United States v. David Shulick

PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

______

Nos. 18-3305 & 19-1011

______

UNITED STATES OF AMERICA

v.

DAVID T. SHULICK,

Appellant

______

On Appeal from the United States District Court

for the Eastern District of Pennsylvania

(D. C. No. 2-16-cr-00428-001)

District Judge: Honorable Harvey Bartle, III

______

Argued December 10, 2020

Before: MCKEE, PORTER and FISHER, Circuit Judges.

(Filed: April 13, 2021)

Hope C. Lefeber

Suite 1205

1500 John F. Kennedy Boulevard

Two Penn Center Plaza

Philadelphia, PA 19102

Lisa A. Mathewson [ARGUED]

Meredith A. Lowry

Suite 1320

123 South Broad Street

Philadelphia, PA 19109

Counsel for Appellant

Christopher J. Mannion

Michael T. Donovan

William M. McSwain

Robert A. Zauzmer [ARGUED]

Office of United States Attorney

615 Chestnut Street

Suite 1250

Philadelphia, PA 19106

Counsel for Appellee

______

OPINION OF THE COURT

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FISHER, Circuit Judge.

Lawyer and businessman David Shulick owned a for-

profit education company through which he contracted with

the School District of Philadelphia to run its Southwest School,

an institution designed to help some of Philadelphia’s most at-

risk children. Under the contract, Shulick received over $2

million to provide teachers, counselors, security, and special

services to the charter school’s students. But instead of

spending the money on the students as the contract required,

2

he embezzled funds for his personal benefit and the benefit of

his co-conspirator, Chaka Fattah, Jr. After a complex, multi-

year fraud investigation, Shulick was ultimately charged and

convicted. He now appeals, alleging a number of errors,

ranging from speedy trial right violations to errors in

evidentiary rulings, faulty jury instructions, and sentencing

miscalculations. After careful review of each claim, we

conclude there was no reversible error in the proceedings and

will therefore affirm.

Shulick owned and operated Delaware Valley High

School Management Corporation (DVHS), a for-profit

business which provided alternative education to at-risk

students. DVHS’s business model was to contract with school

districts to handle the operation of their schools.

One of those school districts was the School District of

Philadelphia. In early 2010, the School District hired and

signed a contract with DVHS and Shulick to operate its

Southwest School in Philadelphia, an institution serving at-risk

high school students with attendance, behavioral, emotional,

and familial issues, including some who had dropped out of

school entirely. The contract provided that DVHS would

operate Southwest for the 2010-2011 and 2011-2012 school

years. The School District set forth a high-level plan for

Southwest, dictating the number of students enrolled at the

school and the services to be provided to them. Specifically,

DVHS had to provide (1) six teachers at a cost of $45,000 each;

(2) benefits for the staff at a total cost of $170,000 per year; (3)

four security workers totaling $130,000 per year; and (4) a

trained counselor and two psychology externs totaling

$110,000 per year. The agreement was not flexible as to

3

budgeted items. In a provision titled “Budget,” it required

DVHS to “carry out the Work and bill the School District

strictly in conformity with the Contractor’s Budget.” App.

4847. Within these parameters, DVHS and Shulick had

authority to manage and run the school. Shulick could

implement a curriculum and program and could hire and fire

staff as he saw fit.

Despite the contract’s clear requirements, Shulick failed

to provide the services and staff he agreed to. He failed to

employ the dedicated security personnel the contract required.

He hired fewer teachers, provided those whom he did hire with

far fewer benefits than the budget allocated, and paid his

educators salaries of only $36,000 a year—$9,000 less than

promised. Shulick then reduced their salaries even further if

they elected health insurance. He even attempted to lay off

teachers at the end of the school year to avoid paying them the

final few months of their salaries. Overall, Shulick represented

to the School District that he would spend $850,000 on salary

and benefits each year but spent under half of that: about

$396,000 in 2010-11 and about $356,000 in 2011-12. In all, of

the over $2 million in funds he received, he spent only

$1,186,001 on expenditures designated for Southwest.

Shulick’s failure to spend these funds on Southwest was

part of an elaborate conspiracy to embezzle money. Shulick

directed the unspent funds to co-conspirator Chaka Fattah, Jr.,

an employee and confidante of Shulick and the son of former

U.S. Representative Chaka Fattah, Sr. The two agreed that

Fattah, Jr. would use the funds to pay off various liabilities

incurred across Shulick’s business ventures, while also

keeping a cut of the embezzled money for himself.

At Shulick’s trial, a number of former DVHS

employees testified to the harmful effects this scheme had.

