Court Opinion

ID: 2963843
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:16:04.836358+00
Date Added: 2024-06-11T11:42:46.649548
License: Public Domain

USCA1 Opinion

	

                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT
                                 ____________________

        No. 94-2277

                              UNITED STATES OF AMERICA,

                                      Appellee,

                                          v.

                                FRANKLIN DELANO LOPEZ,

                                Defendant, Appellant.

                                 ____________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                           FOR THE DISTRICT OF PUERTO RICO

                    [Hon. Jose Antonio Fuste, U.S. District Judge]
                                              ___________________

                                 ____________________

                                        Before

                           Selya and Boudin, Circuit Judges,
                                             ______________

                              and Lisi,* District Judge.
                                         ______________

                                 ____________________

            Nathan  Z. Dershowitz with  whom Amy  Adelson, Alan  M. Dershowitz
            _____________________            ____________  ___________________
        and Dershowitz & Eiger, P.C. were on briefs for defendant.
            __________________  ____
            William  C.   Brown,   Appellate   Section,   Criminal   Division,
            ___________________
        Department  of  Justice,  with   whom  Guillermo  Gil,  United  States
                                               ______________
        Attorney, was on brief for the United States.

                                 ____________________
                                  December 14, 1995
                                 ____________________

                            
        ____________________

        *Of the District of Rhode Island, sitting by designation.

                 BOUDIN,  Circuit  Judge.    Franklin  Delano  Lopez  was
                          ______________

            convicted  on seven  counts  charging him  with white  collar

            criminal offenses  under federal law.   In this  appeal, able

            counsel  on both sides have briefed a host of issues, several

            of which pose difficult and important questions.  We conclude

            by affirming on two counts and vacating  on five others.  The

            case is remanded  for resentencing on the two affirmed counts

            and for retrial on  the five vacated counts, if sought by the

            government.

                                    I.  BACKGROUND

                 Lopez was tried under a  superseding indictment returned

            on February 18, 1994.   Counts 1  through 5 charged him  with

            making false  representations to federally  insured banks, 18

            U.S.C.     1014,  to   influence  loans  to  Lopez   and  his

            businesses,   Four  Winds   Rental,  Inc.,   and  Multi-Media

            Television,  Inc.   Counts 6  and 7  charged Lopez  with wire

            fraud, 18 U.S.C.    1343, based on Lopez' withdrawal  of over

            $300,000  from  the  reserve  accounts   of  certain  limited

            partnerships managed by Lopez through Four Winds Rental, Inc.

            The jury trial began on June 6, 1994.

                 The government's evidence on the first five counts aimed

            to show that Lopez  made false statements or submitted  false

            documents to obtain  loans, or extensions  of loans, on  five

            occasions.   Three  involved substantial  sums borrowed  from

            First Federal  Savings Bank;  another, a loan  extension from

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            Chase Manhattan; and the last, a loan from Banco Central.  In

            each instance the alleged misinformation concerned  the value

            or  existence of collateral to secure the loan, and the facts

            differed in each instance.   No description of the  events is

            necessary to our disposition of these false statement counts.

                 The two wire fraud charges, reflected in counts 6 and 7,

            related to  a different matter, namely,  Lopez' withdrawal of

            over  $300,000  from  reserve  accounts  of  certain  limited

            partnerships  that  owned  multi-unit,  federally  subsidized

            housing  projects in Puerto Rico.  Four Winds managed and had

            a  very small  ownership  interest in  each partnership,  the

            balance being  held by other limited  partners represented by

            Capital Management Strategies,  Inc., a Rockville,  Maryland,

            real estate syndicator.  The  properties were financed by the

            Farmers' Home Administration, which restricted the use of the

            funds in the accounts to specific purposes, primarily repairs

            and improvements.

                 The  gist of  the government's  charge was that  in 1988

            Lopez had withdrawn the sums in  question from these accounts

            without  the  required  permission   and  had  created  false

            invoices  on  the letterhead  of  a  construction company  to

            account for the withdrawals.  The government offered evidence

            that Lopez had  created the invoices in  amounts matching the

            withdrawals,  that no  such construction  work had  ever been

            performed, and that  the invoices were  nevertheless supplied

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                                         -3-

            to auditors to  explain the  withdrawals.   The wire  element

            related  to two  faxes, allegedly  sent  by Lopez  to Capital

            Management Strategies in late 1990 and early 1991, responding

            to its  inquiry as to the purpose  of the withdrawals and the

            existence  of  the  required   approvals  by  Farmers'   Home

            Administration.

                 About two weeks into  the trial, on the evening  of June

            22,  1994, Lopez was rushed to a hospital emergency room with

            serious  symptoms.   Within  a  day,  the  trial  judge  took

            testimony  from the  emergency  room internist  and,  shortly

            thereafter, heard from a court-appointed cardiologist.  Later

            tests revealed that Lopez was  suffering a small brain lesion

            or  tumor which was serious but, if properly treated, was not

            likely to be life  threatening.  The doctors agreed  that the

            tumor had to  be removed but  not on an emergency  basis, and

            surgery was scheduled for August.

                 These events caused a  recess of the trial from  June 22

            until July 6, at  which time a  hearing was held to  consider

            motions by Lopez' counsel for a mistrial based on the lack of

            competency or  for a  continuance for purposes  of treatment.

            The  thrust   of  Lopez'  objections  was   that  medications

            prescribed for  him caused side effects  that interfered with

            his ability to proceed.  Relying partly on the  advice of the

            court-designated  neurologist, Dr.  Charles Payne,  the court

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            denied the motions,  and Dr. Payne  was ultimately placed  in

            charge of prescribing medications.

                 The  same  objections  were thereafter  renewed  several

            times  but denied.   There were  further examinations  by Dr.

