Court Opinion

ID: 6320878
Source: CourtListenerOpinion
Date Created: 2022-03-07 21:00:35.965827+00
Date Added: 2024-06-11T09:02:38.916706
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                               MAR 7 2022
                    UNITED STATES COURT OF APPEALS                         MOLLY C. DWYER, CLERK
                                                                            U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,                        No.   19-10222

              Plaintiff-Appellee,                D.C. No.
                                                 2:15-cr-00198-GMN-NJK-1
 v.

EDWIN YOSHIHIRO FUJINAGA,                        MEMORANDUM*

              Defendant-Appellant.

UNITED STATES OF AMERICA,                        No.   21-10155

              Plaintiff-Appellee,                D.C. Nos.
                                                 2:15-cr-00198-GMN-NJK-1
 v.                                              2:15-cr-00198-GMN-NJK

EDWIN YOSHIHIRO FUJINAGA,

              Defendant-Appellant.

                    Appeal from the United States District Court
                             for the District of Nevada
                    Gloria M. Navarro, District Judge, Presiding

                     Argued and Submitted February 16, 2022
                            San Francisco, California

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Before: SILER,** S.R. THOMAS, and CALLAHAN, Circuit Judges.

      Edwin Fujinaga appeals his conviction and sentence for mail fraud pursuant

to 18 U.S.C. § 1341, wire fraud pursuant to 18 U.S.C. § 1343, and money

laundering pursuant to 18 U.S.C. § 1957. He also appeals the denial of his motion

seeking injunctive relief to prevent the destruction of evidence under Fed. R. App.

P. 8(a)(1)(C). We have jurisdiction under 28 U.S.C. § 1291, and we affirm.

Because the parties are familiar with the factual and procedural history of this case,

we do not recount it here.

      1.      Injunction request. We have jurisdiction to consider Fujinaga’s

appeal of the district court’s denial of his post-trial request for an injunction to

preserve evidence pending appeal. See Natural Res. Def. Council Inc. v. Southwest

Marine Inc., 242 F.3d 1163, 1166 (9th Cir. 2001). The district court did not abuse

its discretion in denying Fujinaga’s motion. See Ass’n des Eleveurs de Canards et

d’Oies du Quebec v. Harris, 729 F.3d 937, 944 (9th Cir. 2013) (describing

standard).

      In deciding whether to grant an injunction or stay pending appeal, we must

consider whether: “(1) he is ‘likely to succeed on the merits’; (2) he is ‘likely to

      **
            The Honorable Eugene E. Siler, United States Circuit Judge for the
U.S. Court of Appeals for the Sixth Circuit, sitting by designation.
                                            2
suffer irreparable harm in the absence of preliminary relief’; (3) ‘the balance of

equities tips in his favor’; and (4) ‘an injunction is in the public interest.’” Id.

(quoting Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008)).

       Fujinaga argues that an injunction pending appeal is required because the

Receiver appointed by the United States Securities and Exchange Commission had

provided notice that it intended to destroy documents in its possession. Fujinaga

claims that such destruction would be in violation of the government’s ongoing

obligations under Brady v. Maryland, 373 U.S. 83 (1963). However, Fujinaga

failed to argue the elements necessary to obtain a preliminary injunction, either

before the district court or on appeal, and therefore fails to meet his burden of

persuasion. See Lopez v. Brewer, 680 F.3d 1068, 1072 (9th Cir. 2012).

       Even if he had, the record supports the conclusion that Fujinaga has not

made a strong showing that he is likely to succeed on the merits. The government

points out that it has no authority over the Receiver. More importantly, as the

district court explained, the Receiver had provided an inventory of the material to

Fujinaga and had granted Fujinaga access to it. There is no violation of Brady if

the defendant “has enough information to be able to ascertain the supposed Brady

material on his own.” Milke v. Ryan, 711 F.3d 998, 1017 (9th Cir. 2013) (quoting

United States v. Aichele, 941 F.2d 761, 764 (9th Cir. 1991)). And, as the district

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court also noted, Fujinaga has made no showing of materiality. In short, Fujinaga

has not made a strong showing—or indeed any showing at all—of a likelihood of

succeeding on the merits. The district court properly denied the injunction request.

