Court Opinion

ID: 2965162
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:36:23.980642+00
Date Added: 2024-06-11T11:43:06.049237
License: Public Domain

USCA1 Opinion

	

                            United States Court of Appeals
                                For the First Circuit
                                 ____________________

        No. 97-1164

                                    UNITED STATES,

                                      Appellee,

                                          v.

                                BERNARD F. BRADSTREET,

                                Defendant, Appellant.

                                 ____________________

        No. 97-1204

                                    UNITED STATES,

                                      Appellant,

                                          v.

                                BERNARD F. BRADSTREET

                                 Defendant, Appellee.

                                _____________________

                    APPEALS FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF MASSACHUSETTS

                    [Hon. Richard G. Stearns, U.S. District Judge]
                                              ___________________

                                 ____________________

                                        Before

                               Torruella, Chief Judge,
                                          ___________
                                Stahl, Circuit Judge,
                                       _____________
                              and Lynch, Circuit Judge.
                                         _____________

                                 ____________________

            William J.  Kopeny, with whom John  W. Powell and Kopeny & Powell,
            __________________            _______________     ________________
        P.C. were on brief for appellant/cross-appellee.
        ____
            John J.  Falvey, Jr.  and  Jonathan L.  Kotlier, Assistant  United
            ____________________       ____________________
        States Attorneys, with whom  Mark W. Pearlstein, Acting United  States
                                     __________________
        Attorney, was on brief for appellee/cross-appellant.

                                 ____________________

                                   January 29, 1998
                                 ____________________

                      STAHL, Circuit Judge.  Bernard F. Bradstreet is the
                      STAHL, Circuit Judge.
                             _____________

            former  President  and Chief  Financial  Officer  of Kurzweil

            Applied  Intelligence,  Inc.,  a  Massachusetts company  that

            develops and sells  voice recognition software.   Following a

            twenty-day trial, a  jury convicted Bradstreet  of conspiring

            to  commit securities fraud, see  18 U.S.C.   371; securities
                                         ___

            fraud,  see 15  U.S.C.     78j(b), 78ff(a),  and 17  C.F.R.  
                    ___

            240.10b-5 ("Rule 10b-5"); and knowingly falsifying Kurzweil's

            books and records in an attempt to conceal his fraud,  see 15
                                                                   ___

            U.S.C.     78m(b)(5), 78ff(a),  and 17  C.F.R.    240.13b2-2.

            Thereafter,  the district  court  departed downward  from the

            applicable  guidelines sentencing  range of 51-63  months and

            sentenced Bradstreet to  33 months in prison,  followed by 24

            months of  supervised release.   It also  ordered him  to pay

            $2.3 million in restitution.

                      Bradstreet appeals from his convictions on a number

            of  grounds, only  two  of which  are  preserved for  plenary

            appellate  review.   The  government cross-appeals  from  the

            district court's sentence, arguing that, on the facts of this

            case,  the  downward  departure was  not  within  the court's

            discretion.    We  affirm  the  convictions  but  vacate  the

            judgment and remand for resentencing.

                                         -3-
                                          3

                                          I.
                                          I.
                                          __

                      We  limit ourselves here  to a general  overview of

            the case, deferring more detailed recitations of the facts to

            later discussions of relevant issues.

                      To   sell  stock  to  the  general  public  on  the

            publicly-traded securities  markets, a company must apply for

            and  receive  the  approval of  the  Securities  and Exchange

            Commission  (SEC),  and  thereafter make  an  initial  public

            offering (IPO).  In connection with the IPO, the company must

            file   with  the  SEC  a  prospectus  detailing  its  overall

            financial   condition  and   recent  financial   performance.

            Subsequently,  it also  must make  quarterly  filings of  SEC

            Forms  10-Q, which  contain information  about  the company's

            financial performance during the preceding quarter.  

                      Sometime  in   the  early   1990's,  the   Kurzweil

            management   hierarchy,  led   by  Bradstreet,   initiated  a

            substantial  effort to  "take the  company public."   To this

            end,   Bradstreet  established   quarterly  projections   for

            revenues and profits.   Bradstreet then  pressured Kurzweil's

            sales  force  to  meet these  projections  because investment

            bankers  were unlikely  to  underwrite  the contemplated  IPO

            unless Kurzweil  could demonstrate profitability  for several

            quarters in a row.

                      Companies determine quarterly profits  or losses on

            either a cash or an accrual basis.  In cash basis accounting,

                                         -4-
                                          4

            profit  or  loss  constitutes actual  dollars  received  less

            actual dollars spent.  In accrual basis accounting, profit or

            loss constitutes revenue  due, whether received or  not, less

            expense  incurred, whether  paid or  not.   Because  informed

            judgment often determines  whether and when  revenue actually

            is  "due," public companies that use accrual basis accounting

            must develop revenue recognition policies that both guide the

            exercise of such  judgment and conform to  generally accepted

            accounting principles (GAAP).

                      Prior  to the decision  to go public,  Kurzweil, an

            accrual  basis  accounter,  adopted  a  revenue   recognition

            policy.   In  June 1992, management  circulated to  the sales

            staff  a  memorandum  reminding   the  staff  of   Kurzweil's

            "policies  regarding   shipment  and   revenue  recognition."

            Attached to the memorandum was a document dated "7/28/87" and

            labeled   "Kurzweil   Applied  Intelligence,   Inc.   Revenue

            Recognition  Policy."   In  relevant  part,  it  stated  that

            anticipated  revenue  should  not  be  recognized  if  "major

            uncertainties .  . .  surround culmination  of the  [revenue-

            generating]  transaction" or  if  "final  acceptance  by  the

            customer requires an event out  of [Kurzweil's] control . . .

            ."

