Court Opinion

ID: 180349
Source: CourtListenerOpinion
Date Created: 2010-12-03 18:30:14+00
Date Added: 2024-06-11T15:09:24.161024
License: Public Domain

FILED
                           NOT FOR PUBLICATION                              DEC 02 2010

                                                                        MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U.S . CO U RT OF AP PE A LS

                            FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,                        No. 07-50069

              Plaintiff - Appellee,              D.C. No. CR-05-00027-GAF-2

  v.
                                                 MEMORANDUM *
DOUGLAS R. DOWIE,

              Defendant - Appellant.

UNITED STATES OF AMERICA,                        No. 07-50072

              Plaintiff - Appellee,              D.C. No. CR-05-00027-GAF-1

  v.

JOHN STODDER, Jr.,

              Defendant - Appellant.

                    Appeal from the United States District Court
                       for the Central District of California
                     Gary A. Feess, District Judge, Presiding

                     Argued and Submitted November 1, 2010
                              Pasadena, California

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Before: GOODWIN and RAWLINSON, Circuit Judges, and ZOUHARY, District
Judge.**

      Douglas R. Dowie and John Stodder, Jr. were found guilty by a jury of

fraudulently inflating client bills during their employment with the public relations

firm Fleishman-Hillard ('FH'). They appeal their convictions for conspiracy and wire

fraud under 18 U.S.C. y 371 and y 1343, challenging multiple aspects of their trial.

Dowie also appeals his sentence, while Stodder appeals the district court's denial of

his request for post-conviction investigation funds. For the reasons that follow, we

affirm appellants' convictions, Dowie's sentence, and the district court's denial of

investigation funds. Because the parties are familiar with the facts and procedural

history of the case, we do not recite them here except as necessary to our decision.

      A.     Sufficiency of the Evidence

             1.     Evidence of Wire Fraud

      Appellants contend that the Government failed to present sufficient evidence

to support their convictions for wire fraud, collectively pointing to three alleged gaps

in the evidence presented at trial. First, Dowie argues that the Government failed to

establish his specific intent to defraud because it did not present evidence showing he

expressly directed the fraudulent increases made to client bills. See United States v.

       **
            The Honorable Jacµ Zouhary, United States District Judge for the
Northern District of Ohio, sitting by designation.

                                           2
Lothian, 976 F.2d 1257, 1267 (9th Cir. 1992) ('To sustain a conviction under the mail

and wire fraud statutes, there must be sufficient evidence to show that the defendant

willfully participated in a scheme with µnowledge of its fraudulent nature and with

intent that these illicit objectives be achieved.') (internal quotation marµs omitted);

see also 18 U.S.C. y 1343.

      The Government put forth significant evidence showing that Dowie

instructed subordinates to increase the amounts billed to the Los Angeles County

Department of Water and Power ('DWP') when he µnew the only way to do so

was by fraudulently increasing the number of hours worµed. Further, the

Goverment presented evidence indicating Dowie µnew these fraudulent additions

were being made to DWP bills. Taµen together, this evidence was sufficient for a

rational trier of fact to have found that Dowie participated in the scheme to

increase the invoices to DWP and was aware of the fraudulent nature of these acts.

See United States v. Ciccone, 219 F.3d 1078, 1084 (9th Cir. 2000) ('The

government can establish µnowledge of a fraudulent purpose by circumstantial

evidence.'); Lothian, 976 F.2d at 1262 ('The defendant need not personally have

mailed the letter or made the telephone call; the offense may be established where

one acts with the µnowledge that the prohibited actions will follow in the ordinary

course of business or where the prohibited acts can reasonably be foreseen').

                                          3
       Second, Appellants argue that the Government failed to show the wires were

used in furtherance of the scheme. The established process used to prepare the

fraudulent billing information, however, included emailing an Excel file containing

the inflated numbers from FH's St. Louis office to its LA office. While it was not

necessary that this information be transferred by email--rather than some other

method--these wire transmissions were a regular step in the process used to

prepare the fraudulent billing information presented to FH clients, which was

undisputably an essential part of the fraud to convince these clients to overpay FH.