4

Teachers explained that students dealing with abuse, addiction,

trouble with the law, and other personal and familial hardships

never received access to the counseling assistance Shulick

promised to provide. Without security staff on site, teachers

had to attempt to keep the children safe while also educating

them. Some employees confronted Shulick about his failure to

pay for these services for Southwest’s students. He would lie

and direct his staff to misrepresent and misreport to cover up

his fraud.

After a multi-year investigation, Shulick was indicted

on October 11, 2016. He was charged with conspiring with

Fattah, Jr. to embezzle from a program receiving federal funds

(18 U.S.C. § 371); embezzling funds from a federally funded

program (18 U.S.C. § 666(a)(1)(A)); wire fraud (18 U.S.C. §

1343); bank fraud (18 U.S.C. § 1344); making a false statement

to a bank (18 U.S.C. § 1014); and three counts of filing false

tax returns (26 U.S.C. § 7206(1)). He was arraigned on October

13, 2016. The wire fraud charges were subsequently dropped.

A year later, Shulick moved to dismiss the indictment,

asserting his speedy trial rights. The District Court denied his

motion (and later, renewed motions), and the case ultimately

went to trial. Following a three-week trial, a jury convicted him

on May 8, 2018 on all charges.

On the conspiracy, federal program embezzlement,

bank fraud, and false statement counts, Shulick was sentenced

to 60 months’ imprisonment and three years’ supervised

release. On the three tax fraud convictions, Shulick was

sentenced to 20 months for each count, to be served

consecutively to each other but concurrently with the sentence

on the other convictions, plus a year of supervised release. The

District Court also imposed two fines of $20,000 each and a

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special assessment of $700. It ordered restitution of $759,735

to the School District and $5,000 to PNC Bank.

1

Shulick appeals, asserting several theories to challenge

his conviction and sentence. After careful consideration, we

reject each.

Shulick first argues his conviction must be reversed

because the District Court violated his constitutional and

statutory rights to a speedy trial. The Sixth Amendment

guarantees “the right to a speedy . . . trial.” U.S. Const. amend.

VI. To effectuate this constitutional guarantee, Congress

enacted the Speedy Trial Act, 18 U.S.C. § 3161 et seq., which

“set[s] specified time limits . . . within which criminal trials

must be commenced.” United States v. Williams, 917 F.3d 195,

199 (3d Cir. 2019) (quoting United States v. Rivera Constr.

Co., 863 F.2d 293, 295 (3d Cir. 1988)).

The Speedy Trial Act requires that trial begin within 70

days of indictment or initial appearance, whichever occurs

later. 18 U.S.C. § 3161(c)(1). However, certain periods of time

may be excluded, including when a judge grants a continuance

“on the basis of his findings that the ends of justice served by

[the continuance] outweigh the best interest of the public and

the defendant in a speedy trial.” 18 U.S.C. § 3161(h)(7)(A).

1

The district court had jurisdiction pursuant to 18

U.S.C. § 3231. We have jurisdiction under 28 U.S.C. § 1291 to

review its final order of conviction, and under 18 U.S.C. § 3742

to review the sentence.

6

In August 2017, as trial preparation was drawing to a

close, the Government discovered that years before, during its

lengthy investigation, one of the servers seized from DVHS

had been filed under the wrong case number. Instead of being

filed with the investigation into Shulick and Fattah, Jr.’s

conspiracy, the server was mistakenly filed with a separate,

unrelated investigation into former Congressman Chaka

Fattah, Sr. On realizing this mistake, the Government promptly

informed the District Court and made an untimely production

of 1.5 million pages of documents and 900,000 emails. It

declined, however, to voluntarily dismiss the indictment.

Shulick, invoking the Speedy Trial Act, moved to

dismiss the indictment. The District Court denied his motion,

saying it was only speculation that the remaining 64 days on

the 70-day clock would expire before the case was ready for

trial. 2 The Court also stated that, upon an appropriate motion

by the parties or sua sponte, it could, if necessary, continue the

trial upon making the appropriate findings to support that the

ends of justice would be served by a delay. In a separate order,

the Court did just that. It issued an ends-of-justice continuance

under § 3161(h)(7)(A) and moved the previously scheduled

October 2, 2017 trial to April 11, 2018.

Shulick argued in the District Court that the Speedy

Trial Act does not permit such a continuance where the delay

is caused by a “lack of diligent preparation . . . on the part of

the attorney for the Government.” 18 U.S.C. § 3161(h)(7)(C).

Rejecting that characterization, the Court held that

2

Six of the 70 days had passed between Shulick’s initial

appearance and an order by the District Court deferring the trial

based on the complexity of the case and time needed for

defense counsel to prepare.