                      After an  earlier false  start, the  IPO closed  on

            August 17, 1993.  Thereafter, as required, Kurzweil submitted

            Forms 10-Q for the quarters  ending July 31, 1993 and October

                                         -5-
                                          5

            31, 1993.  The essence of the government's case was that each

            of these submissions  contained fraudulently-inflated revenue

            figures indicating  that  Kurzweil was  profitable  when,  in

            fact, it  was operating  near or at  a loss.   In  making its

            case,  the government sought to prove that Bradstreet; Thomas

            E.  Campbell, Kurzweil's vice  president in charge  of sales;

            and  Debra J. Murray,  Kurzweil's treasurer  and also  a vice

            president,  conspired to and  actually did "book"  as revenue

            the  anticipated proceeds  of a  number  of contingent  sales

            which  occurred in time periods covered by the prospectus and

            the Forms 10-Q.  The  government also endeavored to show that

            these  same individuals, along with David R. Earl, Kurzweil's

            vice president in  charge of operations, engaged  in a scheme

            to   conceal  the  fraud  from  the  company's  auditors  and

            underwriters.  The  underlying indictment charged  Bradstreet

            and   Campbell  with   conspiracy   (Count  I);   substantive

            securities  fraud  in  connection  with  each  of  the  three

            fraudulent  submissions (Counts  II  - IV  respectively); and

            knowing  falsification of company records (Count V).  It also

            charged Earl with  knowing falsification in Count  V.  Murray

            had  previously entered into a cooperation and plea agreement

            with the government and had waived indictment.

                      The  indictment  set   forth  14  improperly-booked

            "sales" (and  alluded to  a fifteenth) as  overt acts  in the

            conspiracy count.   The transactions in question,  which took

                                         -6-
                                          6

            place between June  1992 and January 1994, were  of two basic

            types:  (1)  those in  which, near the  end of a  fiscal-year

            quarter, a  Kurzweil  salesperson had  forged  a  prospective

            customer's signature to a sales quote; and (2) those in which

            the prospective  customer had signed  a sales quote,  but had

            conditioned its agreement to  purchase Kurzweil equipment  on

            the occurrence of  some event not within  Kurzweil's control,

            such as a future commitment from a third-party purchaser.  At

            trial,  the  government introduced  evidence  regarding these

            transactions and several others, the defendants' knowledge of

            the nature of these transactions, and the defendants' efforts

            to conceal the  nature of these transactions  from Kurzweil's

            auditors  and  underwriters.    These  efforts  included  the

            creation of side agreements, not shown to the auditors, which

            memorialized the conditions of unfinalized sales Kurzweil had

            recorded as  revenue; the  forging by  Kurzweil personnel  of

            responses to audit "confirmation letters" which  the auditors

            had  sent  to Kurzweil  customers to  confirm the  details of

            certain recorded sales;  the pretextual shipment  of Kurzweil

            products to  a storage  facility in order  to create,  on the

            books, the illusion of shipment to customers; and the  giving

            of false explanations of the high and ever-growing percentage

            of Kurzweil  revenues made up  of accounts  receivable.   The

            jury acquitted Earl, but convicted Bradstreet and Campbell on

            all charges.

                                         -7-
                                          7

                                         II.
                                         II.
                                         ___

                      Bradstreet's appellate brief presents six developed

            arguments  for reversal  of his convictions,  but hints  at a

            good number more.  As usual, we confine our discussion to the

            issues  accompanied by  developed argumentation.   See United
                                                               ___ ______

            States v. Bongiorno, 106 F.3d 1027, 1034 (1st Cir. 1997).
            ______    _________

                      Because four  of Bradstreet's  arguments, including

            the primary  one, surface  for the first  time on  appeal, we

            address them together under the plain-error rubric.  See Fed.
                                                                 ___

            R.  Crim.  P.  52(b)  ("Plain  errors  or  defects  affecting

            substantial  rights may  be noticed  although  they were  not

            brought to  the attention of  the court.").  We  then address

            the two arguments Bradstreet has preserved.

            A.  Arguments Governed by Rule 52(b)
            ____________________________________

                      Bradstreet  asserts  that the  trial  court plainly

            erred in failing  to give the jury two  instructions he never

            requested. The first is that "the government bears the burden

            of  negating  a  reasonable  interpretation  of  the  revenue

            recognition  policy upon  which [its] false  statement theory

            depends" [sic]; the second is that the jury must "unanimously

            agree  on either  the factual  basis for  each count,  or the

            precise legal theory on which  [Bradstreet] was guilty" as to

            the  conspiracy  and  securities  fraud counts.    Bradstreet

            further contends that  the court plainly erred  in permitting

            the  indictment to have been constructively amended and/or in

                                         -8-
                                          8

            permitting  the facts at  trial to have  varied prejudicially

            from those alleged in the indictment.  

                      In   two  recent  cases,   the  Supreme  Court  has

            emphasized  and then  reaffirmed the  circumscribed authority

            Rule 52(b) confers upon appellate courts.  To  be correctable

            under Rule  52(b), an  error or defect  raised for  the first

            time on appeal must be "plain," meaning "clear" or "obvious,"

            United States v. Olano, 507 U.S. 725, 734 (1993), at the time
            _____________    _____

            of  appellate consideration, Johnson v. United States, 117 S.
                                         _______    _____________

            Ct.  1544, 1549-50  (1997);  and  it  must  have  "affect[ed]

            substantial  rights," meaning, in most cases, "[i]t must have

            affected  the  outcome of  the  district court  proceedings,"

            Olano, 507 U.S. at 734.  Even then, an appellate court should
            _____

            exercise its discretion to notice an error or defect, see id.
                                                                  ___ ___

            at 735-36 (noting  the permissive language of the Rule), only

            if  it "seriously affects  the fairness, integrity  or public

            reputation of judicial proceedings," id. at 736 (citation and
                                                 ___

            internal  quotation marks omitted).   Although the  Court has

            not described the contours of this discretionary inquiry with

            much precision, it has declined to exercise its discretion in

            the  face of "overwhelming"  evidence that the  outcome would

            have been the same in an error-free proceeding.  See Johnson,
                                                             ___ _______

            117  S. Ct.  at 1550  (involving  failure to  instruct on  an

            element of the offense).  We evaluate Bradstreet's first four

            appellate arguments against this unfriendly legal backdrop.

