United States v. David Mark

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA, No. 13-10579

Plaintiff-Appellee,

D.C. No.

v. 2:11-cr-00453-

PMP-CWH-1

DAVID M. MARK,

Defendant-Appellant. OPINION

Appeal from the United States District Court

for the District of Nevada

Philip M. Pro, Senior District Judge, Presiding

Argued and Submitted

March 9, 2015—San Francisco, California

Filed July 31, 2015

Before: M. Margaret McKeown, Mary H. Murguia, and

Michelle T. Friedland, Circuit Judges.

Opinion by Judge Friedland;

Concurrence by Judge McKeown

2 UNITED STATES V. MARK

SUMMARY *

Criminal Law

The panel reversed the district court’s denial of the

defendant’s motion to reconsider its denial of the

defendant’s motion to dismiss the indictment, and

remanded with instructions to dismiss the indictment, in a

case in which the parties agreed that the defendant was

given immunity in exchange for his cooperation in a

mortgage-fraud investigation.

The panel held that in light of the scant record

supporting the government’s claim that the defendant

breached the immunity agreement (and was therefore

amenable to prosecution) and clear evidence that key

details of the government’s story were inaccurate, the

district court abused its discretion when it failed to either

grant the defendant’s motion for reconsideration or order an

evidentiary hearing.

Concurring, Judge McKeown wrote separately to

emphasize that this case is a textbook lesson in the

importance of documentation with regard to immunity

deals.

*

This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

UNITED STATES V. MARK 3

COUNSEL

Michael S. Fawer (argued), Smith & Fawer, Covington,

Louisiana, for Defendant-Appellant.

Peter S. Levitt (argued), Assistant United States Attorney,

Daniel G. Bogden, United States Attorney, Elizabeth O.

White, Appellate Chief, United States Attorney’s Office,

Las Vegas, Nevada, for Plaintiff-Appellee.

OPINION

FRIEDLAND, Circuit Judge:

When the government promises not to prosecute a

witness in exchange for his cooperation, it cannot then

indict the witness unless it proves that he failed to

cooperate. Because the government did not do so here, we

remand with instructions to dismiss the indictment.

I.

From 2006 to 2007, Defendant David Mark and his

then-girlfriend Kimberly Brown were employed by

Distinctive Real Estate and Investments, a company run by

Eve Mazzarella in Las Vegas. During Mark’s tenure, the

FBI began investigating Distinctive Real Estate,

Mazzarella, and her husband Steven Grimm in connection

with a large-scale mortgage-fraud scheme.

In November 2007, Brown and Mark voluntarily

reached out to the FBI and provided information to assist in

its investigation. A few months later, in March 2008,

Assistant U.S. Attorney Brian Pugh interviewed Brown and

Mark to determine whether they would be good witnesses

in a potential trial against Grimm and Mazzarella. At the

4 UNITED STATES V. MARK

end of this interview, Mark expressed concern about what

was going to happen to him. Pugh assured Mark and

Brown that, as long as they cooperated with the

government, they would not be prosecuted. Pugh later

acknowledged that his statement created informal immunity

agreements with both witnesses. 1

In February 2011, Pugh called Mark to go over his

testimony in preparation for the upcoming Mazzarella-

Grimm trial. Assistant U.S. Attorney Sarah Griswold and

an FBI agent also participated in the call, which was made

to Mark’s cell phone and lasted approximately an hour.

The FBI agent produced a report memorializing the

discussion. For reasons unrelated to Mark, the trial was

later postponed, so he was not called to testify.

In August 2011, Mark received a target letter informing

him that he faced the possibility of indictment in

connection with the mortgage-fraud scheme. In response to

the letter, Mark hired an attorney who immediately

contacted the prosecutors to set up a meeting. After

unsuccessful plea negotiations during which Mark’s

immunity deal was never mentioned, Mark was charged

with five counts of bank fraud; one count of mail fraud; and

one count of conspiracy to commit bank fraud, mail fraud,

and wire fraud.