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the ends of justice served by granting this

continuance outweigh the best interest of the

public and defendant in a speedy trial,

specifically the case is so unusual or complex

due to the nature of the prosecution that it is

unreasonable to expect adequate preparation by

defense counsel for the trial itself within the time

limits otherwise set by the Speedy Trial Act.

App. 46; see 18 U.S.C. § 3161(h)(7)(B)(ii) (listing case

complexity as one of statutory bases for an ends-of-justice

continuance).

Shulick now argues that despite the District Court

articulating case complexity as its motivating reason, the

continuance could only have been granted for one reason—the

Government’s faulty production. The Court’s ruling was

therefore in error, says Shulick, because “[t]he reasons stated

by the judge” are required to “actually have been the factors

motivating his decision to grant the continuance.” United

States v. Crane, 776 F.2d 600, 606 (6th Cir. 1985). Shulick also

contends, as he did below, that the continuance was not

permissible, because “[n]o continuance . . . shall be granted

because of . . . lack of diligent preparation . . . on the part of the

attorney for the Government.” 18 U.S.C. § 3161(h)(7)(C).

We review a district court’s interpretation of the Speedy

Trial Act de novo; its fact-finding for clear error; and its

decision to grant a continuance, after proper application of the

statute to the facts, for an abuse of discretion. United States v.

Rivera Constr. Co., 863 F.2d 293, 295 n.3 (3d Cir. 1988).

Beginning with Shulick’s first argument, we first note there is

ample evidence to support that the case is complex. The

prosecution, stemming from a multi-year investigation

involving millions of pages of documents, was designated as

8

complex under 18 U.S.C. § 3161(h)(7)(B)(ii) from the time of

arraignment on October 13, 2016. The granting of

continuances in response to the various intricacies and knots in

the case is nothing new. In fact, Shulick requested and was

granted multiple continuances to wade through discovery

materials.

Beyond that, Shulick’s reliance on Crane is misplaced.

There, the Sixth Circuit concluded that the district judge’s

stated reasons for granting a continuance—case complexity,

among other things—were not the court’s actual motivation.

776 F.2d at 604. But unlike here, the district judge in Crane

admitted arranging “for [a] [m]agistrate to impanel a jury,”

despite being unavailable to try the case for the following two

weeks, in “an inappropriate effort to begin the trial within the

70 days.” Id. at 606 (citation omitted). Shulick has offered no

evidence of any similar inappropriateness, only an

unsubstantiated claim of pretextuality. We see nothing to

suggest the District Court acted with “an intent to merely pay

the Act lip service,” United States v. Gonzalez, 671 F.2d 441,

444 (11th Cir. 1982); rather, it rightfully acted to remedy the

Government’s admitted discovery violation by continuing the

trial to avoid prejudicing the defense and by enforcing a

previously issued ban on the prosecution from using at trial any

documents produced after June 1, 2017. This was a proper

remedy. See United States v. Cianciola, 920 F.2d 1295, 1300

(6th Cir. 1990) (holding that the district court properly granted

a continuance when the Government inadvertently failed to

timely provide discovery, as “the interests of justice in

allowing defense counsel more time to prepare for trial

outweighed the need for a speedy trial”).

Shulick’s second argument posits that even if the

District Court’s stated reason was the actual reason for the

continuance, the Government’s failure to comply with

9

discovery rules categorically prohibits an ends-of-justice

continuance, because a discovery violation always constitutes

a “lack of diligent preparation” under § 3161(h)(7)(C). The

Government responds by citing persuasive authority holding

that a discovery violation does not rise to the level of a “lack

of diligent preparation” unless it was in bad faith or the

violations were chronic.

The Speedy Trial Act does not define a “lack of diligent

preparation” and we have not yet addressed whether that

phrase means any discovery violation or only those of the more

egregious variety. Requiring a chronic mistake or bad faith

does, however, find support in decisions of our sister Circuits

and in persuasive district court rulings. See, e.g., Cianciola,

920 F.2d at 1300 (district court rightly excluded delay caused

by prosecutor’s inadvertent failure to mail a discovery

response because it was neither in bad faith nor chronic);

United States v. Henry, 698 F.2d 1172, 1174 (11th Cir. 1983)

(district court did not abuse its discretion in finding delay

excludable, where the Government failed to fully comply with

all discovery orders, as “a trial judge must be given broad

discretion in attempting to comply with the mandates of the

Speedy Trial Act and the exclusions thereto”); United States v.

Huff, 246 F. Supp. 2d 721, 726-27 (W.D. Ky. 2003) (“[I]t

would be unfair to classify the United States’ omission as a

lack of preparedness especially where the Court found that the

United States acted negligently, not in bad faith or as part of a

pattern of chronic discovery abuse.”); see also United States v.