                                         -9-
                                          9

                      1.  The Reasonable Interpretation Instruction
                      _____________________________________________

                      The  trial court instructed the jury that there are

            three  alternative ways one can commit securities fraud under

            Rule  10b-5 --  employing  a device,  scheme  or artifice  to

            defraud; making  an untrue statement  of a  material fact  or

            omitting to state  a material fact  necessary to prevent  the

            statement made from being misleading; or engaging  in an act,

            practice  or course  of  business  which  operates  or  would

            operate as a  fraud or deceit  upon any person  -- and  that,

            although the government need only prove one of these three to

            secure conviction, the  jury's "finding must be  unanimous as

            to which type  or types of conduct, if  any, have been proven

            beyond  a reasonable doubt."  It also  told the jury that, to

            convict  Bradstreet of securities fraud, it  had to find that

            he engaged in  the fraud knowingly,  willfully, and with  the

            intent to defraud.  The court  then defined for the jury each

            of these concepts,  and concluded its intent  instructions as

            follows:

                           Because  the crimes  charged in  the
                      indictment   involve   a    specific   or
                      deliberate  intent  to  defraud,  a  good
                      faith  belief on the  part of a defendant
                      in the truth of his actions or statements
                      will  necessarily  negate   that  intent.
                      Even false  statements or omissions  of a
                      material   fact  do   not  constitute   a
                      violation of  the criminal  provisions of
                      the securities fraud law unless made with
                      an  intent to defraud.  This intent, as I
                      told you, is one that the government must
                      prove beyond a reasonable doubt.

                                         -10-
                                          10

                           If  you were  to  have a  reasonable
                      doubt as to  whether a defendant  made an
                      inaccurate   statement   while   honestly
                      believing that  statement to be  true, he
                      cannot be held criminally liable for that
                      statement, even if the statement has been
                      shown demonstrably false.   Good faith is
                      a  defense  to  a   crime  containing  an
                      element of  specific  intent  even  if  a
                      defendant's belief in  the proof [sic] of
                      his statements was one  that a reasonable
                      person would not have embraced.

            Bradstreet  did  not  object to  these  instructions  or seek

            additional mens rea instructions.
                       ____ ___

                      Nevertheless,  Bradstreet  now  contends  that  the

            court  plainly erred  in failing  to instruct  the  jury that

            Bradstreet would not  have committed securities fraud  if, in

            fact, the  revenue he  knowingly booked  was properly  booked

            under  any  reasonable interpretation  of  Kurzweil's revenue

            recognition  policy.  Analogizing  to a false  statement case

            from the Tenth  Circuit, see United States  v. Migliaccio, 34
                                     ___ _____________     __________

            F.3d 1517 (10th Cir. 1994),  and cases cited therein, see id.
                                                                  ___ ___

            at   1525,  Bradstreet  asserts   that  there  is   here  the

            possibility  that the  jury  convicted him  for  one or  more

            recognitions  of revenue that were, in fact, reasonable under

            a  fair  construction  of  Kurzweil s  policy.    Central  to

            Bradstreet's primary argument are subsidiary contentions that

            the jury was presented with substantively divergent summaries

            of Kurzweil s policy  in the documentary evidence and  in the

            testimony  of several  witnesses, and  that  the trial  judge

            never   told  the   jury  which   version  was   controlling.

                                         -11-
                                          11

            Bradstreet also  emphasizes our inability to  ascertain which

            transactions the jury  relied upon in reaching  its verdicts,

            and our  putative willingness to look "more  tolerantly" on a

            "failure to articulate  precisely the shape of  [a] necessary

            protective  instruction" in  the context of  an unprecedented

            prosecution.  See  United States v. Sawyer, 85  F.3d 713, 742
                          ___  _____________    ______

            (1st  Cir. 1996) (involving  a bribery prosecution  under the

            federal Travel Act, 18 U.S.C.   1952). 

                      The government responds by denying  the premises of

            Bradstreet s argument.  It contends that Bradstreet presented

            as his  defense theory  lack of knowledge  of the  fraud, not

            truth-in-conduct; that all witnesses  summaries of Kurzweil's

            revenue recognition  policy were essentially  consonant; that

            this prosecution was not nearly  so novel as the one reviewed

            in Sawyer; and that Bradstreet s utter failure to argue for a
               ______

            reasonable interpretation instruction below is not comparable

            to  the  more  forgivable  "imprecise  articulation"  of  the

            argument at issue in Sawyer.
                                 ______

                      While  we  agree with  the  government's final  two

            rejoinders,  we think the first two are seriously misleading.

            On   our  reading  of  the  record,  Bradstreet  presented  a

            bifurcated  defense.    As  to   the  vast  majority  of  the

            transactions  at  issue,  he  denied   knowing  the  critical

            incriminating facts.   But  certainly with  respect to  three

            transactions  -- contemplated  sales  to Transquick,  Chicago

                                         -12-
                                          12

            Mercy, and Willard  Hall -- and probably with  respect to two

            others -- contemplated sales to HCA Nashville and HCA Plano -

            -  he did defend  on the  basis that  the revenue  that these

            transactions  would have  generated  was properly  recognized

            under Kurzweil's policy.  

                      Moreover, the  jury did hear verbal descriptions of

            Kurzweil's revenue  recognition policy  which, when  taken in

            isolation,  appear  to  have  differed  materially  from  the

            written  versions  of  the  policy  set forth  in  the  trial

            exhibits.   As  we have  noted,  the written  version of  the

            policy that was circulated internally at Kurzweil stated that

            revenue should not be recognized if "major uncertainties .  .

            .   surround   culmination    of   the   [revenue-generating]

            transaction" or if "final acceptance by the customer requires

            an event out of  [Kurzweil's] control . . . ."   See supra at
                                                             ___ _____

            5.    The  jury  also   had  before  it  notes  to  financial

            statements, which had  been attached to the  prospectus, that

            contained a summary of Kurzweil's policy.  In pertinent part,

            these  notes stated:  "Revenue from product sales is recorded

            at the time of shipment if no significant obligation relating

            to  the  sale  remains and  collection  is  deemed probable."

            Arguably, these documentary summaries are consistent with one

            another, and  with the  synopsis of  the revenue  recognition

            inquiry Bradstreet himself presented to the jury:  "Are there

            any major uncertainties and is collection probable?"  