            Payne  and  testimony by  him  that  Lopez was  alert,  could

            understand the  charges and assist  his lawyers, and  was not

            being compromised  by the prescribed medications.   From July

            11  through July 13, Lopez testified in  his own defense.  On

            July  18,  the  jury convicted  Lopez  on  all  seven counts.

            Thereafter, the  district court rejected  a post-trial motion

            directed to competency.   It had earlier refused to  order an

            investigation  into alleged  prosecutorial misconduct  in the

            initiating of the prosection.

                 Following  the   trial,  Lopez  remained  on   bail  and

            underwent  surgery for the removal of the tumor.  On November

            17, 1994, Lopez  was sentenced to a prison term of 63 months,

            based primarily  on loss calculations that  are challenged by

            Lopez on  appeal.  Motions  for continuation of  bail pending

            appeal were denied by  the district court and by  this court.

            See  18 U.S.C.    3143(b)(1)(B).  Lopez  is currently serving
            ___

            his sentence.

                                 II.  MEDICAL ISSUES

                 On this appeal, Lopez' first and  most dramatic claim is

            that he was forced to continue his trial while afflicted with

            a life-threatening  brain tumor  and while requiring  a whole

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            battery of medications to cope with  various symptoms.  These

            medications,  Lopez suggests, interfered  with his ability to

            remember,  concentrate  and  present  himself  credibly,  and

            undermined his trial testimony.  He further asserts that  the

            trial  judge  effectively  compelled   him  to  accept   such

            medications and, without basis,  charged him with malingering

            or  attempting to  over-medicate  in order  to frustrate  the

            trial.

                 Although these  are  the core  factual allegations,  the

            legal claim presented has  an unusual twist.  Lopez  does not
            _____

            claim  that he  was "incompetent"  to  stand trial  under the

            ordinary  rubric, see Godinez v. Moran, 113 S. Ct. 2680, 2685
                              ___ _______    _____

            (1993), or that his health  would be so damaged by  the trial

            that  it would  be inhumane  to continue.   Instead,  relying

            primarily on  Riggins v. Nevada,  504 U.S. 127  (1992), Lopez
                          _______    ______

            says  that  the trial  court  "instead  of  choosing  a  less

            intrusive  alternative--a halt  in  the proceedings  so  that

            Lopez  could  have  surgery--violated  Lopez'  constitutional

            rights by imposing a `regime' of  medication that so impaired

            Lopez'  abilities that he was unable to testify coherently on

            his own behalf."

                 Riggins, which  the government says was  not relied upon
                 _______

            in the district court, contains language  colorably pertinent

            to this  case, but involved a  fundamentally different issue.

            Riggins was tried  for murder and,  as eight Justices  viewed

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                                         -6-

            the  facts,  the trial  court  required  Riggins to  continue

            taking a  powerful  antipsychotic drug  generically known  as

            thioridazine.  Riggins' claim to the Supreme Court, after his

            conviction and death sentence, was that he had been compelled

            unconstitutionally to take this  medication and that the drug

            concealed his  true mental state  from the jury  and impaired

            his ability to present his insanity defense.

                 The Supreme  Court held  that Riggins had  a substantial

            interest  under  the Due  Process  Clause  of the  Fourteenth

            Amendment   in   "avoiding   involuntary  administration   of

            antipsychotic drugs  . . . ." Id. at 134.  Although the Court
                                          ___

            said  that  forced  medication could  sometimes  be justified

            (e.g., to  protect the  defendant's health or  protect others
             ____

            from danger), the  trial judge  in Riggins had  made no  such
                                               _______

            findings.     For   this  reason,   and  given   the  "strong

            possibility"  or  "substantial  probability"   that  Riggins'

            defense had been impaired, id. at 137-38,  the Court declined
                                       ___

            to require a showing  of actual prejudice and overturned  the

            conviction.

                 The  concern in  Riggins with  forced medication  is not
                                  _______

            present in this  case.   Although Lopez points  to the  trial

            court's  threat to  revoke bail  and imprison  him so  that a

            doctor  could  supervise  his  medication,  the incident  had

            nothing  to do with forcing  on Lopez any  medication that he

            did  not want.   The  trial court  thought that  some of  the

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            symptoms of which  Lopez was  complaining (e.g.,  grogginess)
                                                       ____

            had been induced  by over-medication; at the outset  a number

            of doctors  were prescribing different  drugs, and  testimony

            showed  that  over-medication  might  be the  cause  of  such

            problems.  The record shows  that Lopez himself wanted proper

            medicationandwascontent tohaveDr.Payneprescribe andsupervise.

                 This does  not mean  that Lopez  is without a  potential

            claim.  That claim, made below and  adequately presented here

            in  the  course  of   the  Riggins  argument,  is  that   the
                                       _______

            medications,  necessary even  if voluntarily  taken, impaired

            Lopez'  ability to present his defense.  Even assuming Lopez'

            "competency,"  that  being a  fairly  easy  test to  satisfy,

            Godinez,  113  S.  Ct.  at  2685,  the  threat  of impairment
            _______

            permitted a request  for a continuance.   Here, Lopez argues,

            the district  court had a reasonable  alternative that should

            have been adopted,  namely, to postpone  the trial until  the

            operation had occurred and removed or diminished the need for

            drugs.

                 A  defendant,  especially  one proposing  to  testify at

            trial about complex financial transactions, is entitled to be

            concerned about his fitness.  For good medical reasons, Lopez

            was  taking  a  number  of  medications,  some    capable  of

            producing  side effects  that could  impair clarity  of mind.

            The drugs  were designed  to prevent seizures,  control blood

            pressure,  relieve pain,  induce sleep, reduce  agitation and

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                                         -8-

            prevent  depression;  and  they  included  Darvocet,  ProSom,

            Dilantin,  Vasotec,  Valium, Esgic  Plus  and  Sinequan.   At

            various times  Lopez reported  that he had  severe headaches,

            was unable to  sleep, and was  suffering from memory  lapses.

            His lawyers protested that  Lopez had problems  communicating

            with them.