Jain, No. 19-cr-59 (PKC), 2020 WL 6047812, at *11

(S.D.N.Y. Oct. 13, 2020) (collecting additional cases).

We are persuaded by these cases. “[T]he Speedy Trial

Act was not intended ‘to provide defendants with tactics for

ensnaring the courts into situations where charges will have to

be dismissed on technicalities.’” Cianciola, 920 F.2d at 1298

10

(quoting United States v. Bufalino, 683 F.2d 639, 646 (2d Cir.

1982)). Rather, it is well within the district courts’ expertise to

distinguish between one-off or lesser discovery violations and

those committed chronically or in bad faith. Leaving these

matters with the district courts also comports with their general

authority to oversee discovery and craft appropriate remedies

for discovery violations. See United States v. Lee, 573 F.3d

155, 161 (3d Cir. 2009) (“When a party fails to comply with

[Federal Rule of Criminal Procedure 16, which governs

discovery and discovery violations], the district court is

empowered to order that party to comply with the Rule, grant

a continuance, exclude the evidence, or enter other just

relief.”). Just as the District Court here fashioned an

appropriate continuance and sanction in response to the

Government’s discovery practices, so too will other trial judges

craft an appropriate response on a case-by-case basis—

something which Shulick’s categorical approach would

preclude.

Having rejected Shulick’s categorical rule, we now hold

that he fails to meet his burden of showing that the

Government’s untimely production rises to the level of a “lack

of diligent preparation” under the facts of the case. 18 U.S.C.

§ 3161(h)(7)(C). Shulick contends the Government’s conduct

was “chronic,” pointing to the District Court’s previous

criticisms of its slow, rolling productions during discovery.

However, these critiques pertained to earlier productions, not

the August 2017 production at issue. Shulick never asserted

any speedy trial claim with respect to these earlier productions,

instead using them as grounds for requesting multiple

11

continuances. 3 Shulick fails to make any non-cursory argument

about why the Government’s admittedly careless discovery

mistake—a one-time administrative mishap, which the

prosecution promptly admitted and which the District Court

appropriately remedied—is chronic. The continuance did not

violate the Speedy Trial Act.

Separate from his Speedy Trial Act argument, Shulick

argues that his Sixth Amendment right to a speedy trial was

violated. “In assessing a constitutional speedy trial claim, we

consider the ‘[l]ength of delay, the reason for the delay, the

defendant’s assertion of his right, and prejudice to the

defendant.’” United States v. Shaw, 891 F.3d 441, 454 (3d Cir.

2018) (quoting Barker v. Wingo, 407 U.S. 514, 530 (1972)).

“All factors must be considered and weighed as no one factor

is dispositive nor ‘talismanic.’” Hakeem v. Beyer, 990 F.2d

750, 759 (3d Cir. 1993) (quoting Barker, 407 U.S. at 533).

Applying the factors, the District Court found no Sixth

Amendment violation. It reasoned that there was an 18-month

delay from indictment to trial attributable to the Government

and that Shulick indeed asserted his right. He failed, however,

to establish prejudice. We review the District Court’s factual

findings for clear error and legal conclusions de novo. United

States v. Velazquez, 749 F.3d 161, 174 (3d Cir. 2014).

On appeal, Shulick argues, first, that the District Court

erred because it did not consider pre-indictment delay in its

Barker analysis. He relies on United States v. Ingram, in which

the Eleventh Circuit held it “appropriate to consider inordinate

pre-indictment delay in determining how heavily post-

3

This is not to say that a series of slow productions,

even those concerning different discoverable material, can

never support a “lack of diligent preparation.”

12

indictment delay weighs against the Government.” 446 F.3d

1332, 1339 (11th Cir. 2006). Shulick insists that the

Government delayed from the time the investigation began in

2011, and that an indictment could have been secured by late

2014. He was not indicted until October 2016.

The District Court correctly rejected this argument.

Unlike the Eleventh Circuit, we have held that “[t]he speedy

trial guarantee of the Sixth Amendment does not apply to pre-

indictment delay.” United States v. Sebetich, 776 F.2d 412, 429

(3d Cir. 1985). 4 This Court has explained that no “rights under

the Sixth Amendment . . . attach to a preindictment, pre-arrest

delay” as “‘the Sixth Amendment speedy trial provision has no

application until the putative defendant in some way becomes

an “accused,” an event which occurred in this case only when

the appellees [defendants] were indicted . . . .’” United States

v. Dukow, 453 F.2d 1328, 1330 (3d Cir. 1972) (quoting United

States v. Marion, 404 U.S. 307, 313 (1971)). As in Dukow, “our

inquiry on the speedy trial contention is at an end because the

indictment in this case was handed down within the applicable

period of limitations.” Id.