      2.      Brady claims. The government did not commit a Brady violation.

“To establish a Brady violation, the evidence must be (1) favorable to the accused

because it is either exculpatory or impeachment material; (2) suppressed by the

government, either willfully or inadvertently; and (3) material or prejudicial.”

United States v. Blanco, 392 F.3d 382, 387 (9th Cir. 2004) (quoting Benn v.

Lambert, 283 F.3d 1040, 1052–53 (9th Cir. 2002)). Brady applies to evidence in

the government’s possession—either actual or constructive, United States v. Cano,

934 F.3d 1002, 1022–23 (9th Cir. 2019) (quoting Browning v. Baker, 875 F.3d

444, 460 (9th Cir. 2017)), of which the government has knowledge—either actual,

see United States v. Santiago, 46 F.3d 885, 894 (9th Cir. 1995), or implied, Kyles

v. Whitley, 514 U.S. 419, 437 (1995). There is no duty to discover evidence held

by a state or federal agency that is not involved in the investigation or prosecution

of the defendant. Aichele, 941 F.2d at 764; Cano, 934 F.3d at 1026.

      The material that Fujinaga claims the government suppressed in violation of

Brady was all in the physical possession of other entities not connected to the

criminal prosecution, namely, the government of Japan and the SEC Receiver.

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Fujinaga’s speculation that exculpatory evidence was obtained by the SEC fails

because the SEC is not an executive branch agency and the Argon database was, at

one point, in the possession of Fujinaga’s company and his civil attorneys.

Moreover, the government did not have the requisite access and control of the

challenged evidence to impute possession to it. See Santiago, 46 F.3d at 893–94.

Thus, the government did not have a Brady duty to disclose the evidence Fujinaga

contends it withheld. In addition, the record indicates that Fujinaga had the same

opportunity to discover the information held by the Receiver as did the

government. Milke, 711 F.3d at 1017. Finally, Fujinaga’s speculation that some of

this evidence may have been favorable to him fails to establish its materiality. See

Runningeagle v. Ryan, 686 F.3d 758, 767 (9th Cir. 2012). In sum, the government

did not violate Brady.

      3.     Napue claim. The government did not tender perjured testimony in

violation of Napue v. Illinois, 360 U.S. 264 (1959). “A claim under Napue will

succeed when (1) the testimony (or evidence) was actually false, (2) the

prosecution knew or should have known that the testimony was actually false, and

(3) the false testimony was material.” Henry v. Ryan, 720 F.3d 1073, 1084 (9th

Cir. 2013) (quotations omitted). “Mistaken, inaccurate or rebuttable” testimony

does not give rise to a Napue claim. Id.

                                           5
      Here, a witness testified on cross examination that the government had

shown him bank statements indicating that Fujinaga’s company had misspent

$76.9 million of investors’ money, when it was undisputed that this bank statement

did not exist. On redirect, the government questioned the witness, who ultimately

conceded that he did not recall every document the government had shown him.

The witness agreed that he could not recall specifically seeing a bank statement

that supported the $76.9 million figure. On re-cross examination, the witness

changed his story and was positive he had seen a bank statement with that figure.

Id. He insisted the government had shown him such a bank statement in court.

      There is no Napue violation here because this testimony falls into the

category of “mistaken, inaccurate or rebuttable” testimony. Id. Further, Fujinaga

failed to establish that the error was material, namely that there was a “reasonable

likelihood” that the testimony affected the jury’s judgment when the jury knew no

$76.9 million bank statement was presented in court. See United States v. Renzi,

769 F.3d 731, 752 (9th Cir. 2014).

      4.     Sequestration claim. The district court did not abuse its discretion by

allowing the government’s summary witness to observe trial after finding the

witness essential to the prosecution’s case. See United States v. Seschillie, 310

F.3d 1208, 1213 (9th Cir. 2002) (describing standard). Rule 615 does not apply to

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“a person whose presence a party shows to be essential to presenting the party’s

claim or defense.” Fed. R. Evid. 615(c). Here, the district court found the witness

essential to helping the prosecutor understand the significance of new testimony

and explain it to the jury. Given the complexity of the fraud scheme, and the fact

that the witness had spent 1,800 hours familiarizing himself with hundreds of

pages of bank records and accounting spreadsheets, the district court did not abuse

its discretion in allowing him to remain in the courtroom.

