant used  the mails  for the  purpose  of executing  or

            attempting to execute a scheme to  defraud," United States v.
                                                         _____________

                                
            ____________________

            4.  The jury instruction Jordan requested reads as follows:

                      Intent to Defraud - Defined:

                           To act with  an "intent to  defraud"
                      means  to  act  knowingly  and  with  the
                      intention or purpose to deceive or cheat.
                      An  intent  to  defraud  is  accompanied,
                      ordinarily  by  a  desire or  purpose  to
                      bring about some gain or benefit to one's
                      self.

                                         -11-

            Allard,  926 F.2d 1237, 1242 (1st Cir. 1991), and such scheme
            ______

            may include one to deprive another of the intangible right to

            honest services,  United States v.  Sawyer, 85 F.3d  713, 732
                              _____________     ______

            (1st  Cir. 1996).  What  is required is  that "an articulable

            harm  befall [the  victim]  as a  result  of the  defendant's

            activities,  or some  gainful  use must  be  intended by  the

            [defendant], whether  or not  this use  is profitable in  the

            economic sense."  United States v. Czubinski,  106 F.3d 1069,
                              _____________    _________

            1074-75 (1st  Cir. 1997).   Actual  monetary  harm or  unjust

            enrichment is therefore not  required.  A defendant  need not

            even successfully carry out the scheme to defraud in order to

            be found guilty.  Id.; Allard, 926 F.2d at 1242.
                              ___  ______

                      Even if we had  not found Jordan's argument waived,

            we agree  that the  government presented  sufficient evidence

            that  the jury could have found  that Jordan deprived Pioneer

            of his services and/or its money through a scheme to defraud.

                                 IV. Double Jeopardy
                                     _______________

                      Finally, Jordan contends  that the district court's

            decision  to sentence him on  the tax evasion  counts and the

            false  filing counts  violated  the  double jeopardy  clause,

            because the  latter counts charge lesser  included offenses.5

                                
            ____________________

            5.  Other circuits have  endorsed Jordan's contention.   See,
                                                                     ___
            e.g., United States v. Kaiser, 893 F.2d 1300, 1305 (11th Cir.
            ____  _____________    ______
            1990).   Since the panel  is not  in agreement as  to whether
            this contention raises an  issue of first impression  in this
            circuit,  or whether  it  is foreclosed  by  Gaunt v.  United
                                                         _____     ______
            States,  184 F.2d  284, 288  (1st Cir.  1950), we  leave that
            ______
            matter for another day.

                                         -12-

            See Rutledge v. United States, ___ U.S. ___, 116 S. Ct. 1241,
            ___ ________    _____________

            1247-50 (1996).   Since we are vacating the  tax convictions,

            we need express  no view  on this contention  at the  present

            time.

                                         -13-

                                    V.  Conclusion
                                        __________

                      Defendant  has also filed a pro se brief. We do not

            discuss  it here  as  we find  his  arguments to  be  without

            merit.6   His convictions and sentences on Counts I through X

            of the first indictment  are affirmed.  The   convictions and

            sentences on all counts of the second indictment  are vacated

            and this case remanded  for further proceedings in accordance

            with this opinion.

                                
            ____________________

            6.  Nor  do   we  address  Jordan's  claim   that  the  court
            improperly  excluded  his  correspondence with  the  Internal
            Revenue Service as hearsay.   At his next trial,  Jordan will
            be free to present the arguments he failed to make below.

                                         -14-