Shulick’s second Sixth Amendment argument is that the

District Court wrongly rejected his claim of prejudice—the

most important factor in the Barker analysis. Hakeem, 990

F.2d at 760. This factor is to be “assessed in light of certain of

the interests which the speedy trial right was designed to

4

Rather, it is “the Due Process Clause of the Fifth

Amendment [which] protects defendants against oppressive

pre-indictment delay within the applicable limitations period.”

Id. at 430. Shulick, however, has only raised a Sixth

Amendment claim and has not attempted to “invoke the

extreme sanction of dismissal . . . under the Due Process

Clause.” Id.

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protect: preventing oppressive pretrial incarceration,

minimizing anxiety and concern of the accused, and limiting

the possibility that the defense will be impaired.” Virgin

Islands v. Pemberton, 813 F.2d 626, 629 (3d Cir. 1987).

Pointing to that final interest, Shulick argues his ability to

present a defense was prejudiced when a witness, Philadelphia

School District Assistant Superintendent Benjamin Wright,

was rendered unavailable by illness. The District Court,

however, determined that Shulick failed to offer sufficient

factual support for this supposed prejudice, because he did not

explain what Wright’s testimony would be or even that it

would be favorable, despite having interviewed him before he

became unavailable.

On appeal, Shulick asserts—but again fails to

substantiate—that Wright’s testimony would have been

“important[] to Shulick’s authorization and good faith

defense.” Appellant’s Br. 40. As the District Court correctly

concluded, a conclusory claim of this sort falls short of what is

required of a defendant to successfully establish prejudice. See

Hakeem, 990 F.2d at 763 (“General allegations that witnesses’

memories have faded are insufficient to create prejudice . . .

Hakeem has not pointed to any evidence in the state record that

shows the [witnesses] would have been able to corroborate his

presence . . . .”). For example, in United States v. Harris, the

Fifth Circuit rejected a vague claim of prejudice similar to

Shulick’s. 566 F.3d 422, 433 (5th Cir. 2009). There, the

defendant argued he was prejudiced by the loss of a witness

who died twenty months after the indictment. Id. The

defendant, however, backed up his claim with only a

conclusory assertion that the witness “could have supported

defense assertions of innocence at trial.” Id. Such a “blanket

statement,” said the court, “gives no indication as to the content

and relevance of the lost testimony, and how its absence

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impaired [the] defense.” Id. Shulick’s nonspecific claim of

prejudice is inadequate for this very same reason. The Harris

court also noted that the defendant failed to “explain why he or

his attorneys failed to take any steps to preserve [the witness’s]

testimony for trial.” Id. Shulick’s defense has been similarly

neglectful.

Beyond Shulick’s failure to substantiate his claim of

prejudice, his Sixth Amendment argument must be rejected for

another reason. Even if Shulick’s claims about Wright’s

testimony were true, the District Court correctly reasoned that

the School District’s (and Wright’s) purported satisfaction with

Shulick’s performance is legally irrelevant. “The negligence of

the victim in failing to discover a fraudulent scheme is not a

defense to criminal conduct.” United States v. Coyle, 63 F.3d

1239, 1244 (3d Cir. 1995). Thus, having rejected both his

statutory and constitutional claims, we conclude that the

District Court did not violate Shulick’s speedy trial rights.

Shulick next argues that the District Court committed

reversible evidentiary and instructional errors. We review a

decision on the admissibility of evidence for an abuse of

discretion and review on a plenary basis a district court’s

interpretation of the Federal Rules of Evidence. United States

v. Gonzalez, 905 F.3d 165, 195 (3d Cir. 2018).

1. The District Court properly defined “agency” under 18

U.S.C. § 666 and rightfully excluded an agency clause in the

Southwest contract

Shulick was convicted under 18 U.S.C. § 666, which

criminalizes theft from organizations receiving federal

funding. Under the statute, (1) “an agent of an organization”

(2) who “embezzles, steals, obtains by fraud, or otherwise

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without authority knowingly converts to the use of any person

other than the rightful owner or intentionally misapplies,

property” (3) that “is valued at $5,000 or more” and (4) is

“owned by, or is under the care, custody, or control of such

organization,” commits a federal offense. 18 U.S.C.

§ 666(a)(1)(A). For the statute to apply, the organization must

“receive[], in any one year period, benefits in excess of

$10,000 under a Federal program.” Id. § 666(b).