Mark’s trial began in March 2013. During Kim

Brown’s testimony, she explained that in 2008 Pugh had

promised her and Mark immunity from prosecution as long

1

Brown’s immunity agreement was at issue in United States v.

Mazzarella, 784 F.3d 532, 538 (9th Cir. 2015).

UNITED STATES V. MARK 5

as they cooperated with the government. According to

Mark’s attorney, this was the first time he had heard about

Pugh’s promise. Three days later, Mark filed a motion to

dismiss the indictment based on the informal immunity

agreement.

The district court suspended the trial and held a hearing

to determine whether Mark was immune from prosecution.

Pugh and Griswold both testified that they called Mark in

July 2011 to go over his testimony in preparation for the

rescheduled Mazzarella-Grimm trial. The prosecutors

recounted that, unlike when they spoke to Mark in February

2011, Mark was suddenly uncooperative and pretended not

to remember anything. Pugh explained that they initiated

the July 2011 call “us[ing] a speakerphone” in a conference

room in the U.S. Attorney’s Office, and reached Mark “at

his telephone number that [they] had from prior

interviews,” an account with which Griswold agreed. Pugh

further testified that an FBI agent was present during the

call, and that, although he could not specifically remember

which agent it was, he “believe[d] it was Sean Jones,

because [Jones] was the case agent at the time.” Agent

Jones testified, however, that he could not recall being part

of a July 2011 phone call. Pugh acknowledged that the

U.S. Attorney’s Office had no notes or other records of the

call, but he testified that he sent the August 2011 target

letter in response to the call. Mark, on the other hand,

testified that the July call never occurred, and that he had

no calls with Pugh between February and his receipt of the

target letter in August.

Ruling from the bench, the district court denied Mark’s

motion to dismiss. The judge credited the testimony of

Pugh and Griswold and found that the July call happened as

they described.

6 UNITED STATES V. MARK

Mark’s trial continued. At the conclusion of the trial,

the jury convicted Mark on multiple counts.

Shortly thereafter, Mark sought reconsideration of his

motion to dismiss the indictment based on new evidence.

After hearing the prosecutors’ testimony about the alleged

July call, Mark had subpoenaed phone records between the

U.S. Attorney’s Office and Mark’s cell phone, and had now

received those records. Although the records confirmed the

February call, there were no entries showing a call to Mark

in July. Mark argued that the new evidence undermined

the prosecutors’ testimony and that the district court

therefore should reconsider its denial of the motion to

dismiss.

The district court denied Mark’s motion to reconsider,

holding that there were “no sufficient grounds presented to

warrant [a] further evidentiary hearing or reconsideration of

[the] Court’s previous Order denying Defendant’s motion

to dismiss.”

II.

A. Standard of Review

We review rulings on reconsideration motions for abuse

of discretion. See United States v. Tapia-Marquez,

361 F.3d 535, 537 (9th Cir. 2004). A district court abuses

its discretion if it does not apply the correct legal standard

or if it rests its decision on a clearly erroneous finding of

fact. See United States v. Hinkson, 585 F.3d 1247, 1261-62

(9th Cir. 2009) (en banc).

B. Analysis

The parties agree that Mark was given immunity in

exchange for his cooperation. The dispute here is whether

UNITED STATES V. MARK 7

Mark breached the immunity agreement and thus made

himself amenable to prosecution.

In order to deny the motion to dismiss the indictment,

the district court had to find that Mark breached the

immunity agreement. See United States v. Carrillo,

709 F.2d 35, 37 (9th Cir. 1983) (“[B]ecause [the defendant]

fulfilled all . . . obligations under the agreement, under

settled notions of fundamental fairness the government was

bound to uphold its end of the bargain.”). As the

government conceded at oral argument, it had the burden of

proving that Mark breached. See United States v. Fitch,

964 F.2d 571, 574 (6th Cir. 1992) (“If [an immunity]

agreement has been entered into, the government bears the

burden of proving that the defendant failed to satisfy his

part of the deal.”); see also United States v. Packwood,

848 F.2d 1009, 1011 (9th Cir. 1988) (holding that the

government has the burden of proof to show breach of a

plea agreement). The government must prove a breach of

an immunity agreement by a preponderance of evidence.