                                         -13-
                                          13

                      They are not, however, entirely consistent with the

            explanations of the applicable revenue recognition principles

            provided by two of the government's more important witnesses:

            Debra Murray, Kurzweil's treasurer, and Harvey Creem, who led

            Kurzweil's auditing  team up  to and through  the IPO.   Both

            Murray  and Creem used language  which might suggest that the

            applicable principles were stricter than the written versions

            of the policy seemed to indicate.

                      After  being  shown a  copy of  Kurzweil's internal

            policy,  Murray  described  it  as  requiring  that  a  "firm

            contract [exist] before any goods could be shipped"; that the

            goods "be shipped  to the customer and stored  at a warehouse

            only at the request of a customer and that they were going to

            be paying for the storage [sic]"; and that "there . . . be no

            obligations  beyond the company's  control."  She  also noted

            that  Kurzweil's policy was  in compliance with  GAAP.  Creem

            framed  his testimony  in terms  of GAAP, and  not Kurzweil's

            written  policy, stating  that income  must  be "earned"  and

            "realizable"  to  be   recognizable:    "Putting   that  into

            Kurzweil's terms, Kurzweil would have delivered to a customer

            a product that the customer  wanted, and the customer has the

            ability to pay and is obligated to pay, both."    

                      If  Bradstreet  had   argued  that  there  was   an

            interpretation of Kurzweil's revenue  recognition policy that

            differed  materially from  the  government's and  under which

                                         -14-
                                          14

            certain of the recognitions of  revenue at issue in this case

            would have been proper, the  trial court, upon request, might

            well  have  been obliged  to  give some  sort  of "reasonable

            interpretation" instruction.  After all, where the government

            must prove, as an element of the offense, falsity or, as here

            (at  least with respect to the  second and third of the three

            securities fraud scenarios described by Rule 10b-5, see supra
                                                                ___ _____

            at 9-10),  something akin  to falsity;  where the  government

            also must prove intent to defraud; where a defendant advances

            an understanding of the principles by which truth and falsity

            are  judged that  differs from  that of  the government;  and

            where  the defendant's actions might have been truthful under

            such an understanding, the government cannot carry its burden

            without  first  demonstrating  the  unreasonableness  of  the

            contrary  understanding.  See Migliaccio, 34 F.3d at 1522-25.
                                      ___ __________

                      In   this    case,   however,    Bradstreet   never

            affirmatively claimed,  either in testimony  or in  argument,

            that  his  underlying   understanding  of  Kurzweil's  policy

            differed  from that  of Harvey  Creem, Debra  Murray, or  the

            government.    Nor did  he  suggest that  ambiguities  in the

            policy  made  such  a contrary  understanding  possible.   He

            merely testified that, in his judgment and on his view of the

            hotly-contested facts,  certain  of the  transactions put  in

            issue by the  government properly triggered a  recognition of

                                         -15-
                                          15

            revenue under Kurzweil's  policy.  In light of  this, we take

            Bradstreet's characterization of Kurzweil's written policy, a

            document to  which his lawyer drew his  attention just before

            he gave  his characterization, to  be only a synopsis  of the

            document.  We do not take it to be a de  facto assertion that
                                                 __  _____

            Bradstreet's baseline  understanding of  the policy  differed

            from that of the government, or that a contrary understanding

            was possible.   And  absent such an  assertion, there  was no

            need  for  the   instruction  Bradstreet  now  contends   was

            necessary.  

                      The transcript demonstrates that the parties  tried

            this case on disputed historical facts and the inferences  to

            be drawn  from those  facts.   The principles  underlying the

            policy by which Bradstreet's conduct was to be judged, though

            summarized  variously  and,  perhaps,  carelessly,  were  not

            controverted;  they  seem to  have been  commonly understood.

            This is enough to differentiate this case from Migliaccio and
                                                           __________

            the cases on which  it relies.  And it is  enough to convince

            us  that the  trial  court's  failure to  give  a sua  sponte
                                                              ___  ______

            reasonable interpretation  instruction was  not plain  error.

            On this  record, there  is no basis  for concluding  that the

            jury's verdict would have been  different had the trial judge

            given the now-suggested instruction.  Cf. Johnson, 117 S. Ct.
                                                  ___ _______

            at 1550.

                      2.  The Remaining Plain Error Claims  
                      ____________________________________

                                         -16-
                                          16

                      Bradstreet's remaining claims  of plain error merit

            less  discussion.   As  we  have  observed, the  trial  judge

            informed the  jury that it must unanimously  agree upon which

            of  the three types of securities fraud Bradstreet committed.

            See supra  at 9-10.   In view  of this, we  are at a  loss to
            ___ _____

            comprehend Bradstreet's  suggestion that  the jury never  was

            told to agree  on a precise legal  theory of guilt as  to the

            securities fraud and conspiracy counts.   

                      With respect to  the argument that the  jury should

            have been  told that it must "unanimously agree  on . . . the

            factual  basis for  each count,"  we simply  note that  it is

            unaccompanied by  citation to  any case  which even  remotely

            supports it, and that, although this area of the law is still

            developing, the weight  of the relevant authority  appears to

            be against  requiring juries  to reach  factual unanimity  in

            circumstances  such as these.   See McKoy  v. North Carolina,
                                            ___ _____     ______________

            494  U.S.  433,  449 (1990)  ("Plainly  there  is  no general

            requirement  that the jury reach agreement on the preliminary

            factual issues which  underlie the verdict.")  (Blackmun, J.,

            concurring) (footnote omitted); United  States v. Tipton,  90
                                            ______________    ______

            F.3d  861, 885 (4th  Cir. 1996) (unanimity  instructions need

            guard only against  a lack of  unanimity as  to the means  by

            which a statute  was in fact violated), cert.  denied, 117 S.
                                                    _____  ______

            Ct. 2414 (1997);  United States v. Bellrichard, 62 F.3d 1046,
                              _____________    ___________

            1049 (8th Cir. 1995) (similar), cert. denied, 116 S. Ct. 1425
                                            _____ ______

                                         -17-
                                          17

            (1996);  United States v.  Tarvers, 833 F.2d  1068, 1074 (1st
                     _____________     _______