                 Lopez'  health obviously  warranted  an  inquiry by  the

            trial  judge.  Far from  ignoring the issue,  the trial court

            deferred trial  for  a substantial  period, summoned  medical

            experts one after  another, took an  active role in  securing

            diagnoses for Lopez, had him re-examined repeatedly, and took

            testimony  and   made  findings  in  abundance,  including  a

            detailed  post-trial order  summarizing the  court's findings

            and reasons for  proceeding with trial.  There is  no need to

            describe the procedural steps in detail because Lopez himself

            does not seriously suggest  that the investigation was flawed

            or inadequate.

                 The substantive issue is  more difficult.  The testimony

            of  the various doctors confirms  that a number  of the drugs

            Lopez took have the  potential to cause side effects  such as

            grogginess that  could interfere with defendant's  ability to

            present  his case.    Yet the  main  thrust of  the  doctors'

            testimony,  fairly read,  was that  the doctors  thought that

            proper prescription  and careful monitoring  would meet these

            threats.   Such a monitoring  regime was in  place when Lopez

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                                         -9-

            testified.  The doctors  who gave testimony raising  the most

            doubts did  so  at the  outset  (while several  doctors  were

            prescribing   drugs  for   Lopez,  apparently   without  much

            coordination).

                 Lopez' main trial counsel did  protest at times that his

            client was not able to cooperate fully; but  these complaints

            of  Lopez'   conduct  during  trial  are   balanced,  if  not

            outweighed,  by  the  district  court's findings  that  Lopez

            appeared  to  be  well  oriented  and  was  cooperating  with

            counsel.  In all events, a reputable expert unaffiliated with

            the  prosecution or  defense--Dr. Payne--gave  firm testimony

            that Lopez  was fit to  testify.  His testimony  was based on

            examinations  of Lopez close in time and on the monitoring of

            his medicine.  Even  on a cold record, Dr.  Payne's testimony

            carries conviction.

                 As for  Lopez' own  testimony, which he  claims suffered

            because   of  his   medical   condition,  the   evidence   is

            inconclusive.   It is not  the most organized  and responsive

            testimony  we  have  ever read;  but  Lopez  was confined  by

            evidentiary   rulings   that   limited   him   in  presenting

            information that he  and his counsel thought  helpful but the

            trial  judge thought  irrelevant (e.g.,  such as  whether the
                                              ____

            banks  had sustained actual losses).  Much of the disarray in

            his testimony appears to be caused by such  struggles between

            Lopez and the court.

                                         -10-
                                         -10-

                 We  have no doubt that Lopez in addition was under great

            stress.   This  is true  for  many criminal  defendants,  but

            surely  it  was augmented  here  by  the  tumor.   In  a  few

            instances  Lopez' initial medication caused some adverse side

            effects while it  was being adjusted.  On the other hand, the

            trial had already progressed  for several weeks before Lopez'

            emergency room visit, and much of the medication was directed

            to  medical  symptoms--difficulty  in  sleeping,  high  blood

            pressure,  anxiety--that could easily  have continued even if

            the  trial had  been  delayed and  the  tumor removed.    The

            medical advice itself  largely supported the  course followed

            by the district court.

                 This is  a classic instance in which  the district court

            had to exercise  its informed  judgment.  In  such cases,  so

            long as  sound procedures are followed,  the court's ultimate

            judgment is  reviewed under an abuse  of discretion standard.

            United  States v. Zannino, 895  F.2d 1, 13  (1st Cir.), cert.
            ______________    _______                               _____

            denied,  494 U.S. 1082 (1990).   Whether to  proceed with the
            ______

            trial  or await  the  operation may  well  have been  a  hard

            question.  But on appeal,  we think it easy to conclude  that

            the trial judge acted within his discretion in deciding, with

            expert medical support  and after  careful investigation,  to

            proceed.

                 We  reject the  suggestion that  the district  court was

            hostile  to the defendant.   Most judges are  suspicious of a

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            mid-trial  request for  a  continuance or  mistrial, and  the

            record confirms  that Lopez'  initial symptoms may  have been

            caused in part by over-medication, even if inadvertent or the

            product  of too many doctors.  Paragons may exist among trial

            judges who can maintain perfect discipline with perfect tact;

            but  for most, a certain  sternness in manner  and an abiding

            skepticism about delay are a necessary part of the arsenal.

                                   III.  THE MERITS

                 Counts 1-5.   The  first five  counts of  the indictment
                 __________

            charged  Lopez  under  a  statute that  punishes  anyone  who

            "knowingly makes any false statement"  to influence federally

            insured financial  institutions.   18  U.S.C.    1014.    The

            indictment  charged, and  the  district court  assumed,  that

            materiality  was  an element  of the  offense.   But,  as was

            commonly done in most  circuits at the time, the  trial judge

            resolved the materiality issue himself  and did not submit it

            to the jury.  The defense objected to this procedure.

                 Following  Lopez' conviction, the  Supreme Court decided

            United States v. Gaudin, 115 S.  Ct. 2310 (1995).  There, the
            _____________    ______

            Court  held  that where  materiality  is  an  element  of  an

            offense,  it must under  the Sixth Amendment  be submitted to

            the jury.  The  government's main response to Gaudin  is that
                                                          ______

            materiality   is  not   an   element   under  section   1014.

            Alternatively,  the  government  says   that  any  error  was

                                         -12-
                                         -12-

            harmless   because   the   evidence   overwhelmingly   proved

            materiality and no rational jury could have found otherwise.