See United States v. Castaneda, 162 F.3d 832, 836 (5th Cir.

1998); United States v. Meyer, 157 F.3d 1067, 1078 (7th

Cir. 1998); United States v. Gerant, 995 F.2d 505, 508 (4th

Cir. 1993); see also Packwood, 848 F.2d at 1011 (requiring

that the government show the defendant breached a plea

agreement by a preponderance of evidence).

Initially, the district court accepted the prosecutors’

account that Mark suddenly became uncooperative during a

July call—an account that did, when credited, support the

finding that Mark had breached the immunity agreement.

In his motion to reconsider, however, Mark presented

phone records that contradicted the prosecutors’ testimony

about the July call. The district court did not explain why,

despite the new phone records, it chose not to hold a further

evidentiary hearing or otherwise reconsider its earlier order

8 UNITED STATES V. MARK

denying the motion to dismiss. In light of the scant record

supporting the government’s claim of a breach and clear

evidence that key details of the government’s story were

inaccurate, the district court abused its discretion when it

failed to either grant Mark’s motion for reconsideration or

order an additional evidentiary hearing.

The government’s only evidence of breach was

testimony by Pugh and Griswold that Mark became

uncooperative during a July 2011 phone call. The

prosecutors testified that they and an FBI agent made the

call to Mark’s cell phone from a speakerphone in a

conference room at the U.S. Attorney’s Office. That

account, however, is directly contradicted by the phone

records that Mark presented in his motion to reconsider.

The records show that there were no calls between the U.S.

Attorney’s Office and Mark’s cell phone during the month

of July.

The absence of phone records corroborating the July

call stands in stark contrast with the February call. Both

sides agree that Pugh, Griswold, and an FBI agent

interviewed Mark over the phone in February 2011 in

preparation for the Mazzarella-Grimm trial. The phone

records show a call on February 1 from the U.S. Attorney’s

Office to Mark’s cell phone that lasted approximately an

hour, as well as several shorter calls the day before.

The February conversation was also memorialized in a

report prepared by the FBI agent who participated in that

call. The July call, on the other hand, which purportedly

had the same trial-preparation purpose, was not

memorialized by the prosecutors or by any FBI agent. The

government did not dispute at oral argument that the usual

practice in the U.S. Attorney’s Office was to keep notes

during any such interview. Here, however, there are no

UNITED STATES V. MARK 9

notes from a July call, and the FBI case agent at the time

testified that he had no recollection of such a call. The

government has failed to supply an explanation for either of

these gaps in the record.

The government also did not dispute at oral argument

that a target letter to a witness who previously had an

immunity deal would ordinarily describe the defendant’s

breach. But the target letter Mark received does not

mention a July call, or any other instance of a breach, to

explain why the government suddenly considered Mark a

target rather than a cooperating witness.

Perhaps at a further evidentiary hearing the prosecutors

could have reconciled their recollections that a call

happened with all of the apparent evidence to the contrary.

But the government has urged us not to remand for an

evidentiary hearing and instead has expressed a desire to

stand on the existing record. When asked whether

remanding the case for a further evidentiary hearing would

be appropriate, the government attorney stated: “I can’t

imagine that at a further evidentiary hearing . . . that

anything else is going to get unearthed.” When pressed

further on whether the government would “stake its claim”

on the existing record, he answered “correct.” We

therefore evaluate whether, on the current record, the

government met its burden of proving that Mark breached.