Accordingly, there was sufficient evidence to find that the wires were used to

further the fraudulent scheme. See Pereira v. United States, 347 U.S. 1, 8 (1954)

(finding that it is sufficient if the wire transmission is 'incident to an essential part

of the scheme.'); United States v. Chung Lo, 231 F.3d 471, 478 (9th Cir. 2000)

('Although a mailing [or wire transmission] must occur in the execution of the

scheme - that is, as a 'step in [the] plot,' - the mailing [or transmission] need not

be an essential element of the scheme.') (quoting Schmucµ v. United States, 489

U.S. 705, 711 (1989) (internal citations omitted)).

       Third, Stodder contends that the Government failed to prove he ever

personally obtained money as a result of the fraud. This issue was not raised

before the district court and is reviewed for plain error. See United States v. Green,

                                            4
592 F.3d 1057, 1065 (9th Cir. 2010). A conviction for wire fraud requires the

Government to prove the defendant had 'a specific intent to defraud,' not an intent

to personally gain from the fraud. See United States v. Sullivan, 522 F.3d 967, 974

(9th Cir. 2008); United States v. Inzunza, 580 F.3d 894, 904 (9th Cir. 2009) (citing

United States v. Welch, 327 F.3d 1081, 1106 (10th Cir. 2003) ('No appellate court

to our µnowledge has ever held an intent to achieve personal gain is an element of

a traditional mail or wire fraud charge involving the deprivation of property.'));

United States v. Stocµheimer, 157 F.3d 1082, 1087-88 (7th Cir. 1998) ('An intent

to defraud does not turn on personal gain. . . . [A]ll that matters is that [defendant]

intended to inflict a loss.') (internal citation omitted). Therefore, there is no basis

to find plain error related to this claim.

              2.     Burden of Proof

       Appellants also argue that the Government suggested at trial that all upward

adjustments, or 'write-ups,' to client bills were necessarily fraudulent. Appellants

contend this suggestion impermissibly shifted the burden of proof, requiring them to

prove the legitimacy of every write-up. Due process places the burden on the

Government to prove each element of a charged offense beyond a reasonable doubt.

In re Winship, 397 U.S. 358, 362-63 (1970). When not raised at trial, a claim that the

                                             5
prosecution impermissibly shifted the burden of proof is reviewed for plain error.

United States v. Mitchell, 502 F.3d 931, 958 (9th Cir. 2007).

      Appellants fail to identify any instruction or prosecution statement suggesting

the defendants had to prove all write-ups were legitimate. To the contrary, the district

court instructed the jury that they had to 'agree[] on at least one particular false

representation or statement which was made.' There was substantial testimony from

multiple witnesses that activity reports given to FH clients included fraudulent entries.

Accordingly, there is no basis to find plain error related to this claim.

             3.     Variance of the Evidence from the Indictment

      Dowie and Stodder argue that specific evidence presented by the Government

at trial varied from the first superceding indictment, supporting either a constructive

amendment of the indictment or a variance therefrom. See United States v. Adamson,

291 F.3d 606, 614-15 (9th Cir. 2002). The evidence at issue, however, failed to

constructively amend, or vary from, the charges in the indictment.

      Appellants first contend that the Government introduced evidence of multiple

conspiracies, rather than the single conspiracy charged, because the evidence showed

certain employees changed jobs over time and did not continually communicate with

one another. In evaluating a variance defense based on alleged multiple conspiracies,

this Court has found that 'the question of whether a single conspiracy has been

                                           6
proved, rather than multiple conspiracies . . . is essentially a question of the

sufficiency of the evidence.' United States v. Bibbero, 749 F.2d 581, 586 (9th Cir.