                 This court  has already held that  section 1014 requires

            "that the  false statement concern[] a  material fact. United
                                                                   ______

            States v. Concemi, 957 F.2d 942,  951 (1st Cir. 1992).   This
            ______    _______

            view is consistent with that of several other circuits.  E.g.
                                                                     ____

            United States v.  Wells, 63  F.3d 745, 750  (8th Cir.  1995);
            _____________     _____

            United  States v. Staniforth,  971 F.2d 1355,  1358 (7th Cir.
            ______________    __________

            1992).   Although  the statute  does not contain  an explicit

            materiality requirement and the  Second Circuit has held that

            no such  requirement  is to  be  inferred, United  States  v.
                                                       ______________

            Cleary, 565 F.2d  43, 46  (2d Cir. 1977),  cert. denied,  435
            ______                                     _____ ______

            U.S. 915 (1978), we are  not disposed to regard the  issue as

            an open one in this circuit. 

                 The government's alternative position is  that any error

            that occurred in  failing to submit the issue to the jury was

            harmless.   Most errors, including  constitutional ones,  are

            subject  to harmless  error analysis, Sullivan  v. Louisiana,
                                                  ________     _________

            113  S. Ct.  2078, 2081  (1993), simply  because it  makes no

            sense  to retry a  case if the  result will  assuredly be the

            same.   But for various reasons, some errors are deemed fatal

            without proof of prejudice.  No one, for example, would think

            it was harmless error--no  matter how conclusive the evidence

            of guilt--if  the defendant were tried by a jury of five year

            olds or in a courtroom dominated by a lynch-mob.

                                         -13-
                                         -13-

                 The Supreme Court has  gone somewhat beyond such extreme

            cases, holding  (for  example) that  a  defective  reasonable

            doubt  instruction objected  to at  trial cannot  be harmless

            error. Id. at  2082-83.   The precedents make  clear that  it
                   ___

            could not be harmless error for  the trial judge to direct  a

            verdict on the case as a whole, United States v. Martin Linen
                                            _____________    ____________

            Supply, Co., 430 U.S.  564, 572-73 (1977); and we  think that
            ___________

            the Court would apply the same analysis to a directed verdict

            on a single element of the  offense.  Rose v. Clark, 478 U.S.
                                                  ____    _____

            570, 581 n.  8 (1986); Hoover  v. Garfield Heights  Municipal
                                   ______     ___________________________

            Court,  802 F.2d 168,  177-78 (6th Cir.  1986), cert. denied,
            _____                                           _____ ______

            480 U.S. 949 (1987).

                 We  stress that it is  of crucial importance  to us that

            Lopez made a timely objection at trial to the judge's refusal

            to submit this  issue to the  jury.  This  court has  already

            indicated that where there is no timely objection, the "plain

            error"  doctrine (see United States v. Olano, 13 S. Ct. 1770,
                              ___ _____________    _____

            1777-78 (1993)),  governs  in  deciding  whether  failure  to

            submit an element  to the  jury calls for  reversal.   United
                                                                   ______

            States v. Romero, 32 F.3d 641, 652 (1st Cir. 1994).  See also
            ______    ______                                     ________

            Gaudin,  115 S.  Ct. at  2322 (Rehnquist,  C.J., concurring).
            ______

            The mix  of considerations is very different  where the trial

            judge  has not  been alerted  by an  objection.   Indeed, the

            element  may  be one  that the  defendant  has chosen  not to

            contest.

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                                         -14-

                 Even where a timely  objection has been made, as  in our

            own case,  one might ask why the failure to submit an element

            to the  jury should  automatically be  fatal, given  that the

            harmless  error   doctrine  can   be   invoked  (not   always

            successfully)   in  kindred   cases,   say,   to   remedy   a

            misinstruction  as to an element, Pope  v. Illinois, 481 U.S.
                                              ____     ________

            497, 502 (1987), or  a faulty presumption, Rose, 478  U.S. at
                                                       ____

            579-80.   But  labels like  "fundamental,"  id. at  577,  and
                                                        ___

            "structural,"  Sullivan,  113  S. Ct.  at  2083,  tend  to be
                           ________

            surrogates for  matters of degree and  for multiple concerns.

            In all events, our best guess is that the Supreme Court would

            regard an  omitted element reversible  error per se  if there
                                                         ______

            were  a timely  objection--although not  automatically "plain

            error" if  no objection occurred--and this  conclusion almost

            disposes of the government's fallback position.

                 We say "almost" because  the government could argue that

            the jury, although instructed not to, actually did decide the

            materiality issue  when it  found that  Lopez  did intend  to

            influence the bank loans by false statements.  In theory, the

            question of purpose (the defendant's specific intent) differs

            from the question of materiality (whether an objective lender

            would  be likely to be influenced by the statement).  Purpose

            could exist without materiality, and vice versa.  But in most

            cases no  independent proof exists of  a defendant's specific

                                         -15-
                                         -15-

            intent; rather, the  jury infers such  purpose from the  fact

            that the statement would so influence an ordinary lender.

                 The government hints  at this argument in  its brief but

            makes no effort to show that in this case the  jury must have

            so reasoned, a  conclusion that might require  a showing both

            that the  evidence of  materiality was overwhelming  and that

            other evidence of purpose was thin or absent.  If an adequate

            showing were made, we  would have to decide whether  it would

            satisfy the Supreme  Court.   There is some  reason to  think

            that it might, see Sullivan, 113 S. Ct. at 2082,  but it will
                           ___ ________

            be time enough to consider this  question in a case where the

            factual predicate is adequately developed.

                 Counts  6 and  7.   Lopez'  attacks  on the  wire  fraud
                 ________________

            convictions remain to  be considered.  In  his opening brief,

            Lopez challenged the wire fraud convictions on three grounds:

            that the evidence  did not show a scheme to defraud; that the

            use of the  wires was not  in furtherance  of such a  scheme;

            that  in  any  event  there  was  no  proof  that  Lopez  was

            responsible for any such  use of the wires.   We address  the

            points in the same order.