      5.      Evidentiary error claim, tax fraud evidence. The district court did

not plainly err in admitting evidence of tax fraud. The testimony that Fujinaga’s

company never made money was relevant to understanding that Fujinaga knew his

promises to investors were false. Rule 404(b) was not implicated because the

testimony was inextricably intertwined with the crimes charged and “part of the

transaction that serves as the basis for the criminal charge” because it was

undertaken to conceal his fraud from the IRS to prolong the scheme. United States

v. Loftis, 843 F.3d 1173, 1177–78 (9th Cir. 2016).

      6.     Evidentiary error claim, loss amount. The district court did not err in

allowing the government to introduce evidence of a $1.5 billion loss at trial.

Fujinaga asserts the evidence was prejudicial because it was unprovable. However,

the district court correctly determined that the loss figure was documented in a

                                          7
spreadsheet created by a witness who relied on that information in the course of her

job. The evidence was therefore probative and not substantially outweighed by

any of the dangers outlined in Federal Rule of Evidence 403. The district court did

not err in admitting it.

       7.     Evidentiary error claim, admission of material in violation of Brady.

The district court did not abuse its discretion in admitting evidence derived from

Fujinaga’s bookkeeper’s records. Because Fujinaga cannot establish a Brady

violation, no secondary evidence sanction is appropriate.

       8.     Evidentiary error claim, pyramid king image. The district court did

not abuse its discretion in allowing the government to use a demonstrative exhibit

depicting a pyramid scheme in closing argument. The district court found that the

image was illustrative of a ponzi scheme and did not implicate any other negative

connotations. The district court did not abuse its discretion in determining that the

exhibit was not “unduly prejudicial” under Federal Rule of Evidence 403.

       9.     Jury instruction challenge, no adverse inference instruction. The

district court did not abuse its discretion in declining to give an adverse inference

instruction. See United States v. Sivilla, 714 F.3d 1168, 1172 (9th Cir. 2013)

(stating standard). Fujinaga asserts that the government had allowed certain

evidence to be destroyed. But the district court reasonably found that: (1) the

                                           8
government never possessed the evidence, so it had no duty to preserve it; (2) the

office where this evidence existed was vandalized before the Receiver took

possession; (3) there were no facts to indicate the government “fail[ed] to adhere to

some standardized reasonable care procedure;” and (4) the government lacked

reason to believe the records it possessed were not accurate and therefore needed to

be compared to the missing evidence. See id. There was no clear error in the

district court’s factual findings, and no abuse of discretion in applying those facts

to the law.

      10.     Jury instruction challenge, witness immunity. The district court did

not abuse its discretion in formulating an immunity instruction that informed the

jury that it was allowed to view the testimony of a certain witness with greater

caution than other witnesses. Fujinaga claims that the instruction provided an

impermissible inference that only this witness’s testimony on cross examination

should be viewed with “greater caution,” but the instruction did not contain this

limitation. It was not defective, nor was it misleading or confusing, so there was

no abuse of discretion here. See United States v. Warren, 25 F.3d 890, 898 (9th

Cir. 1994).

      11.     Jury instruction challenge, vicarious liability. The district court did

not abuse its discretion in giving a vicarious liability instruction. The instruction

                                            9
was in accord with the Ninth Circuit Pattern Instructions. Fujinaga’s argument that

the instruction is flawed by the omission of the word “knowingly,” is precluded by

United States v. Stapleton, 293 F.3d 1111, 1115–18 (9th Cir. 2002).

       12.    Jury instruction challenge, mail and wire fraud. The district court did

not commit plain error in formulating its mail and wire fraud instructions. The

instructions did not amount to a constructive amendment of the indictment because

the instructions used language that was narrower than the language of the

indictment. See United States v. Kalu, 791 F.3d 1194, 1206 (10th Cir. 2015).