1984) (citations omitted). Although certain members changed, the nature of the

scheme, its manner of operation, and Dowie's position as its primary leader remained

the same throughout the conspiracy. Accordingly, there was sufficient evidence for

a rational trier of fact to have found a single conspiracy. See id. at 587 ('The

consistency of µey personnel and of method and type of operation militates against the

separation of [the] smuggling operation into smaller, independent conspiracies');

United States v. Bloch, 696 F.2d 1213, 1215 (9th Cir. 1982) (single conspiracy

established by same scheme, same central actors, same activities and same goals),

abrogated on other grounds by United States v. Jimenez Recio, 537 U.S. 270 (2003).

      Next, Appellants argue that the Government introduced evidence related to

Platinum Equity and Kajima, FH clients not named in the indictment. This evidence

did not create a variance from the indictment, however, because the district court

found the evidence relevant to specific aspects of the charged conspiracy. See United

States v. Atul Bhagat, 436 F.3d 1140, 1146 (9th Cir. 2006) ('Evidence not referenced

in the indictment may be admitted for . . . 'other legitimate purposes,' without

effecting any changes to the indictment.') (quoting United States v. Kahan & Lessin

Co., 695 F.2d 1122, 1125 (9th Cir. 1982)). Further, the district court properly limited

                                          7
the jury's consideration of the evidence, instructing that they could only find the

defendants guilty of the conspiracy charged in the indictment and could only consider

the Platinum Equity evidence in evaluating Dowie's state of mind. See Kahan &

Lessin Co., 695 F.2d at 1125 (finding 'no fatal variance between the indictment and

the evidence' when a proper limiting instruction was given).

      B.     Evidentiary Rulings

             1.     Stodder's Cooperation with FH's Investigation

      Stodder argues that the district court erred in excluding evidence of his post-

conspiracy cooperation with FH's investigation, which might have supported his lacµ

of intent to engage in a conspiracy and his defense of good faith.            Although

post-conspiracy evidence is admissible if it is probative of the existence of the

conspiracy, see United States v. Koppers Co., Inc., 652 F.2d 290, 298 (2d Cir. 1981),

cert. denied, 454 U.S. 1083 (1981), a trial court has discretion under Federal Rule of

Evidence 403 to exclude evidence where its probative value is outweighed by its

potential to confuse the jury. See United States v. Ross, 372 F.3d 1097, 1113 (9th Cir.

2004). The district court found that potential testimony and exhibits regarding

Stodder's post-conspiracy cooperation was of little probative value to his state of mind

during the conspiracy. Further, the district court found the exhibits were liµely to

                                           8
confuse the jury as to the conspiracy period. The district court did not abuse its

discretion in barring Stodder's post-conspiracy evidence on this basis.

       2.    Dowie's Polygraph Evidence

      In the list of issues presented in Dowie's Amended Opening Brief, he identifies

the district court's refusal to admit his offer to taµe a polygraph examination. Because

neither his amended opening brief or reply maµes an argument in support of this

claim, the issue is waived. See Martinez-Serrano v. INS, 94 F.3d 1256, 1259-60 (9th

Cir. 1996) (issues not specifically raised and argued in a party's opening brief are

waived).

      C.     Jury Instructions

             1.     Appellants' Proposed Lew Instruction

      Relying on United States v. Lew, 875 F.2d 219 (9th Cir. 1989), Appellants

requested a jury instruction that would have required the jury unanimously to find that

the entity deceived by the defendants was the same entity from which money or

property was sought, in order to support a guilty verdict. See id. at 221 (holding that

to support a mail fraud conviction, 'the intent must be to obtain money or property

from the one who is deceived'). In seeµing this instruction, Appellants argued that

the wire fraud charges failed because the evidence showed FH was paid by the City

of Los Angeles, a separate entity from the DWP, which was the deceived party.

                                           9
      The district court did not err in rejecting Appellants' proposed instruction

because it has no support in the law or the evidence. See United States v. Fejes, 232

F.3d 696, 702 (9th Cir. 2000) ('[A] defendant is entitled to have the judge instruct the

jury on his theory of defense, provided that it is supported by law and has some

foundation in the evidence.'). All the relevant FH contracts were made with the

DWP, and all the relevant invoices were sent to the DWP. Although the City

Controller's Office apparently approved all DWP payments before they were made,

there was no evidence indicating that Appellants sought to obtain money from the

City, rather than from the DWP.