            Cir.  1987) (unanimity generally not required with respect to

            a specific  act underlying an element of  a charged offense);

            cf.  United States v. Shaoul,  41 F.3d 811,  818 n.4 (2d Cir.
            ___  _____________    ______

            1994) (quoting pattern unanimity instructions).  We therefore

            discern  no "clear" or "obvious"  defect in the trial court's

            unanimity instructions.  See Olano, 507 U.S. at 734.
                                     ___ _____

                      We  are left,  then,  with  Bradstreet's claims  of

            constructive  amendment  and/or  prejudicial  variance.   See
                                                                      ___

            United States v.  Fisher, 3 F.3d 456, 462-63  (1st Cir. 1993)
            _____________     ______

            ("A  constructive amendment occurs when the charging terms of

            the indictment are altered, either literally or in effect, by

            the prosecution or court after the grand jury has last passed

            upon them.  A variance  occurs when the charging terms remain

            unchanged but when  the facts proved  at trial are  different

            from  those  alleged  in  the  indictment.")  (citations  and

            internal  quotation   marks  omitted).     Bradstreet   first

            complains about the  government's introduction into  evidence

            of transactions other  than those set forth as  overt acts in

            Count  I of  the indictment.   He  also contests  the court's

            instruction to  the jury that it could  convict Bradstreet on

            Count V  under an  aiding and abetting  theory.   Finally, he

            points  to  the  discrepancy  between the  relatively  strict

            summary of Kurzweil's revenue recognition policy set forth in

            paragraph  1(f) of the  indictment -- "[Kurzweil]  could only

                                         -18-
                                          18

            recognize a  sale as  revenue for purposes  of its  financial

            statements  and  balance  sheet  when  (1)  it  had  a  firm,

            unconditional contract with  the buyer evidenced by  a signed

            purchase order or sales quote  signed by the customer and (2)

            it had shipped  the product to the customer" --  and the more

            open-ended  language found  in the  written  versions of  the

            policy the jury saw.  None of these alleged defects is within

            the purview of Rule 52(b).

                      First,  it is settled that the government "need not

            recite  all of  its evidence  in  the indictment,  nor is  it

            limited at trial to the overt acts listed in the indictment."

            Fisher, 3  F.3d at 462 n.16 (citation  and internal quotation
            ______

            marks  omitted).    Bradstreet  has  not  pointed  us  toward

            anything  that  takes  this case  outside  the  general rule.

            Second,  Count V did  effectively charge him  with falsifying
                             ___

            books   and  records   and  aiding   and   abetting  such   a

            falsification  by  alleging  a violation  of  the  aiding and

            abetting statute, 18  U.S.C.   2.   And even had it  not done

            so,  "aiding and abetting  is an alternative  charge in every

            count,  whether  explicit  or implicit."    United  States v.
                                                        ______________

            Oreto,  37  F.3d  739,  751  (1st  Cir.  1994)  (citation and
            _____

            internal  quotation marks  omitted), cert.  denied, 513  U.S.
                                                 _____  ______

            1177 (1995).  Third, while the summary of  Kurzweil's revenue

            recognition  policy set forth in  the indictment -- a summary

            the jury did not hear  or read -- did differ materially  from

                                         -19-
                                          19

            the language used in the  written versions of the policy that

            were   in  evidence,   the  lack   of   congruence  did   not

            constructively  amend the indictment  and cause Bradstreet to

            be  convicted of a crime  other than the  ones charged.  Cf.,
                                                                     ___

            e.g., United  States v. Fletcher,  121 F.3d 187,  191-93 (5th
            ____  ______________    ________

            Cir.) (analyzing  the effects  of a constructive  amendment),

            cert. denied, 66 U.S.L.W. 3417  (U.S. Dec. 15, 1997) (No. 97-
            _____ ______

            6753).   Nor did it prejudice him.  See Fisher, 3 F.3d at 463
                                                ___ ______

            (an objected-to variance constitutes reversible error only if

            it results  in prejudice).   Indeed, the  variance we  detect

            worked only to Bradstreet's advantage, as the versions of the

            policy  the jury saw were, if anything, more defense-friendly

            than the  summary of applicable  principles set forth  in the

            indictment.  Cf. id. at 463 n.19.
                         ___ ___

            B.  Preserved Arguments
            _______________________

                      Bradstreet contends that  the trial court committed

            reversible  error  when,  in  admitting  into   evidence  the

            cooperation  agreement  between  the   government  and  Debra

            Murray, it failed to redact from the document the $10 million

            loss to investors Murray admitted  to having caused.  He also

            argues that  the court  committed reversible  error when,  in

            giving  the  jury  an   accomplice  witness  instruction,  it

            inadvertently failed, despite  its having told Bradstreet  it

            would  do so at the charging conference,  to tell the jury to

            consider  what benefits Murray "hopes to receive" in addition

                                         -20-
                                          20

            to the benefits  she had been promised or  had received.  The

            first argument is unconvincing and the second is frivolous.

                      Near the end  of the trial's sixth  day, Bradstreet

            and Campbell argued to the  district court that the amount of

            loss  Murray admitted  to having  caused  should be  redacted

            because it was irrelevant, see Fed. R. Evid. 401 and 402, or,
                                       ___

            even  if  relevant,  was highly  inflammatory  and  therefore

            excludable  under  Fed.  R. Evid.  403  ("Although  relevant,

            evidence   may  be  excluded   if  its  probative   value  is

            substantially  outweighed by the  danger of unfair prejudice,

            confusion of the  issues, or misleading the  jury . . .  .").

            The district court rejected this argument, reasoning that the

            amount  of  loss  was  relevant to  the  materiality  of  the

            falsely-recorded  revenue   figures.     At  Bradstreet   and

            Campbell's request, the  court then instructed the  jury that

            the  loss stipulation was  between the government  and Murray

            only,  and that  it  should  not be  viewed  as binding  upon

            Bradstreet, Campbell, or Earl. 