                 First, Lopez says  that the evidence does  not show that

            there was a scheme to defraud.  He argues that the government

            did not show  that the withdrawals from  the reserve accounts

            were  diverted to his personal use or that they were directly

            linked   to  the  false  invoices;   and  he  says  that  the

                                         -16-
                                         -16-

            partnerships owed  him money in excess  of anything withdrawn

            and  that as a general  partner he had  authority to withdraw

            funds.  These arguments peel  apart into distinct factual and

            legal issues.

                 Starting with the facts,  the government apparently  did

            not prove at  trial where the withdrawn  money went.  But  it

            did show that Lopez'  withdrawals matched false construction-

            company invoices  in  the same  amounts  and that  Lopez  had

            prepared  the invoices,  together  with false  checks on  the

            accounts  purporting  to  pay  the invoices.    Absent  other

            evidence, the  jury  was entitled  to  infer that  Lopez  had

            employed the false documents  to disguise the withdrawals and

            divert them to  his own use.  This is enough  for a scheme to

            defraud without proof  as to where he  concealed the proceeds

            or how  he spent the money. Cf.  United States v. Yefsky, 994
                                        ___  _____________    ______

            F.2d 885, 892 (1st Cir. 1993).

                 As for  the legal defenses, Lopez  as manager apparently

            could  withdraw  funds  for  proper purposes,  but  the  jury

            reasonably concluded that the purpose here  was illicit.  Nor

            is it  pertinent that  the partnerships may  have owed  Lopez

            money.   The  accounts in  question here  were restricted  to

            repairs  and  other narrow  uses;  and,  more important,  the

            records Lopez created gave the  impression that the money had

            been used for repairs.  The scheme, if successful, would have

                                         -17-
                                         -17-

            enriched   Lopez  without  reducing  the  ventures'  apparent
                              _______

            obligations to Lopez.

                 Second, Lopez says  that the evidence did  not show that

            the wires--the basis  for federal jurisdiction--were  used in

            furtherance  of  the  scheme.    The  money,  he  notes,  was

            withdrawn  in 1988;  and the  faxes, responding  to inquiries

            about the withdrawals,  occurred in late 1990 and early 1991.

            Lopez concludes that if any fraud occurred,  it was completed

            long before the faxes were ever  sent.  No other use of wires

            was alleged.

                 The case law requires that the  use of the wires must be

            "incident to  an essential  part of  the scheme,"  Pereira v.
                                                               _______

            United  States 347  U.S.  1, 8  (1954),  but the  cases  have
            ______________

            stretched  that  concept  to  include use  of  the  wires  in

            attempts  "`to  lull  the  victims  into  a  sense  of  false

            security,   postpone  their   ultimate   complaint   to   the

            authorities,  and  therefore  make  the  apprehension  of the

            defendants less  likely.'"  United  States v. Lane,  474 U.S.
                                        ______________    ____

            438, 451-52 (1986) (quoting an earlier decision).  It is hard

            to  see why the  jury could not  find that the  faxes in this

            case do not fit that description.

                 Lopez says that the faxes do not explicitly refer to the

            withdrawals and that they  refer to events after 1988  and so

            could not justify the  withdrawals.  But the faxes  were sent

            in response to  inquiries that did  refer to the  withdrawals
                                           ___

                                         -18-
                                         -18-

            and it  is not a complete  answer to say that  the faxes were

            not  directly  responsive  to  the inquiries.    Rather,  the

            responses could be read as attempts to talk around the issue,

            to  confuse  matters,  and   ultimately  to  delay  or  avoid

            detection.   This  permissible inference  satisfies  the Lane
                                                                     ____

            criterion.

                 Third, Lopez  says that  the government failed  to prove

            that he  sent the  December 1990  fax (count  6) or that  the

            January 1991 document (count 7) was transmitted by wire.  The

            former was sent from  the accounting firm used by  Four Winds

            Rental and an  accountant testified that he faxed  the letter

            as a  "courtesy for .  . . Mr.  Lopez" because "either  he or

            someone from his office was in--in our office that day."  The

            letter  is  not  signed  but the  accompanying  cover  sheet,

            prepared by the accounting firm, says that the letter is from

            Lopez.

                 Quite  apart from the  cover sheet,  the content  of the

            letter reveals that it is a response to the earlier letter of

            inquiry to Lopez.  The wording of the letter is substantially

            the  same as the subsequent letter of January 14, 1991, which

            was signed by Lopez.  It  was a fair inference that Lopez had

            also  composed the  earlier  letter and  either directed  the

            accountant to  fax it or sent someone in his employ to do so.

            All that  is required is that  Lopez caused the  letter to be

            faxed and the jury could find that he did.

                                         -19-
                                         -19-

                 As  for  the January  1991 letter,  Lopez does  not deny

            authorship  but questions the  proof that it  had been faxed.

            The  letter was  found  in the  files  of Capital  Management

            Strategies together with a  page bearing the phrases "Telefax

            Communication"  and "Fax  Cover Sheet"  as well  as the  Four

            Winds  logo; and the page  describes Lopez as  the sender and

            bears  the same  date  as  the  letter.    This  is  adequate

            circumstantial  evidence  that  the  document was  faxed  and

            serves to  distinguish United  States v. Srulowitz,  785 F.2d
                                   ______________    _________

            382 (2d  Cir. 1986), where no  circumstantial evidence showed

            that a  letter found in  a file  had been mailed  to a  third

            party.

                 Lopez  contends  in  his  reply brief  that  the  Gaudin
                                                                   ______

            decision also  requires reversal of his  convictions for wire

            fraud.  The government charged that Lopez had used interstate

            wires in furtherance  of a scheme to obtain money by means of

            false representations,  thereby violating 18  U.S.C.    1343.

            Lopez says  that such false representations  must be material

            and that it was error not to so instruct the jury and require

            it  to find materiality.  The government says that this issue

            was  not preserved, but Gaudin  is a recent  and not entirely
                                    ______

            predictable decision.