      Further, the proposed instruction erroneously indicates that Appellants could

not be not found guilty if they deceived DWP and ultimately deprived it of budgetary

funds, but sought direct payment only from the City. A defendant may be guilty of

fraud where the deceived party is indirectly deprived of money or property as a result

of the fraud. See United States v. Ali, 620 F.3d 1062 (9th Cir. 2010) (affirming wire

fraud conviction where defendants deceived Microsoft but were paid for fraudulently

discounted Microsoft goods by third parties); United States v. Bonallo, 858 F.2d 1427,

1432-34 (9th Cir. 1988) (affirming banµ fraud conviction where a banµ employee

stole funds from customer accounts and deceiving the banµ as to the activity,

ultimately harming the banµ when it reimbursed the customers).

                                          10
             2.     Sugarman's Guilty Plea

      Stodder contends that the guilty plea of Steven Sugarman, who worµed at FH

prior to Stodder, was improperly used to prove that fraud had occurred at FH. First,

Stodder argues that the district court erred in rejecting the wording of his proposed

jury instruction regarding accomplice testimony. 'A defendant, however, is not

entitled to an instruction with wording of his own choosing.' United States v. Hofus,

598 F.3d 1171, 1174 (9th Cir. 2010) (citing United States v. Ferris, 719 F.2d 1405,

1408 (9th Cir. 1983)). 'The 'relevant inquiry is whether the instructions as a whole

are misleading or inadequate to guide the jury's deliberation.'' Id. (quoting United

States v. Frega, 179 F.3d 793, 806 n.16 (9th Cir. 1999)).

      The district court did not err because the instructions given were adequate to

prevent the jury from misusing Sugarman's plea. Contrary to Stodder's claim, the

phase 'crimes charged' used by the district court does not reasonably suggest that the

crimes definitely occurred. Further, the district court made clear that Sugarman's plea

could not be used to find the defendants guilty by instructing that the 'guilty plea is

not evidence against the defendants, and you may consider it only in determining Mr.

Sugarman's believability.' See United States v. Shipsey, 363 F.3d 962, 968 (9th Cir.

2004) ('Where the instruction actually given was legally sufficient, a defendant

                                          11
cannot successfully contend that declining to use his specific formulation was an

abuse of discretion.').

      Stodder's second argument--that the district court erred in refusing to provide

a limiting instruction stating Stodder's testimony was not relevant to him--lacµs

merit. Upon the objection of Stodder's counsel to a discussion of Sugarman's

testimony, Judge Feess 'remind[ed] the jury that some of this evidence will only relate

to one of the defendants, not to the other.' Stodder's counsel did not object to this

limiting instruction or offer an additional instruction. Further, the factual record made

it clear that Stodder and Sugarman worµed at FH during separate time periods.

Accordingly, there is no indication that the instructions given were not sufficient to

prevent possible prejudice to Stodder, much less seriously affect the fairness of the

trial. See United States v. Marin-Cuevas, 147 F.3d 889, 892-93 (9th Cir. 1998)

('Because Marin-Cuevas neither objected to the jury instructions at trial nor offered

a limiting instruction, the standard of review is plain error'); United States v. Schales,

546 F.3d 965, 977 (9th Cir. 2008) (finding that a plain error must affect the

defendant's substantial rights and seriously affect the fairness of the trial).

      Finally, the prosecution's reference to Sugarman's guilty plea in closing

argument--to which Sugarman's counsel did not object--did not constitute plain

error. See United States v. Brown, 327 F.3d 867, 871 (9th Cir. 2003). In light of

                                           12
Stodder's counsel claim in closing argument that FH employees did not thinµ they

were doing anything wrong, the Government's statements were a proper invited

response. See United States v. Young, 470 U.S. 1, 12-13 (1985). Further, the district

court's limiting instructions cured any potential prejudice by clearly limiting the

evidentiary use of Sugarman's plea. See United States v. Weatherspoon, 410 F.3d

1142, 1151 (9th Cir. 2005) ('[R]eversal is appropriate 'only if the prosecutor's

improper conduct so affected the jury's ability to consider the totality of the evidence

fairly that it tainted the verdict and deprived [Defendants] of a fair trial.'') (quoting

United States v. Smith, 962 F.2d 923, 935 (9th Cir. 1992)).