In seeking to overturn his federal program theft

conviction, Shulick targets the requirement that the defendant

be an “agent” of the organization receiving federal funds. Id.

§ 666(a)(1)(A). He argues he was not an “agent” within the

meaning of the statute.

Under the statutory definition, an “agent” is “a person

authorized to act on behalf of another person or a government

and, in the case of an organization or government, includes a

servant or employee, and a partner, director, officer, manager,

and representative.” Id. § 666(d)(1). An independent contractor

who exercises managerial responsibility can be an “agent.”

United States v. Vitillo, 490 F.3d 314, 323 (3d Cir. 2007)

(stating that § 666(d)(1)’s list is not exhaustive, as “an ‘agent’

is merely a person with authority to act on behalf of the

organization receiving federal funds”).

With respect to agency, Shulick posits two errors. First,

he argues the District Court wrongly prohibited him from

presenting evidence of a clause in the Southwest contract

which reads: “Neither the Contractor nor the School District

shall have any power to bind the other party in any manner

whatsoever to any third party. The Contractor does not

function as an agent of the School District in its dealings with

any third party.” App. 4946-47. The District Court ruled this

clause irrelevant, reasoning that the parties “cannot bind the

16

federal government in a criminal trial . . . by simply saying

they’re not agents of one another.” App. 4455.

While “the bar for what constitutes relevant evidence

is low,” Forrest v. Parry, 930 F.3d 93, 114 (3d Cir. 2019), it

cannot be said that the District Court’s ruling was an abuse of

discretion. Indeed, the very cases Shulick cites support

exclusion of the clause. In United States v. Lupton, the Seventh

Circuit pointedly explained the lack of relevance of any such

contractual provision:

Whether Lupton is considered an “agent” for

purposes of 18 U.S.C. § 666 is determined by

that statute, not by the terms of a private contract.

Parties cannot contract around definitions

provided in criminal statutes; even if Lupton

could not be considered a common law agent

under [the] contract, it is nonetheless possible for

him to be an “agent” under the terms of 18

U.S.C. § 666(d)(1). . . . The statutory definition

of ‘agent’ is an expansive one.

620 F.3d 790, 800-01 (7th Cir. 2010); see also United States v.

Hudson, 491 F.3d 590, 594 (6th Cir. 2007) (stating that the

contract “does not resolve the inquiry” and rather, the focus

should be on “whether [the defendant] satisfies the statute’s

general definition of an agent—whether [he] was ‘authorized

to act on behalf of’ the school district’” (quoting 18 U.S.C.

§ 666(d)(1)). Here, the District Court did not stumble in

disregarding the parties’ contractual delineation of the scope of

Shulick’s authority, especially given the substantial evidence

showing that Shulick had the power to act on behalf of the

School District. He was given significant managerial control

over the administration of Southwest, such as the power to hire

17

and fire teachers, establish curriculum, and control day-to-day

activities.

Next, Shulick challenges the District Court’s jury

instruction on the agency element. The Court used language

from the Third Circuit’s model instruction, but also altered the

model in one respect. The model instruction reads:

A person may be an agent of an organization

without being an employee of that organization.

An outside consultant who exercises significant

managerial responsibility within the

organization is an agent of that organization if

the consultant is authorized to act on behalf of

the organization.

Third Cir. Model Crim. Jury Instr. 6.18.666A1A-1. The

District Court read the first sentence of the model but omitted

the second. 5 Shulick challenges that omission on appeal.

However, he failed to make this objection in the District Court,

5

The Court also correctly instructed the jury that:

An agreement between the parties to a contract .

. . does not establish an agency relationship is not

binding on the federal government in a criminal

prosecution. You must disregard any testimony

or other exhibit as to what the School District of

Philadelphia and Shulick, Delaware Valley High

School or Unique Educational Experiences has

agreed regarding any agency relationship in their

contracts. However, you may consider other

evidence related to the issue of agency.

App. 4423-24.

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which “would constitute a waiver of [his] right to assert any

legal error unless it was of such a magnitude as to constitute

plain error.” Karabin v. Petsock, 758 F.2d 966, 969 (3d Cir.

1985). There was no plain error. “[A] model jury instruction

itself is neither law nor precedential,” but is “designed to help

litigants and trial courts . . . to distill the law correctly.”

Robinson v. First State Cmty. Action Agency, 920 F.3d 182,

190 (3d Cir. 2019). Here, the District Court adopted the crux

of the model instruction—someone outside an organization can

also be an agent—and that statement of the law accords with

our interpretation of § 666(d)(1). Vitillo, 490 F.3d at 323.