                      Although  Bradstreet's  appellate argument  is  not

            entirely clear on  this point, we infer that  he continues to

            view the amount of loss as either irrelevant or, if relevant,

            excludable under  Rule 403.   The government points  out that

            Bradstreet  has not  presented a  coherent  challenge to  the

            district court's  reasoning  in admitting  the evidence,  and

            contends further that  the evidence was relevant  to Murray's

                                         -21-
                                          21

            knowledge of the scope of the conspiracy.  Alternatively, the

            government  asserts  that  any error  in  admitting  the loss

            figure was  harmless because "it is highly  probable that the

            error did not  contribute to the verdict."   United States v.
                                                         _____________

            Rose, 104  F.3d 1408, 1414  (1st Cir.), cert. denied,  117 S.
            ____                                    _____ ______

            Ct. 2424 (1997).

                      On  the one  hand, Bradstreet  says  little in  his

            brief about whether the amount of  loss was relevant.  On the

            other, we have some trouble seeing how the amount of loss was

            relevant to the  materiality of the alleged  false statements

            or Murray's  knowledge of  the scope of  the conspiracy.   We

            therefore  turn our focus  to the harmless-error  analysis by

            assuming  error arguendo  and asking  whether  the error  was
                            ________

            likely  to  have  affected  the  verdict.   We  see  no  such

            likelihood.   The  jury was  well aware  that the  IPO netted

            Kurzweil approximately $24  million.  Moreover, the  jury was

            told that  a private placement  of Kurzweil stock  would have

            netted  anywhere  from  $10-15  million  less  than  an  IPO.

            Finally,  a  single investor,  Scudder,  Stevens, and  Clark,

            testified  without  objection  that, by  April  1994,  it had

            invested approximately $5.6 million in the company.  The jury

            therefore could hardly have been shocked by evidence that the

            total  loss was  $10 million.    We are  confident that  this

            evidence had no effect on the verdict.

                                         -22-
                                          22

                      As  to  Bradstreet's  objection to  the  accomplice

            witness instruction, we think that, although the court failed

            to  use the "hopes to receive" language Bradstreet requested,

            the court's lengthy instruction was adequate to convey to the

            jury the  need to  scrutinize Debra  Murray's testimony  with

            special care.   This, in combination with the extensive cross

            examination of Murray as to the benefits she hoped to receive

            for  her plea  and  cooperation,  leaves  us  with  no  doubt

            whatsoever that the  jury fully understood  it was to  regard

            what  Murray had  to say  with some  skepticism.   Cf. United
                                                               ___ ______

            States  v.  Newton,  891  F.2d   944,  950  (1st  Cir.  1989)
            ______      ______

            (rejecting  a challenge  to  a  court's  failure to  give  an

            accomplice witness instruction because the court's immunized-

            witness instruction advised the jury to receive the testimony

            of such a witness with caution and to weigh it with care).

                                         III.
                                         III.
                                         ____

                      Having  rejected  Bradstreet's  challenges  to  his

            convictions, we  turn now to  the government's  cross-appeal.

            Appropriately  applying  the   1995  Guidelines  Manual,  the

            probation  officer  who   prepared  Bradstreet's  presentence

            report  (PSR)  recommended a  base  offense level  of  six; a

            two-level  increase   for  more  than  minimal   planning;  a

            fifteen-level  increase  because  the  loss  ($11,471,250.00)

            exceeded   $10   million;  a   four-level   increase  because

            Bradstreet was an organizer or leader of  a criminal activity

                                         -23-
                                          23

            that  involved five  or more  participants  or was  otherwise

            extensive; and a  two-level increase for abuse  of a position

            of public or private trust.   This yielded adjusted and total

            offense levels of 29 and,  because Bradstreet had no criminal

            history,  a recommended guidelines sentencing range of 87-108

            months.

                      Prior  to sentencing,  however, Bradstreet  and the

            government entered into a sentencing agreement which mirrored

            the PSR except in two respects.  First, the government agreed

            not  to seek  a two-level  upward adjustment  for abuse  of a

            position of trust.  Second, the parties agreed to request the

            court  to  find   that  the  $11-plus  million   loss  figure

            overstated the  seriousness of  the offense, see  Application
                                                         ___

            Note  7(b) of  U.S.S.G.    2F1.1,  and  that the  appropriate

            amount  of   loss  to   be  attributed   to  Bradstreet   was

            approximately  $2.3  million.   Adoption of  this calculation

            would result in a twelve, rather than fifteen, level increase

            for  amount  of  loss.   These  provisions  of the  agreement

            combined  to reduce the recommended total offense level to 24

            and  the  recommended  guidelines sentencing  range  to 51-63

            months.  The sentencing agreement also provided that the only

            ground   on  which  Bradstreet  could  move  for  a  downward

            departure was under  a theory that his conduct  was "a single

            act  of aberrant behavior," see United States v. Grandmaison,
                                        ___ _____________    ___________

            77 F.3d 555, 560-64 (1st Cir. 1996) (explicating the contours

                                         -24-
                                          24

            of this ground  of departure), and that the  government would

            oppose the motion.  Prior to sentencing, Bradstreet so moved.

                      The government opposed Bradstreet's motion on three

            grounds.   First,  it argued  that  it is  illogical to  find

            aberrant conduct where, as here, there has been  no admission

            of guilt. Alternatively, it asserted that both the record and

            the  jury's  verdicts  establish  that  Bradstreet  testified

            dishonestly when  he testified  that he did  not act  with an

            intent to defraud, see supra at  10-11 (outlining the court's
                               ___ _____

            mens  rea instructions, which  emphasized that the  jury must
            ____  ___

            find an  intent to  defraud in order  to convict);  see also,
                                                                ___ ____

            e.g., United  States v. Rostoff,  53 F.3d 398, 413  (1st Cir.
            ____  ______________    _______

            1995)  (a  court  is  bound  to  accept  a  fact  necessarily

            established by a  jury verdict when that fact  is material to

            sentencing),  and that  it  is  illogical  to  find  criminal

            dishonesty   aberrant   where  the   defendant   subsequently

            testified dishonestly.    Finally, the  government  took  the

            position that the duration, complexity, and sophistication of

            Bradstreet's fraud defy characterization as "a single act."

