Court Opinion

ID: 4383009
Source: CourtListenerOpinion
Date Created: 2019-04-01 21:00:22.501116+00
Date Added: 2024-06-11T14:50:05.985976
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                            APR 01 2019
                    UNITED STATES COURT OF APPEALS                       MOLLY C. DWYER, CLERK
                                                                          U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,                        No.   16-10418

              Plaintiff-Appellee,                D.C. No.
                                                 1:13-cr-00512-DKW-1
 v.

GEORGE LINDELL,                                  MEMORANDUM*

              Defendant-Appellant.

UNITED STATES OF AMERICA,                        No.   16-10422

              Plaintiff-Appellee,                D.C. No.
                                                 1:13-cr-00512-DKW-2
 v.

HOLLY HOAEAE,

              Defendant-Appellant.

                  Appeal from the United States District Court
                            for the District of Hawaii
                 Derrick Kahala Watson, District Judge, Presiding

                     Argued and Submitted February 12, 2019
                               Honolulu, Hawaii

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Before: TALLMAN, BYBEE, and N.R. SMITH, Circuit Judges.

      George Lindell and Holly Hoaeae (“Defendants”) appeal their convictions

on multiple counts of mail fraud, wire fraud, and money laundering arising from a

$28 million fraudulent scheme they called the “Parking Lot.”1 Hoaeae also appeals

her sentence of 120 months imprisonment. We have jurisdiction pursuant to 28

U.S.C. § 1291 and 18 U.S.C. § 3742, and we affirm.

      1. Relying on Luis v. United States, 136 S. Ct. 1083, 1093 (2016) (plurality

opinion), Defendants argue that the government violated their Sixth Amendment

rights by improperly seizing Lindell’s entire IRA, containing about $220,000 at the

time of the initial seizure, thereby preventing them from hiring private counsel to

represent them during their criminal proceedings. Defendants also argue that the

district court erred under Luis by failing to immediately release some of the IRA

funds for the remaining post-trial proceedings.

      Dealing first with the pre-trial restraint of funds, Defendants forfeited this

argument, as they failed to object to the government’s continued restraint of

allegedly untainted funds until after trial. Puckett v. United States, 556 U.S. 129,

134 (2009); United States v. Ripinsky, 20 F.3d 359, 365 (9th Cir. 1994). Thus, we

      1
          Only Lindell was convicted of money laundering.
                                           2
review for plain error. United States v. Perez, 116 F.3d 840, 845 (9th Cir. 1997)

(en banc).

      We exercise our discretion to remedy a plain error only if four conditions are

satisfied: (1) “there must be an error or defect”; (2) the error “must be clear or

obvious, rather than subject to reasonable dispute”; (3) “the error must have

affected the appellant’s substantial rights”; and (4) the error must “seriously

affect[] the fairness, integrity or public reputation of judicial proceedings.” Puckett,

556 U.S. at 135 (internal citations and quotation marks omitted).

      Defendants have failed to demonstrate plain error, as it is not clear or

obvious that the government withheld “innocent funds needed to pay for counsel.”

Luis, 136 S. Ct. at 1095. Even assuming there were untainted funds in the IRA

during the criminal proceedings, Defendants have failed to clearly demonstrate that

those funds were needed to pay for counsel of choice. When Defendants originally

challenged the government’s allegedly improper restraint of untainted IRA funds

(three months after Defendants were convicted), they argued that they needed those

funds “to cover reasonable livelihood expenses for [Lindell’s] wife and child,” and

did not mention or indicate that the funds were needed to retain private counsel.

However, after Luis was issued (and a year after their conviction), Defendants for

the first time asserted they had actually needed those funds to hire private counsel

                                           3
to represent them at trial and for post-trial proceedings. The timing of this request

suggests that Defendants never intended to hire counsel with any allegedly

untainted IRA funds, but instead merely saw a promising argument for vacating

their convictions after Luis was handed down. Nothing in the record necessitates a

contrary conclusion. In these circumstances, it is not clear or obvious that the IRA

funds were actually needed to pay for counsel at any time.2

      For the same reason, we likewise conclude that even reviewing legal

conclusions de novo and factual findings for clear error, see United States v.

Hernandez-Escobar, 911 F.3d 952, 955 (9th Cir. 2018), the district court properly

denied Defendants’ request for immediate release of IRA funds for the remaining

post-trial proceedings. As a result, Defendants have failed to satisfy their burden

on appeal.3

      2. Defendants argue that the jury instructions constructively amended the

indictment by allowing the jury to convict based on an uncharged fraudulent

nondisclosure theory. However, the court provided “jury instructions requiring the

      2
       Indeed, even as he challenged the government’s restraint of the IRA funds
on Luis grounds, Lindell continued to simultaneously assert that the IRA funds
should be released to cover his family’s reasonable livelihood expenses.
      3
       Because we conclude that Lindell’s Sixth Amendment right to counsel of
choice was not violated by the restraint of the entire IRA account, any potential
claim Hoaeae asserts related to those funds also necessarily fails.
                                           4
jury to find the conduct charged in the indictment before it may convict.” United

States v. Ward, 747 F.3d 1184, 1191 (9th Cir. 2014); see also United States v.

Flores, 802 F.3d 1028, 1040 (9th Cir. 2015) (“We presume the jury followed these

instructions . . . .”). More specifically, the court told the jury that it must find “the

charged scheme.” The jury instructions “assur[ed] that the jury convicted the

[Defendants] based solely on the conduct actually charged in the indictment.”