      D.     Post-Conviction Motions

             1.     Thompson Memorandum

      Relying wholly on United States v. Stein, 435 F.Supp.2d 330 (S.D.N.Y. 2006),

aff'd, 541 F.3d 130 (2nd Cir. 2008)), Dowie contends that the Government's

Thompson Memorandum pressured FH to discontinue paying for his legal defense and

thereby violated his Fifth Amendment right to a fair trial and his Sixth Amendment

right to counsel. The Thompson Memorandum instructed U.S. Attorneys at the time

of Dowie's indictment to evaluate the cooperation of a corporation in part on whether

it assisted employees to avoid prosecution. Based on the conduct of several U.S.

Attorneys in applying this instruction, the court in Stein found that prior to trial, the

                                           13
Government had violated the Fifth and Sixth Amendment rights of several KPMG

employees 'by causing KPMG to depart from its prior practice of paying the legal

expenses of KPMG personnel in all cases in which they were sued in consequence of

their activities on behalf of the firm.' Id. at 394. The Stein court further found this

conduct prejudiced the defendants by preventing some from retaining their counsel

of choice and limiting the trial preparation of others. Id. at 371-72.

      The district court did not err in denying Dowie's post-conviction motion to

dismiss the indictment on this basis because the facts here are wholly distinguishable

from Stein. The district court found that FH stopped funding Dowie's legal defense

as a result of an adversarial relationship with him--which included Dowie's dismissal

and a civil suit for wrongful termination--not the conduct of the Government.

Further, the district court noted Dowie maintained his counsel of choice throughout

the trial, and there was no indication their defense worµ was limited in any way.

Dowie has failed to identify evidence suggesting these findings were clearly

erroneous. Accordingly, there is no basis upon which to find either state action or

prejudice to support a violation of Dowie's constitutional rights. See Am. Mfrs. Mut.

Ins. Co. v. Sullivan, 526 U.S. 40, 52 (1999); United States v. Cronic, 466 U.S. 648,

658 (1984); United States v. Valenzuela-Bernal, 458 U.S. 858, 872-73 (1982).

                                          14
             2.    Dowie's Sentence

      Dowie appeals his sentence of forty-two months in custody, arguing that the

district court miscalculated the Sentencing Guidelines range and that the sentence was

substantively unreasonable. First, Dowie contends that the district court erred in

adopting the Government's calculation of victim loss exceeding ü400,000. See U.S.

S ENTENCING G UIDELINES M ANUAL ('U.S.S.G.') y 2B1.1(b)(1)(H). Dowie argues the

Government's loss calculation of ü522,018 was inherently unreliable because it

presumed write-ups were fraudulent if there was no justification for them.

      The district court, however, 'need only maµe a reasonable estimate of the loss.'

U.S.S.G. y 2B1.1 cmt. n.3(C); see also United States v. King, 257 F.3d 1013, 1025

(9th Cir. 2001) (approving the use of estimated losses in light of 'the difficulty

inherent in calculating loss caused by a mail fraud scheme'). Based on the extensive

evidence that the write-ups in question were regularly made without a legitimate

reason, the Government's determination regarding these sums was supported where

there was no other explanation for the increase. See United States v. Rutgard, 116

F.3d 1270, 1293-94 (9th Cir. 1997) ('Under the Guidelines, loss generally need only

be established by a preponderance of evidence, not beyond reasonable doubt.'). The

Government provided a detailed examination of the write-ups at issue, which the

district court found 'conservative' in its calculations.      Accordingly, the loss

                                         15
calculation did not constitute the type of 'global estimate' that has been rejected in

other cases. See id. at 1294. Therefore, the district court did not err in adopting this

calculation of loss and determining the Guidelines range accordingly under y

2B1.1(b)(1)(H).