The government’s only affirmative evidence of a

breach is the testimony of Pugh and Griswold, which was

directly contradicted by the phone records. This is

insufficient to prove that Mark stopped cooperating during

a July call, particularly in light of the lack of any notes

memorializing a call or any mention of a call in the target

letter. This is troubling because the government made clear

at oral argument that it is the typical practice of the office

10 UNITED STATES V. MARK

to keep such records. 2 Cf. Fed. R. Evid. 803(7) (providing

that the “Absence of a Record of a Regularly Conducted

Activity” may be evidence that “the matter did not occur or

exist”). In light of the gaps and contradictions in the

record, the district court’s failure to either grant Mark’s

motion for reconsideration or order an additional

evidentiary hearing was an abuse of discretion. 3

III.

For the foregoing reasons, we reverse the district

court’s denial of Mark’s motion to reconsider and remand

with directions to dismiss the indictment.

REVERSED and REMANDED.

McKEOWN, Circuit Judge, concurring:

The opinion, which I join in full, aptly describes why

the government failed to meet its burden of proving that

Mark breached his informal immunity agreement with

federal prosecutors. I write separately to emphasize that

2

At oral argument, the government also acknowledged that it had

searched the phone records for calls between the U.S. Attorney’s Office

and any number in Louisiana, which is where Mark’s cell phone was

registered and where he had lived after leaving Las Vegas, but had

found nothing.

3

Mark raised two other issues on appeal. Because we are remanding

with instructions to the district court to dismiss the indictment, we need

not reach those additional issues.

UNITED STATES V. MARK 11

this case is a textbook lesson in the importance of

documentation with regard to immunity deals. When it

comes to proving breach of an immunity agreement, the

government should do better than “he said, she said.”

The government routinely enters into agreements in

which it promises leniency in exchange for cooperation

with an investigation or prosecution. The threshold

question of whether a deal was made in the first place is

often the subject of dispute. See, e.g., United States v.

Aleman, 286 F.3d 86, 90 (2d Cir. 2002) (noting the parties’

“failure to agree on the existence” of an agreement); United

States v. Thompson, 25 F.3d 1558, 1562 (11th Cir. 1994)

(evaluating an “alleged oral grant of immunity”). Here, the

government candidly acknowledges it made such an

agreement directly with Mark, though it inexplicably failed

to disclose the existence of the agreement to his counsel,

who learned about it by happenstance while questioning

another witness at Mark’s trial.

Granting immunity is a big deal. Claiming that a

defendant breached the agreed-upon terms is an equally big

deal. Prosecuting someone who was previously granted

immunity implicates “more . . . than just the liberty of [a]

defendant. At stake is the honor of the government[,]

public confidence in the fair administration of justice, and

the efficient administration of justice in a federal scheme of

government.” United States v. Carter, 454 F.2d 426, 428

(4th Cir. 1972) (en banc). Failure to document the breach,

even with something as simple as a file note, a memo, or a

reference in the target letter is dumbfounding. See United

States v. Harvey, 869 F.2d 1439, 1443 (11th Cir. 1989) (en

banc) (“[T]his appeal would not be necessary had the

United States Attorneys . . . reduced their agreement . . . to

writing.”).

12 UNITED STATES V. MARK

When the government alleges breach stemming from

the failure to cooperate sufficiently, a typical response is

that the defendant complied with the literal terms of the

deal. See, e.g., Ricketts v. Adamson, 483 U.S. 1, 11 (1987)

(noting that the defendant’s argument that his plea

agreement did not require him to testify was “an

interpretation of the agreement that proved erroneous”);

United States v. Floyd, 1 F.3d 867, 868-70 (9th Cir. 1993)

(highlighting the difference between an agreement that

requires a defendant to “testify fully and truthfully” and an

agreement that requires her to “cooperate”); United States

v. Irvine, 756 F.2d 708, 710-11 (9th Cir. 1985) (per curiam)

(holding that defendant’s malfeasance constituted a breach

notwithstanding his accurate “testimony” because the

agreement proscribed any and all “deception”). This case

tracks that pattern in the broadest sense: Mark claims that

he complied with the terms of his immunity agreement by

cooperating with the government’s investigation, while the

prosecutors maintain that he breached by giving evasive

and contradictory answers to their questions.