       In addition, Fujinaga correctly points out that the instruction’s definition of

“intent to defraud” as the “intent to deceive or cheat” has subsequently been held

invalid in United States v. Miller, 953 F.3d 1095, 1103 (9th Cir. 2020) (holding

that “intent to defraud” requires the government to prove intent to “deceive and

cheat”). Fujinaga did not object at trial and thus, the question is whether the “error

(1) is plain, (2) affects substantial rights, and (3) seriously affects the fairness,

integrity or public reputation of judicial proceedings.” United States v. Tirouda,

394 F.3d 683, 688 (9th Cir. 2005).

       Here, the error does not meet the second or third prongs of the plain error

test because the evidence presented at trial indicated that Fujinaga deceived

investors by promising them their investments were safe and cheated investors out

                                            10
of their money by using investment funds for his personal gain and to pay back

other investors. Accordingly, there is no reasonable probability that the jury

convicted Fujinaga of only deception or cheating, and so the error did not alter the

outcome.

      13.    Jury instruction challenge, money laundering. The district court did

not plainly err in formulating its money laundering instruction. Fujinaga claims

that the instruction omitted an essential element of the crime under United States v.

Stein, 37 F.3d 1407 (9th Cir. 1994). Under Stein, a district court errs when it gives

a general knowledge instruction alongside a money laundering instruction without,

in some way, clarifying for the jury that it must still find the defendant had specific

knowledge that the funds at issue in the money laundering counts involved

criminally derived property. See United States v. Knapp, 120 F.3d 928, 932 (9th

Cir. 1997). However, in this case, the money laundering instruction itself further

defined “criminally derived property” as “property constituting, or derived from,

the proceedings of a criminal offense” and clarified that, with regard to this

element, “the government must prove that the defendant knew that the property

involved in the monetary transaction constituted, or was derived from, proceeds

obtained by some criminal offense.” Thus, the instruction satisfied the specific

                                          11
knowledge requirement. See id. There was no error that affected Fujinaga’s

substantial rights.

      In addition, the district court did not err in failing to instruct the jury on the

pre-2009 definition of “proceeds” in its money laundering instruction. The

indictment charged Fujinaga with three counts of money laundering each taking

place in 2010. Thus, no pre-2009 instruction was required. Although the jury

heard evidence that the ponzi scheme dated back to 2000, the timing question

relates to when the charged monetary transactions occurred, see United States v.

Grasso, 724 F.3d 1077, 1083, 1090 (9th Cir. 2013) (looking to pre-2009 definition

when money laundering transactions occurred in 2002), not when the criminal

enterprise initially obtained the proceeds. Fujinaga cites no law to the contrary.

There was no plain error in not giving the pre-2009 instruction.

      14.    Cumulative error claim. Given that the only error did not rise to the

level of plain error, and that the district court did not commit any reversible errors,

Fujinaga is not entitled to reversal under the cumulative error doctrine. Parle v.

Runnels, 505 F.3d 922, 928 (9th Cir. 2007).

      15.    Insufficiency of the evidence claim. There was sufficient evidence to

support the jury’s verdict on all counts. In assessing the sufficiency of the

evidence, we “determine whether ‘after viewing the evidence in the light most

                                           12
favorable to the prosecution, any rational trier of fact could have found the

essential elements of the crime beyond a reasonable doubt.’” United States v.

Nevils, 598 F.3d 1158, 1163–64 (9th Cir. 2010) (en banc) (quoting Jackson v.

Virginia, 443 U.S. 307, 319 (1979)).

      Fujinaga contends that the evidence does not establish the specific intent to

defraud as required to sustain convictions for mail and wire fraud. The evidence

showed that the company never made money. Yet, Fujinaga’s marketing materials

portrayed the company’s investment product as highly lucrative and

secure—neither of which was true. Moreover, even as the company was

collapsing, Fujinaga fabricated a story about a state audit to keep investors

investing in it. There was adequate evidence of intent to sustain the verdicts on

mail and wire fraud.

      To the extent that Fujinaga relies on his challenge to his mail and wire fraud

convictions to challenge his money laundering conviction, it fails. To the extent he

relies on his assertion that the district court should have used a pre-2009 definition

of “proceeds,” it fails for the reasons previously discussed. Fujinaga finally claims

the government failed to trace the funds involved in the money laundering scheme.

However, the government is entitled to prove money laundering by establishing

that the defendant’s entire business operation was fraudulent, United States v.

                                          13
Hanley, 190 F.3d 1017, 1025 (9th Cir. 1999), superseded on other grounds, which

was the avenue taken here. In sum, there was sufficient evidence to uphold the

money laundering conviction.