                      The   district   court    accepted   the   parties'

            recommendations    as   to    the   appropriate    guidelines

            calculations,  finding that  Bradstreet had  a total  offense

            level of 24 and an applicable guidelines sentencing  range of

            51-63 months.  The court then granted Bradstreet's motion for

            a  downward  departure,  reduced Bradstreet's  total  offense

                                         -25-
                                          25

            level  to 20 (yielding a guidelines sentencing range of 33-41

            months), and sentenced Bradstreet to 33 months in prison.  In

            doing so,  the  court implicitly  rejected  the  government's

            argument  that  a defendant  must  admit  guilt in  order  to

            receive  an aberrant  conduct  departure.    The  court  also

            rejected without explanation the argument that the record and

            verdicts establish that Bradstreet testified dishonestly, and

            that this fact makes  him legally ineligible for an  aberrant

            conduct departure.

                      Rather,  the  court  looked  to  our  statement  in

            Grandmaison that "aberrant behavior departures are  available
            ___________

            to  first offenders whose course of criminal conduct involves

            more  than  one  criminal  act,"  77 F.3d  at  563,  and  our

            directive  that  courts  judge  aberrance  vel  non  under  a
                                                       ___  ___

            totality-of-circumstances test, see id.  at 563-64 (approving
                                            ___ ___

            consideration of  factors such  as the  absence of  pecuniary

            gain  to the  defendant,  prior good  deeds,  and efforts  to

            mitigate the effects of  the crime), to find  that Bradstreet

            had  engaged  in  "behavior  .  .  .  animated  by  a  single

            objective, . .  . the success of  the Kurzweil IPO."   In the

            court's  view, Bradstreet's conduct  was, under the  facts of

            this case, tantamount to  a single act.  And the  totality of

            the circumstances -- a perceived lack of motivation by greed,

            an

            otherwise exemplary life, a record of significant charitable

                                         -26-
                                          26

            giving,  and an impressive outpouring of support from friends

            and  family  -- warranted  the  conclusion  that Bradstreet's

            conduct was aberrant.

                      Even  if we  were to  follow  the district  court's

            approach  and to define  Bradstreet's criminal conduct  at an

            exceedingly  high  level   of  generality,  that  is,   as  a

            multi-faceted  act  of  dishonesty  designed  to  obtain  for

            Kurzweil  badly-need cash during  the 1992-94 time  frame, we

            are  faced with the government's arguments that what occurred

            was  not  a   single  aberrant  act  of   dishonesty  because

            Bradstreet  did not  plead  guilty and/or  because Bradstreet

            engaged  in the wholly-separate act of testifying dishonestly

            about his conduct.  Because  we see no convincing response to

            the latter of these two arguments on the  facts of this case,

            we accept  it  and  leave to  another  day  consideration  of

            whether  an  admission  of  guilt  is  a prerequisite  to  an

            aberrant behavior departure.

                      Although  Grandmaison  takes an  expansive  view of
                                ___________

            that which constitutes  a single act of aberrant  conduct, it

            confirms that  the Guidelines Manual  means what it says:   a

            departure  for  an  act  that  is composed  of  a  number  of

            component  acts, id.  at  563  ("[S]ingle  acts  of  aberrant
                             ___

            behavior  . .  .  include  multiple acts  leading  up to  the

            commission of a  crime."), is permissible only if  the act is

            singular, see id. at 564  (first time offenders who have been
                      ___ ___

                                         -27-
                                          27

            "convicted of several unrelated offenses" are not entitled to

            aberrant  conduct departures).   Moreover, in the  context of

            guidelines  sentencing, we  think it  obvious  that the  term

            "aberrant" must look  forward as well as backward.   In other

            words, an aberrant behavior departure is not warranted unless

            the conduct at issue is both a marked departure from the past

            and is unlikely to recur.  Cf. United States v. Lam,  20 F.3d
            ___                        ___ _____________    ___

            999, 1004  (9th Cir.  1994) ("[I]n  this  context, calling  a

            consistent criminal's behavior aberrant would  be an oxymoron

            and, perhaps,  make us look  like oxen or morons  or both.").

            In so  holding, we  note that the  Ninth Circuit,  which also

            takes an expansive  view of that  which constitutes a  single

            act of  aberrant behavior,  see United  States v.  Takai, 941
                                        ___ ______________     _____

            F.2d 738, 741 (9th Cir. 1991), apparently includes likelihood

            of recurrence as  part of its aberrance calculation, see Lam,
                                                                 ___ ___

            20 F.3d at 1005.

                      Under  these  criteria  and  on  this  record,  the

            district  court  exceeded  its  discretion  in  rejecting the

            government's  dishonest  testimony   argument  and  departing

            downward.  The argument rests  on two premises, one legal and

            one factual:   (1) one convicted  of criminal dishonesty  who

            testifies dishonestly about his conduct is not entitled to an

            aberrant  conduct departure  as a  matter of  law; and  (2) a

            finding  that Bradstreet did not testify dishonestly would be

            an abuse of discretion.   Because the court failed to specify

                                         -28-
                                          28

            which of these premises it did not accept, we examine each in

            turn.

                      We think  it  obvious that  the government's  legal

            premise  is sound.  As we have observed, a departure based on

            a finding that the relevant criminal conduct was a single act

            of  aberrant behavior is  appropriate only where  the conduct

            was isolated and is unlikely to recur.  Yet one who testifies

            dishonestly  after engaging  in  felonious dishonesty  cannot

            credibly  make either  claim.    One  convicted  of  criminal

            dishonesty is therefore  not entitled to an  aberrant conduct

            departure  if he has testified dishonestly about his criminal

            conduct.

                      We  also   agree  with  the   government's  factual

            premise.  As the  government  pointed out  both below  and on

            appeal,  Bradstreet testified that he  did not intend to file

            false  information in connection with the public offering, to

            file  false  financial  statements  in  connection  with  the

            relevant Forms  10-Q, or  to conceal  records or  information

            from  the auditors.   The  verdicts  against him  necessarily

            establish, however, that the jury rejected this testimony and

            found that he did act with  an intent to defraud.   See supra
                                                                ___ _____

            at 10-11 (noting that the court instructed the jury to acquit

            unless  it found  that  Bradstreet acted  with  an intent  to

            defraud and setting forth the court's mens rea instructions).
                                                  ____ ___

            In  our  view,  this  finding  conclusively  establishes that

                                         -29-
                                          29

            Bradstreet  testified dishonestly  at trial.  After all,  the

            jury's verdict must  be credited  over Bradstreet's  contrary

            testimony, see,  e.g., Rostoff, 53 F.3d at  413; the contrary
                       ___   ____  _______

            testimony   strikes  us   as   inherently  not   subject   to

            characterization  as  unintentional,  cf.  United  States  v.
                                                  ___  ______________

            Dunnigan, 507  U.S. 87,  94 (1993)  (making clear that  false
            ________

            testimony  is  not  perjurious  where  it  is  "a  result  of

            confusion,  mistake, or faulty  memory"); and, in  any event,

            Bradstreet  has not responded to the government's argument by

            suggesting that his false intent testimony was unintentional.