In its details, however, this case is far from typical.

Specifically, the government claims that Mark breached the

immunity agreement during a July 2011 phone call with

two Assistant United States Attorneys and an FBI agent.

Unlike a defendant who attempts to characterize his less-

than-complete cooperation as compliance with the literal

terms of an agreement, Mark disputes the very event—the

phone call—that prosecutors assert is the genesis of the

breach. Mark says that this phone call never took place at

all.

The government bears the burden of proving the

breach. Slip Op. 7. When confronted with contradictory

evidence about whether a breach occurred, the district court

must make factual findings about the defendant’s

UNITED STATES V. MARK 13

compliance. See Floyd, 1 F.3d at 871. As a threshold

matter, the government needed to prove that a call between

prosecutors and Mark took place in July 2011. Absent a

phone call, the claim of breach collapses. Two prosecutors

testified that they and an FBI agent called Mark. Mark

denied that the call took place, and the FBI agent testified

that he had no recollection of the call. While the district

court is generally entitled to base its rulings on the

credibility of witnesses, this case takes on a different patina

due to the absence of any documentary evidence about the

call itself, let alone the content of the supposed breach.

It is undisputed that the prosecutors spoke with Mark in

February 2011 as part of their preparation for the

Mazzarella-Grimm trial. Fast forward only five months

and the prosecutors were in the throes of preparing for the

trial that had been continued. In contrast to the well-

documented February call, which was memorialized in

phone records and a follow-up memo by an FBI agent, the

purported July call yielded no records. It is difficult to

conceive that a trial preparation call involving two

attorneys, one FBI agent, and a key witness in a multi-

million dollar fraud case would not trigger a substantial

paper trail or at least a scrap of documentary evidence. But

here, neither the prosecutors nor the FBI could find any

notes, correspondence, or other documents verifying that a

call had taken place, let alone the results of the call. See

Harvey, 869 F.2d at 1443 (describing the government’s

failure to take notes during witness interviews as

“astonishing”). The only near-contemporaneous document

the government produced—the target letter sent to Mark in

August 2011—contains no reference to a July call. The

absence of any notes or documentation coupled with

complete silence in the target letter is nothing short of

remarkable.

14 UNITED STATES V. MARK

In light of this abysmal record, the district court was

forced to base its ruling on little more than a swearing

contest. Interestingly, the swearing contest pitted the

prosecutors against not just Mark but also an FBI agent

who had no recollection of the call. Significantly, the court

did not make an adverse credibility finding regarding Mark.

Following the district court’s initial ruling, Mark requested

that the government produce phone records to corroborate

that the call took place. In response, the government for

the first time attempted to reconstruct evidence of the call.

The government’s belated search for phone records,

however, demonstrated that the central details of the

prosecutors’ testimony were inaccurate: no call was placed

from the United States Attorneys’ office to Mark’s cell

phone in July 2011. At that point, the district court should

have dismissed the indictment or granted a new evidentiary

hearing. Notably the government has now eschewed any

suggestion of another evidentiary hearing.

Whenever a defendant is prosecuted after having been

given immunity, it is eminently foreseeable that he will

advance every legitimate argument that his immunity

should have remained intact. Cases involving oral grants of

immunity and undocumented breaches “create confusion

for the government and for the courts.” Harvey, 869 F.2d

at 1443. Contemporaneous documentation is thus critical

to detail the scope and terms of the agreement and equally

critical to establish whether a breach occurred. Setting up a

claim of breach without any documentation puts the court

and counsel in the unenviable position of reconstructing a

breach solely through a swearing contest and a hypothetical

reimagining of events. To be sure, the government holds

the cards in such a situation. But when the defendant’s

liberty rests on those cards, common sense, fairness, and

confidence in the system demand more. I therefore concur

UNITED STATES V. MARK 15

in the opinion remanding with instructions to dismiss the

indictment.