2. The District Court properly excluded irrelevant evidence

Shulick next argues that the District Court abused its

discretion in excluding evidence that would have shown that

he did not, as § 666(a)(1)(A) requires, use funds “without

authority”—i.e. in an “unauthorized or unjustifiable or

wrongful” way. United States v. Baroni, 909 F.3d 550, 582 (3d

Cir. 2018), abrogated on other grounds by Kelly v. United

States, 140 S. Ct. 1565 (2020). This evidence included a prior

request for proposal put out by the School District, which

arguably suggested that the District placed little importance on

a contract’s budget by weighting it at only 10% in a ranking

system used to evaluate bids for the job. It also included

evidence showing that School District employees failed to

object to certain expenditures which did not conform to the

contract’s budget, thereby ratifying them, according to

Shulick.

We see no abuse of discretion. The District Court

appropriately excluded the request for proposal on relevancy

grounds because it was specific to a 2008 bidding process that

predated by two years Shulick’s involvement with Southwest

and DVHS’s contract with the School District. On appeal,

19

Shulick merely re-ups his disagreement with the Court’s

relevancy determination but offers no legal authority or

reasoned argument to show reversible error.

The District Court also rightfully barred the evidence

suggesting that School District employees failed to

affirmatively object to Shulick’s noncompliant expenditures.

As we have already noted, “[t]he negligence of the victim in

failing to discover a fraudulent scheme is not a defense,” Coyle,

63 F.3d at 1244, so victim inobservance indeed bore no

relevance. The school district’s failure to catch Shulick’s

crimes does not negate his fraud.

3. The District Court properly excluded the expert testimony

of Frederick Hamilton

Shulick next challenges the District Court’s exclusion

of Frederick Hamilton’s testimony on the ground that he was

an untimely-disclosed expert witness. According to Shulick,

the trial court improperly classified Hamilton’s presentation as

expert testimony, subject to Federal Rule of Criminal

Procedure 16’s disclosure regime, rather than summary

evidence. See Fed. R. Evid. 1006 (allowing a “summary, chart,

or calculation to prove the content of voluminous writings,

recordings, or photographs that cannot be conveniently

examined in court.”).

The record shows otherwise. In a sidebar discussion

partway through the trial, District Judge Bartle questioned

defense counsel about their plans to call Hamilton as a witness.

In this discussion, as recounted in a judicially-approved

statement under Federal Rule of Appellate Procedure 10(c), the

Government asked the District Court to direct Shulick’s

counsel to fully disclose Hamilton’s expert opinions, bases,

and reasons. See Fed. R. Crim P. 16(b)(1)(C) (requiring a

defendant to, “at the government’s request, give to the

20

government a written summary” of any planned expert

testimony, which “must describe the witness’s opinions, the

bases and reasons for those opinions, and the witness’s

qualifications.”). At the time of this conversation, the defense

had provided only minimal information on Hamilton, namely,

his curriculum vitae and a short description of what he might

testify to—a disclosure which Judge Bartle agreed was

insufficient under Rule 16. Importantly, Judge Bartle stated

that if Shulick wanted to offer Hamilton as an expert witness,

the defense would have to make an additional, full disclosure

of his opinions, bases, and reasons. Judge Bartle then

specifically asked defense counsel whether they intended to

offer Hamilton as an expert. Defense counsel responded that

they would not make any further disclosure and that Hamilton

would be offered solely as a summary witness.

But when Hamilton was called to the stand at the

opening of the defense case, he attempted to offer expert

testimony. Specifically, Hamilton, a CPA who acknowledged

that he had previously served as an expert “hundreds of times,”

App. 4135, was asked why it was appropriate to allocate certain

shared costs across Shulick’s business ventures to the budget

for Southwest—a post-hoc analysis, involving the application

of Hamilton’s own formulas and judgment to facts. The

District Court ultimately excluded this testimony, accepting

the Government’s argument that it was undisclosed “expert

opinion based on his years of accounting experience, based on

his forensic background, and based on information that is not

available from the records.” App. 4146-47.

We agree and reject Shulick’s characterization of

Hamilton’s sophisticated analysis as mere summary. If a

purported summary includes “assumptions” and “inferences”

that “represent [the witness’s] opinion, rather than the

underlying information,” it is actually expert testimony

21

“subject to the rules governing opinion testimony.” Eichorn v.

AT&T Corp., 484 F.3d 644, 650 (3d Cir. 2007). Here, the

witness’s testimony would have involved him explaining his

analytical assumptions and professional opinion, based on his

accounting expertise, that it was appropriate to allocate some

of Shulick’s general (and even unrelated) business costs as

expenditures for the Southwest school. The apportionments

Hamilton advanced were not contained in any of the

documents governing the parties’ relationship. Rather, they

would have required the retroactive application of business and

accounting principles and Hamilton’s own judgment to the

facts—in other words, classic expert testimony, rightly

excluded.