      16.    Sentencing challenge, loss amount. The district court did not clearly

err in calculating the loss amount for purposes of sentencing. See United States v.

Torlai, 728 F.3d 932, 937 (9th Cir. 2013) (stating standard). The government

proposed a loss figure based on information contained in a company database and

MRI’s bookkeeper’s testimony that, since the inception of the company, Fujinaga

misappropriated $813 million of investors’ money by transferring those funds into

the general corporate account. Fujinaga contends that the bookkeeper’s testimony

was not reliable or accurate. However, the bookkeeper’s accounting records were

corroborated by the government’s summary witness who reconciled the books with

the company’s bank statements, and the fact that the loss figure was contested

does not make the district court’s conclusion clearly erroneous.

      Fujinaga also argues that the loss calculation did not contain an offset for

money returned to investors. However, this contention is belied by testimony that

general fund money was not used to repay investors. Thus, the district court’s

calculation was not clearly erroneous and was “a reasonable estimate of the loss

                                         14
based on available information.” United States v. Zolp, 479 F.3d 715, 719 (9th Cir.

2007).

      17.    Sentencing challenge, vulnerable victim enhancement. The district

court did not err in imposing a vulnerable victim enhancement. Fujinaga contends

that there was no proof that he specifically targeted elderly investors. However,

for the enhancement to apply, the defendant need not specifically target a certain

group so long as the defendant knows or should have known of the victims’

unusual vulnerability. U.S.S.G. § 3A1.1. Here, the district court applied the two-

level enhancement after finding that: (1) Fujinaga marketed the investment product

as a low risk investment appropriate for retirement savings; (2) he specifically

rejected a suggestion to exclude investors over the age of 80 and included a clause

that made the investment certificates easily transferrable in an inheritance; and (3)

many investors were of advanced age. Given these facts, the district court did not

err in applying the enhancement.

      18.    Sentencing challenge, substantively unreasonable sentence. The

district court did not abuse its discretion in imposing the sentence. It appropriately

considered Fujinaga’s arguments and applied the factors contained in 18 U.S.C.

§ 3353(a).

                                          15
      19.    Forfeiture challenge. The district court did not err in imposing the

forfeiture order. There was no plain error with regard to the district court’s failure

to comply with the requirements of Rule 32.2(b) by not holding a preliminary

hearing. Fujinaga consented to a consolidated forfeiture and restitution hearing, he

briefed the issue, and the district court afforded Fujinaga the opportunity to be

heard. In the context of the complete record, he was not deprived of his

substantive rights, and no plain error occurred.

      Fujinaga also contends that the district court’s forfeiture order imposed joint

and several liability in violation of Honeycutt v. United States, 137 S. Ct. 1626

(2017). However, Honeycutt only applies to property the “defendant himself did

not [personally] acquire.” Id. at 1630. Here, the district court found that Fujinaga

had full and exclusive authority over the accounts. United States v. Thompson, 990

F.3d 680, 689 (9th Cir. 2021) is not to the contrary. Thompson, like Honeycutt, did

not involve a situation in which the defendant had exclusive control of the

property.

      20.    Restitution challenge. The district court did not commit reversible

error in imposing the restitution order. See United States v. Gagarin, 950 F.3d

596, 607 (9th Cir. 2020) (stating standard). The record reflects that restitution was

only ordered for the counts for which Fujinaga was convicted. The district court

                                          16
ordered restitution for those investors who had outstanding certificates as of April

2013, excluding investors whose principal had been repaid. The investors with

outstanding certificates were harmed “in the course of the scheme.” 18 U.S.C.

§ 3663A(a)(2). The precise amount was calculated by adding the amount in the

corporate general account, which testimony indicated consisted of investor funds,

plus amounts paid to old investors through new investor money, which would not

have been taken into consideration in the corporate general account. The district

court properly declined at sentencing to offset the restitution amount by the sums

recovered by the Receiver, because there was no evidence as to what sums, if any,

the Receiver had distributed to victims, leaving for later determination the amount

of any offset. Fujinaga argues that the amount of discount urged by the

government was arbitrary. However, the district court explained that the discount

was to ensure that the total amount of restitution recovered did not exceed the total

amount of loss. There was no reversible error in the district court’s approach to

determining restitution.

      AFFIRMED.

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