                 On the  merits,  Lopez' argument  confronts  an  initial

            difficulty.  In United  States v. Faulhaber, 929 F.2d  16, 18
                            ______________    _________

            (1st Cir. 1991), this  court found no materiality requirement

                                         -20-
                                         -20-

            in the substantially identical federal mail fraud statute, 18

            U.S.C.   1341, stating that the jury was not required to find

            that the  scheme would have  defrauded a person  of "ordinary

            prudence and comprehension."  Faulhaber's position is at odds
                                          _________

            with some circuits and with  both of the standard instruction

            treatises. E.g.,  United States v.  Dunn, 961  F.2d 648,  651
                       ____   _____________     ____

            (7th  Cir. 1992); 1A  L. Sand, J.  Siffert, W. Loughlin  & S.

            Reiss, Modern Federal Jury Instructions   44.01  (1995).  But
                   ________________________________

            whether  Faulhaber warrants re-examination  is a  subject for
                     _________

            another occasion.

                 In  our case, the  district court did  instruct the jury
                                                   ___

            that a "scheme to  defraud" required that the "plan  [be one]

            reasonably calculated to deceive persons of ordinary prudence

            and comprehension by means  of false or fraudulent pretenses,

            representations, or promises."   This  language embodies  the

            materiality standard.    The only  deceptive conduct  charged

            under counts 6 and 7 involved false  or fraudulent documents,

            so  it hardly  matters that  the "reasonably  calculated" and

            "ordinary  prudence"  language  referred to  the  word "plan"

            rather  than the false  statements.  In  short, assuming that

            materiality  is  an element  in  wire  fraud, the  issue  was

            effectively submitted to the jury in this case.

                              IV.  GOVERNMENT MISCONDUCT

                                         -21-
                                         -21-

                 Before trial, Lopez  filed a motion alleging  government

            misconduct and  seeking to have the  indictment dismissed, or

            at least  to obtain  additional discovery and  an evidentiary

            hearing.   He claimed that he was  a victim of vindictive and

            selective  prosecution  and  that  the  indictment  had  been

            tainted by a  conflict of interest  on the  part of a  former

            Assistant United States  Attorney who had played a minor role

            in the investigation of  Lopez and later served for  a period

            as Lopez'  defense counsel prior to indictment.  The district

            court denied this  motion.   United States v.  Lopez, 854  F.
                                         _____________     _____

            Supp. 41 (D.P.R. 1994).

                 We start with the claim  of improper prosecution.  Lopez

            told the  district court that he had  been prosecuted because

            he refused to  use his  political influence in  favor of  the

            reappointment  of a  former  U.S. Attorney  for Puerto  Rico.

            Further,  he  claimed that  defendants  in  his position  are

            normally pursued  civilly on  false statement claims,  so the

            prosecution  was  selective  as  well  as  vindictive.    His

            evidence  on the  first point  was thin;  on the  second, the

            government offered  the district  court evidence  that Lopez'

            case did fall within its guidelines for criminal prosecutions

            because of the amounts involved.

                 On appeal, Lopez has condensed his argument on the claim

            of improper prosecution to  a couple of sentences and  a pair

            of  footnotes.  The arguments are used primarily to add color

                                         -22-
                                         -22-

            to his other claim of government  misconduct, relating to the
                   _____

            dual role of  the lawyer who allegedly represented  first the

            government  and then Lopez in the same matter.  Arguments not

            seriously developed  on appeal are waived,  Zannino, 895 F.2d
                                                        _______

            at 17, and  in this instance we also think that a deliberate,

            and reasonable, strategy choice was made.

                 Nevertheless,  those charges of selective and vindictive

            prosecution indirectly concern the integrity  of the judicial

            process.   We have therefore reviewed with care the pertinent

            filings in  the district court, the  district court's lengthy

            discussion of the subject, what little Lopez has to say about

            the  matter on  appeal, and  the government's  more extensive

            rebuttal.  Although the waiver relieves us of the need to set

            out the facts in detail, we comment briefly on each branch of

            Lopez' claim.

                 The district court did not ignore the serious charges of

            blackmail made against certain members of the U.S. Attorney's

            office, but  analyzed the proffered evidence with care.  This

            evidence consisted primarily of  hearsay and conjecture,  and

            the district  court after  scrutiny found it  insufficient to

            require an evidentiary hearing.   Lopez, 854 F. Supp.  at 45-
                                              _____

            46.  The district court's judgment call was not  unreasonable

            on  its  face,  especially   where  as  here  the  vindictive

            prosecution claim falls outside the narrow area where  such a

            claim traditionally has  been recognized, e.g.  United States
                                                      ____  _____________

                                         -23-
                                         -23-

            v. Garza-Juarez, 992  F.2d 896,  905 (9th  Cir. 1992),  cert.
               ____________                                         _____

            denied,  114 S.  Ct. 724  (1994),  and where  the prosecution
            ______

            itself was conducted by a new U.S. Attorney not implicated by

            Lopez' allegations.

                 As for selective prosecution,  the district court  asked

            the government for information  about its prosecution policy.

            The government  supplied the  data and  the court ruled  that

            Lopez  had not made  out a colorable  claim of discriminatory

            treatment.   Id. at 44.  Nor is it  surprising to us that the
                         ___

            government would  prosecute criminally a  charge of  multiple

            false loan applications totalling a considerable sum.

                 The government-misconduct claim that Lopez does argue at

            length on appeal concerns Luis Plaza Lopez.  According to the

            allegations,  Plaza, while  serving  as  an Assistant  United

            States Attorney, began the  grand jury investigation of Lopez

            in February  1992, and  took a small  number of steps  in the

            inquiry  before  leaving  the  government  in  November 1992.

            Plaza  then  began representing  Lopez  in  dealing with  the

            government's investigation.   Lopez  asserts that he  did not

            know  of  Plaza's  prior role  in  his  case.   Plaza  ceased

            representing Lopez  a year later, before  Lopez was indicted,

            after  a new  United States  Attorney raised  questions about

            Plaza's dual role.