Ward, 747 F.3d at 1191. The court did not specifically characterize the charged

scheme as a “Ponzi” scheme, but its failure to do so did not embolden the jury to

disregard the court’s instructions and convict based on an uncharged scheme,

especially because the underlying indictment was also presented to the jury to

consult during deliberations. Accordingly, we reject Defendants’ argument.

       3. Defendants argue that the district court abused its discretion by admitting

evidence that they sold unlicensed securities and by declining to strike related

allegations from the governing indictment. However, Defendants fail to contradict

(or even acknowledge) the district court’s ultimate finding that “[w]hether the

defendants were licensed to sell these securities, whether these securities were in

fact not registered, [and] whether they were required to be registered by law is

highly probative . . . evidence of whether the defendants were operating a scheme

to defraud and [is] highly relevant to the charged crimes of wire and mail fraud.”

                                             5
Accordingly, Defendants have failed to demonstrate this finding was clearly

erroneous. In that light, it was within the district court’s discretion to determine

that the high probative value of the evidence to show their intent to defraud was

not substantially outweighed by the risk of prejudice that would result from its

admission. See United States v. Espinoza-Baza, 647 F.3d 1182, 1189 (9th Cir.

2011) (giving substantial deference to the district court’s Rule 403 rulings, “unless

it ‘lies beyond the pale of reasonable justification under the circumstances’”

(quoting United States v. Pineda-Doval, 614 F.3d 1019, 1035 (9th Cir. 2010))).

      4. Defendants argue that the district court abused its discretion by permitting

Keith Cunningham to testify as a fact witness. They assert that Cunningham

actually provided expert testimony, because he discussed his financial expertise

and his opinion—which he expressed to Lindell years before the criminal

proceedings—that the “Parking Lot” investment program run by Defendants was a

Ponzi scheme.

      Lay testimony is admissible if it is (1) “rationally based on the witness’s

perception”; (2) “helpful to clearly understanding the witness’s testimony or to

determining a fact in issue”; and (3) “not based on scientific, technical, or other

specialized knowledge within the scope of Rule 702.” Fed. R. Evid. 701.

                                           6
      Here, Cunningham’s testimony was relevant in establishing how he knew

Lindell—the two met through Cunningham’s business seminars—and the context

in which Lindell disregarded Cunningham’s advice by continuing to run the

Parking Lot scheme in the same manner. This was permissible fact testimony that

was “helpful to” the jury in determining Lindell’s knowledge of his potential

wrongdoings and his intent to defraud his clients. See United States v. Gadson, 763
F.3d 1189, 1207–09 (9th Cir. 2014).

      Moreover, the district court properly instructed the jury that Cunningham

was not an expert witness, that his opinion was not determinative or substantive

evidence, and that the jury must consider the testimony “only for the limited

purpose of demonstrating Mr. Lindell’s knowledge, intent and state of mind

following his discussions with Mr. Cunningham.” Thus, even if it were error to

admit Cunningham’s testimony, that error was harmless. United States v.

Christensen, 828 F.3d 763, 800 (9th Cir. 2015) (“We routinely trust juries to

follow limiting instructions when evidence is erroneously admitted.”) (internal

                                          7
citation omitted). Under these circumstances, the court did not abuse its discretion

in permitting Cunningham to testify.4

      5. Hoaeae argues that the district court erred in enhancing her sentence

pursuant to two separate provisions of the United States Sentencing Guidelines.

She asserts that the court utilized the wrong legal standard for the sophisticated

means enhancement. See U.S.S.G. § 2B1.1(b)(10)(C). She also asserts that the

court erred in concluding she occupied a position of trust. See U.S.S.G. § 3B1.3.

      The court used the correct legal standard under U.S.S.G. § 2B1.1, as it

expressly noted that the enhancement applies to “intentionally employing”

sophisticated means. Additionally, the court found that Hoaeae “participated in the

preparation and delivery of [the diploma-like promissory] notes to her client

investors.” This finding is not clearly erroneous, as it is consistent with the

undisputed fact that Hoaeae “signed and delivered the notes.” Consequently,

      4
       In challenging Cunningham’s testimony, Defendants also argue that the
government violated their Sixth Amendment rights to confront witnesses regarding
testimonial statements. On that basis, they claim that the government should not
have questioned Cunningham regarding statements contained in an e-mail sent to
Lindell by Frank Clark. However, Clark’s e-mail was a response to Lindell’s
decision to resign from a business advisory council run by Cunningham, and it was
sent well before any criminal proceedings were initiated. There is no indication
that Clark believed the statements would be part of a future court record.
Accordingly, the statements were not testimonial, but were admitted and
admissible as business records. See Crawford v. Washington, 541 U.S. 36, 51–52,
55 (2004).
                                           8
because Hoaeae concedes that the creation and use of the promissory notes

constituted sophisticated means, the court did not err in concluding that she

intentionally engaged in the use of sophisticated means.

      The court also did not err in concluding that Hoaeae held a position of trust

pursuant to U.S.S.G. § 3B1.3. It is clear from the record that Hoaeae was

intimately aware of all of her clients’ financial needs and goals, and that she used

that familiarity to build personal relationships with her clients in frequent one-on-

one meetings as their financial advisor. Based on these relationships, a reasonable

client would trust her to disclose all information in her possession, public and

nonpublic, bearing on her recommended financial investments. See United States v.

Laurienti, 731 F.3d 967, 973–74 (9th Cir. 2013). Thus, Hoaeae held a position of

trust, and the district court did not err in applying an enhancement based on her

abuse of that position. See id.

      AFFIRMED.

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