            To the contrary, he has  steadfastly maintained that he acted

            without an intent  to defraud during  the entire pendency  of

            these proceedings.

                      Bradstreet attempts to rebut  this line of analysis

            in three  ways.  First,  he appears in  some places to  argue

            that the district court departed  downward on some ground  or

            grounds  other  than  the  guidelines-based  single   act  of

            aberrant  behavior  ground,  and  that  the  Supreme  Court's

            decision in  Koon v.  United States, 116  S. Ct.  2035 (1996)
                         ____     _____________

            (establishing   an  across-the-board   abuse  of   discretion

            reviewing standard for sentencing  departures), validates the

            court's authority to engage in such a departure.  We think it

            apparent, however, that the court based its departure  on the

            ground  on which  departure  was  sought:  that  the  conduct

            underlying  the conviction  was  a  single  act  of  aberrant

                                         -30-
                                          30

            behavior.  To  the extent that the court  ranged far and wide

            in explaining its departure, we perceive it only to have been

            employing the totality-of-circumstances test we prescribed in

            Grandmaison.        Second, Bradstreet seems  to contend that
            ___________

            Koon  precludes   appellate  courts  from   establishing  the
            ____

            contours  of mixed  fact/law  concepts  such  as  that  which

            constitutes  a single act  of aberrant behavior.   Koon makes
                                                               ____

            clear, however,  that the appellate courts are to continue to

            establish  the  legal  boundaries  and to  correct  law-based

            misapplications of such concepts.  See 116 S. Ct. at 2047-48.
                                               ___

            Here, for  the reasons just  stated, we think  the sentencing

            court went beyond its legal boundaries when it concluded that

            the dishonest conduct underlying Bradstreet's convictions was

            both a one-time occurrence and an aberration.  We simply have

            corrected the court's error.

                      Finally, Bradstreet contends that the  jury did not

            necessarily reject any aspect of his testimony.  In doing so,

            he  reanimates  his  argument that,  because  the  jury heard

            substantively  divergent   versions  of   Kurzweil's  revenue

            recognition policy  and was  not told to  acquit if  it found

            that  the revenue  Bradstreet knowingly  booked was  properly

            booked under a  reasonable interpretation of the  policy, his

            conviction is fatally flawed.  In Bradstreet's view, the jury

            might  have  believed that  he  knew nothing  about  the true

            nature  of   those  transactions  involving   forgeries,  but

                                         -31-
                                          31

            nonetheless  convicted him on the basis of those transactions

            he defended as having generated properly-recognized revenue.

                      Even  if we assume  this unlikely scenario  for the

            sake  of  argument,  it remains  fact  that  Bradstreet never

            argued  that there was an interpretation of Kurzweil's policy

            that differed in some respect  from the government's.  And on

            this record, there is no basis for an inference that the jury

            understood the testifying witnesses' summaries of  Kurzweil's

            revenue  recognition  policy   to  be  anything  other   than

            divergent synopses of commonly-understood concepts.   We thus

            have  every   confidence  that  the   jury  determined   that

            Bradstreet acted with an intent  to defraud by reference to a

            common and proper  set of  principles.  As  a result, we  are

            bound to credit the jury's intent finding, which conclusively

            demonstrates its rejection of Bradstreet's testimony.

                      We wish  to be clear  on the precise nature  of our

            ruling.  We do  not employ a per se rule that  an accused who
                                         ___ __

            gives testimony that is necessarily rejected  by the jury has

            intentionally  testified  dishonestly --  i.e.,  that he  has

            perjured himself.  As we  have stated, such testimony, though

            it must be taken  as false, see Rostoff, 53 F.3d  at 413, may
                                        ___ _______

            not  have been  intentionally  false; it  may  have been  the

            product  of  confusion,   mistake,  or  faulty  memory,   see
                                                                      ___

            Dunnigan, 507 U.S. at  95.  Here, though, for reasons we have
            ________

                                         -32-
                                          32

            explained,  see supra  at  29,  Bradstreet's false  testimony
                        ___ _____

            simply is not capable of being regarded as unintentional.  

                      Because the record is fully developed on this point

            and Bradstreet has had an ample opportunity to respond to the

            government's argument, we rule, as  a matter of law, that the

            dishonest activity  for which Bradstreet stands convicted was

            not a single act of aberrant conduct.  Accordingly, we vacate

            Bradstreet's  sentence and  remand  for  resentencing.   See,
                                                                     ___

            e.g., Rostoff, 53 F.3d at 413-14.  
            ____  _______

                                         IV.
                                         IV.
                                         ___

                      Our  decision  to  nullify  the  district   court's

            downward  departure might  strike  some  as  harsh.   We  are

            acutely aware  that incarceration is  but one of a  number of

            ruinous consequences that the  52-year-old Bradstreet and his

            family are suffering as a result of his conduct.  And we have

            a  great deal  of respect  for the  informed judgment  of the

            experienced judge  who determined that,  in light of  all the

            circumstances, nearly three years  in prison is enough.   But

            it  hardly bears repeating that, under guidelines sentencing,

            a judge has  limited discretion to depart  from an applicable

            guidelines  sentencing range.    This  case  is  yet  another

            striking reminder of this fact.

                      For the  reasons  stated,  we  affirm  Bradstreet's
                                                     affirm
                                                     ______

            convictions  but   vacate   the  judgment   and  remand   for
                               vacate
                               ______

            resentencing.

                                         -33-
                                          33