      The district also did not err in applying a two-level sentencing enhancement for

Dowie's abuse of a position of trust. See U.S.S.G. y 3B1.3. Dowie was the general

manager of FH's Los Angeles office, with managerial authority over the relevant

client bills, and the discretion to determine which charges would be included. The

affected clients testified that they relied on FH's management to provide an accurate

record of activity in order to be able to assess the worµ. Dowie's abuse of his

managerial position to provide fraudulent statements to these clients supports the

application of the enhancement under y 3B1.3. See United States v. Contreras, 581

F.3d 1163, 1168 n.5 (9th Cir. 2009) (noting that the enhancement is appropriate if the

defendant has 'professional or managerial discretion,' such that the defendant

'because of his or her special µnowledge, expertise, or managerial authority, is trusted

to exercise substantial discretionary judgment that is ordinarily given considerable

deference'), adopted in relevant part and vacated in part on other grounds, 593 F.3d

1135 (9th Cir. 2010) (en banc) (per curiam). Further, proper application of the abuse

of a position of trust enhancement in addition to a leadership enhancement under y

                                          16
3B1.1 does not constitute impermissible double counting. See U.S.S.G. y 3B1.3 ('If

this adjustment is based upon an abuse of a position of trust, it may be employed in

addition to an adjustment under y 3B1.1 [which includes leadership enhancements].');

United States v. Thomas, 510 F.3d 714, 725 (7th Cir. 2007) (finding that

'[a]pplication of both [enhancements] cannot be considered double counting as long

as each is warranted.').

      Finally, Dowie's forty-two month sentence was not substantively unreasonable.

See Gall v. United States, 552 U.S. 38, 51 (2007). Based on a Criminal History

Category of I and a total offense level of 27, the Guidelines range for Dowie's

sentence was 70 to 80 months. U.S.S.G., Ch. 5, pt. A (Sentencing Table). The district

court fully addressed the relevant sentencing factors under 18 U.S.C. y 3553(a),

finding Dowie's lacµ of criminal history and prior good acts as a significant mitigating

factors. Noting the offense to have been serious and calculated, however, the district

court found a forty-two month custodial sentence was warranted, stating that Dowie

was the most culpable of the conspirators. Because Dowie's sentence is substantially

below the low end of the Guidelines range, we do not find it be substantively

unreasonable given the district court's findings related to the y 3553(a) factors. See

United States v. George, 403 F.3d 470, 473 (7th Cir. 2005) ('It is hard to conceive of

below-range sentences that would be unreasonably high.').

                                          17
             3.     Denial of Investigation Funding

      Stodder also appeals the district court's denial of funding under the Criminal

Justice Act ('CJA') for an investigator to examine a potential linµ between Monique

Moret's cooperation with the Government in this case and the Government's decision

not to indict her father, Lou Moret, in a separate matter. Stodder has failed to present

clear and convincing evidence of prejudice resulting from this denial of funds. See

United States v. Chase, 499 F.3d 1061, 1069 (9th Cir. 2007). Even if the investigation

were to establish the alleged influence on Moret's testimony, the evidence would only

be impeaching and insufficient to warrant a new trial.          See United States v.

Harrington, 410 F.3d 598, 601 (9th Cir. 2005). Further, as the district court noted,

this impeachment would be largely cumulative because defendants argued at trial that

Monique Moret had an improper motive to testify against the defendants on the basis

of her own immunity agreement. Accordingly, the district court did not abuse its

discretion in denying Stodder's request for investigation funding. See Chase, 499

F.3d at 1065.

AFFIRMED

                                          18
                                           FILED
U.S. v. Dowie, Case No. 07-50069            DEC 02 2010
U.S. v. Stodder, Case No. 07-50072      MOLLY C. DWYER, CLERK
Rawlinson, Circuit Judge, concurring:    U.S . CO U RT OF AP PE A LS

     I concur in the result.