                 If  after leaving  the  government Plaza  worked on  the

            other side of the same matter, this would normally constitute

                                         -24-
                                         -24-

            a violation  of federal  law.   See  18 U.S.C.     207.   But
                                            ___

            ordinarily the  injured party  would be the  original client,

            here the  government, which  would be  entitled to  fear that

            confidential information might now be used against it by  its

            own former lawyer.   The  district court made  this point  in

            declining to  convene an evidentiary hearing  on this matter.

            Lopez, 854 F. Supp. at 49.
            _____

                 Lopez responds by saying  that he was himself prejudiced

            because Plaza must have  carried into his new employment  his

            prosecutor's judgment that Lopez was guilty.   Lopez cites us

            to  case  law holding  that, for  just  this reason,  a judge

            cannot sit  on a matter  on which he worked  as a prosecutor.

            United States  v. Arnpriester,  37  F.3d 466,  467 (9th  Cir.
            _____________     ___________

            1994).  The  analogy is not very persuasive.   The judge, who

            is  supposed to  be  impartial, is  disqualified because  his

            prior  connection   with   one  side   renders  his   present

            impartiality suspect.  An attorney  is expected to be  loyal,

            not impartial, and after switching sides has ample inducement

            to act in the interest of the attorney's new client.
                                                     ___

                 But--Lopez  counters--in this case  Plaza, while serving
                                          ____

            as   Lopez'  attorney,   told  Lopez   that  the   government

            prosecutors might drop charges if Lopez supported one of them

            for the then open post of U.S. Attorney.   The implication is

            that  Plaza was  working  as an  agent for  prosecutors, thus

            depriving  Lopez of  his constitutional right  to independent

                                         -25-
                                         -25-

            counsel.  Assuming that Plaza ever conveyed such a message to

            Lopez, Plaza's role was that of a go-between and was apparent

            to Lopez.   The suggestion  that Plaza therefore  had divided

            loyalties or was a government agent is rhetoric. 

                 Lopez'  most  straightforward  complaint  is   that  the

            prosecutors,  when   they  discovered  that  Plaza   was  now

            appearing on  Lopez' side, should have  immediately disclosed

            to Lopez Plaza's prior involvement as prosecutor  in the same

            case.   Lopez cites  us to cases where  the government has by

            its silence improperly reaped an advantage from disloyal acts

            of  private   defense  counsel   in   cooperation  with   the

            government.  E.g., United  States v.  Marshank, 777  F. Supp.
                         ____  ______________     ________

            1507 (N.D. Cal. 1991).   But there is no indication  that the

            government  gained any  advantage  from  delay in  disclosing

            Plaza's former affiliation, if undue delay there was.

                 The main job of the trial judge in a criminal case is to

            try the defendant,  and there  is always a  tension when  the

            defense seeks  to shift the focus to charges of improprieties

            or wrongdoing by the  government.  Where there  are plausible

            claims of government misconduct prejudicing the rights of the

            defendant, the district court cannot ignore them; but how far

            to   pursue  them,   and   in  what   manner,  depends   upon

            circumstances, and  the judge  on the scene  has considerable

            latitude.   United States v. Ortiz-Arrigiotia,  996 F.2d 436,
                        _____________    ________________

            442-43 (1st Cir. 1993), cert. denied, 114 S. Ct. 1368 (1994).
                                    _____ ______

                                         -26-
                                         -26-

            Here,  the trial judge looked  about for big  fish, saw none,

            and let the red herrings go. 

                                    V.  SENTENCING

                 Lopez was  sentenced pursuant  to the November  1, 1990,

            edition   of  the   Sentencing  Guidelines   (all  subsequent

            references are  to  that  edition).    The  seven  counts  of

            conviction   were  grouped,  U.S.S.G.     3D1.2,  and  Lopez'

            sentence was calculated under section 2F1.1, which prescribes

            a base offense  level of  6 for offenses  involving fraud  or

            deceit.

                 The  main variable under section  2F1.1 is the amount of

            "loss"   inflicted  or  intended,   and  the  district  court

            calculated the total loss for the seven counts as $6,689,051,

            requiring   an   increase  of   14   levels.     U.S.S.G.    

            2F1.1(b)(1)(O).    The  district court  added  six additional

            levels, representing  two levels  each for more  than minimal

            planning, id.    2F1.1(b)(2), abuse of  a position of  trust,
                      ___

            id.     3B1.3,  and  obstruction of  justice  for  committing
            ___

            perjury during trial, id.   3C1.1.
                                  ___

                 The resulting total base offense level was 26 (6 plus 14

            plus  6).    Lopez had  no  prior  convictions  and, given  a

            criminal  history category  of  I, his  offense  level of  26

            corresponds  to  a  guideline  range  of  63  to  78  months'

            imprisonment.   The  court  chose to  construct the  63-month

            sentence  by imposing  concurrent sentences  of 24  months on

                                         -27-
                                         -27-

            count 1 (the conduct  underlying this count occurred  when an

            earlier version of  section 1014 was in effect  that provided

            for  a two-year maximum sentence), 63 months each on counts 2

            through 5, and 60 months each on counts 6 and  7 (there being

            a 60-month statutory maximum on those last two counts).

                 Lopez  has not challenged the base  offense level or the

            six-level  adjustment   for  planning,  abuse  of   trust  or

            obstruction.   He  does  challenge the  loss calculations  on

            counts  1 through  5,  and  on  certain  of  his  claims  the

            government suggests a remand.  Having reversed convictions on

            those false statement  counts, we have no reason  to consider

            the claims  of error as  to sentences on  those counts.   Our

            concern  is  limited  to   Lopez'  separate  attacks  on  the

            calculations as to counts 6 and 7.

                 The broader of the  two challenges made by Lopez  to his

            sentence on counts 6 and 7  is that the government failed  to

            show either an actual or an intended loss to the partnerships

            because  Lopez was  charged with having  improperly withdrawn

            $308,481 from the partnerships'  reserve accounts in 1988 and

            the same year the partnerships allegedly owed Lopez $741,000.

            Lopez' brief reasons that the "withdrawal of monies that were

            owed to him . . . did not cause the partnerships any `actual'

            economic loss,"  nor can  there have  been any  intended loss

            because "here, the alleged crime was complete yet there still

            was no loss."  The argument is clever but unpersuasive.

                                         -28-
                                         -28-

                 If a  defendant had picked  the pocket of a  victim in a

            crowded elevator, gaining $10 in the process, it would not be

            a  defense when  the $10  loss figure  was attributed  to the

            defendant at sentencing  to say that  the victim happened  to

            owe the defendant an even larger sum.  As long as  a theft or

            diversion is concealed or disguised, the victim has no reason

            to  think that its debt has been  reduced.  In this sense the

            loss caused by Lopez was both actual and intended.

                 Lopez' second  argument is  less ambiguous but  may have

            more  substance.    It  is  common  ground  that  the  amount

            withdrawn  by Lopez  from the partnerships'  reserve accounts

            was  $308,481.  This was the amount charged in the indictment

            and,  interestingly,  it  is  the  figure  specified  by  the

            district court  in its order requiring  restitution, an order

            that  Lopez has  not  challenged.   Yet  in reliance  on  the

            probation report, the district court found a loss of $436,176

            attributable  to the wire fraud  counts; and as  we shall see

            the difference between the two figures may matter.

                 The probation  officer originally calculated the loss on

            counts 6 and 7 as $308,481 but thereafter a letter containing

            a  victim   impact  statement   was  received   from  Capital

            Management  Strategies  claiming a  loss  of  $632,917.   The

            probation  officer deducted various  amounts from this larger

            figure concluding that they did not reflect losses imposed by

            Lopez.   The amount  left was  $436,276, which the  probation

                                         -29-
                                         -29-

            officer  and   the  district   court  adopted  as   the  loss

            attributable  to counts 6 and 7.  The victim impact statement

            was not  attached to the  pre-sentencing report so  the basis

            for  the claimed  total  loss  of  $632,917 is  difficult  to

            discern.

                 At sentencing, the discrepancy  between the original and

            adjusted figures for the loss on counts 6 and 7  did not loom

            large, since  both  figures were  dwarfed  by the  losses  on

            counts 1  through 5; whether the  loss of counts 6  and 7 was

            $308,481 or $436,176, the  total loss on all  counts appeared

            to be within the $5 to $10 million range for which a 14-level

            increase was required.   Nevertheless, at sentencing  defense

            counsel took a swipe at the victim impact statement,  calling

            it "a letter  that has  been alluded to  in the  pre-sentence

            report.    No live  body,  no documentation.  .  .  . and  to

            indicate that there are $436,376 in the losses as a result of

            that, I believe, is -- is improper."

                 On appeal,  Lopez says that  the letter in  question was

            not  disclosed to him, despite a request, and argues that the

            trial  judge "failed  to  exercise  independent judgment  but

            relied  mechanically  on  a  non-disclosed  hearsay  document

            referred to very generally  in the pre-sentence report .  . .

            ."   The government  responds that  in this  circuit reliable

            hearsay can be used  at sentencing, including hearsay adopted

            by  a pre-sentence report.  See United States v. Tardiff, 969
                                        ___ _____________    _______

                                         -30-
                                         -30-

            F.2d 1283,  1287 (1st Cir.  1992).  Lopez then  says that the

            victim  impact statement  had  no indicia  of reliability,  a

            point difficult to resolve since it is not before us.

                 It  is not  necessary  to  decide  these issues  in  the

            abstract  because the case must in all events be remanded for

            resentencing.  The bulk of the losses, and thus a significant

            part of Lopez'  sentence on counts 6 and  7, rests on amounts

            attributed  to  the  counts  that  we  have  reversed.    The

            government  has not  given us  any reason  to think  that the

            losses for counts 1 through 5 can be attributed to Lopez in a

            resentencing on counts 6 and 7.   The possibility that it may

            retry Lopez on counts 1 through 5 is irrelevant at present.

                 The base offense level for  counts 6 and 7 and  the six-

            level increase  have not  been challenged  on appeal,  so the

            only  question is the amount of loss.  The difference between

            the two alternative figures here is significant; the $308,481

            figure  would seemingly produce  a total offense  level of 20

            and a  sentencing range  of 33-41  months,  while the  larger

            $436,276 figure would produce a total offense level of 21 and

            a  range of  37-46 months.   Although  one might  construct a

            technical argument  to defend  the use  of the  larger figure

            (e.g.,  because  Lopez  did   not  counter  the  report  with
             ____

            evidence), we think that simple justice suggests that this is

            the wrong course to  follow, especially since resentencing is

            required in any event.

                                         -31-
                                         -31-

                 If  on remand the government wants to rely on the larger

            of the  two figures,  the victim impact  statement should  be

            made  available  to  Lopez'  counsel  prior  to resentencing.

            Whether  the government  wants to  support the  larger figure

            with any other kind  of evidence, and whether Lopez  wants to

            seek  an evidentiary hearing at which the maker of the victim

            impact statement  can be cross-examined, are  matters for the

            future.  What we will not do is uphold on this record the use

            of the  larger figure where a procedural flaw arguably exists

            and we ourselves cannot discern the basis for the figure.

                 The  convictions and sentences on counts 1 through 5 are

            vacated;  the government  may  retry the  defendant on  those
            _______

            counts or  not, as it chooses.   The convictions  on counts 6

            and  7 are affirmed but the sentences imposed on those counts
                       ________

            are  vacated and the case remanded  for resentencing on those
                 _______              ________

            counts of conviction.

                 It is so ordered.
                 _________________

                                         -32-
                                         -32-