Shulick next claims there was reversible error in the

District Court’s jury instructions on federal program theft. The

federal program theft statute makes liable a person who

“embezzles, steals, obtains by fraud, or otherwise without

authority knowingly converts to the use of any person other

than the rightful owner or intentionally misapplies, property.”

18 U.S.C. § 666(a)(1)(A) (emphasis added). Shulick argues the

District Court erred in instructing that an intentional

misapplication within the meaning of § 666(a)(1)(A) can be

found even if the misuse of funds still benefited the victim.

In so stating to the jury, the District Court deployed our

model instruction, 3d Cir. Model Jury Inst. 6.18.666A1A-3,

stating:

To intentionally misapply money or property

means to intentionally use money or property of

the School District of Philadelphia, knowing that

22

such use is unauthorized or unjustifiable or

wrongful. Misapplication includes the wrongful

use of the money or property for an unauthorized

[purpose], 6 even if such use benefitted the School

District of Philadelphia.

App. 4425-26 (emphasis added). Shulick contends the

emphasized language is bad law.

We exercise plenary review over the question of

whether a jury instruction contained an incorrect statement of

law. United States v. Friedman, 658 F.3d 342, 352 (3d Cir.

2011). At the outset, we note the general unlikelihood that a

model instruction is erroneous. See Robinson, 920 F.3d at 190

(“Given the care put into [its] drafting, we have observed it is

unlikely ‘that the use of [a] model jury instruction can

constitute error.’” (quoting United States v. Petersen, 622 F.3d

196, 208 (3d Cir. 2010))).

We now turn to the statutory text to determine if our

model is in accord with the law. Federal program theft occurs

when the defendant “embezzles, steals, obtains by fraud, or

otherwise without authority knowingly converts to the use of

any person other than the rightful owner or intentionally

misapplies, property.” 18 U.S.C. § 666(a)(1)(A) (emphasis

6

In reading this instruction, the District Court

accidentally substituted the word “person” for “purpose,”

saying that “[m]isapplication includes the wrongful use of

money or property for an unauthorized person.” App. 4426.

After being alerted of this slip of the tongue, the Court

corrected its misstatement, saying “I said ‘unauthorized

person.’ I should have said ‘unauthorized purpose,’ and you

will see that in the written instructions -- that it’s correct,

‘unauthorized purpose.’” App. 4464.

23

added). The emphasized phrase is a limiting condition, which

would require that the property be used for someone else’s

benefit besides the defrauded organization. In other words, if

the funds were still used to benefit the “rightful owner”—as

our model instruction provides—then this condition would not

be satisfied and federal program theft would not have occurred.

However, in parsing the statutory language, we must be

careful to determine which word or words this limiting

condition modifies. Again, federal program theft occurs when

the defendant “embezzles, steals, obtains by fraud, or

otherwise without authority knowingly converts to the use of

any person other than the rightful owner or intentionally

misapplies, property.” 18 U.S.C. § 666(a)(1)(A) (emphasis

added). The disjunctive “or” suggests that an intentional

misapplication of funds is a separate way of satisfying the

statute, apart from the earlier prohibition on conversion, which

is subject to the aforementioned limiting phrase. Under the rule

of the last antecedent, that qualification should be read only to

modify the word it immediately follows: “converts.” Id. §

666(a)(1)(A); see Lockhart v. United States, 136 S. Ct. 958,

962 (2016) (applying limiting phrase in a statute to only “the

antecedent immediately preceding it”). Most importantly for

our purposes, it would not narrow the meaning of

“intentionally misapplies,” as Shulick would have it.

Use of those words of limitation earlier in §

666(a)(1)(A) also shows that Congress knew how to expressly

impose a condition that would require the defrauded property

to inure to another’s benefit for liability to attach. If Congress

wished to subject intentional misapplication to this same

condition, it could have included parallel language after

intentional misapplication—for example, drafting the statute to

read: “intentionally misapplies for the use of any person other

than the rightful owner, property.” Congress, however, did not

24

do that. We generally presume such differences in drafting to

be purposeful. In re Bayer AG, 146 F.3d 188, 193 (3d Cir.

1998).

The interpretation we have espoused thus far finds

additional support when we compare the current version of §

666(a)(1)(A) to an earlier version of the statute. The prior

version placed the limiting condition after all six statutory

prohibitions, including willful misapplication, the precursor to

the “intentionally misapplies” prohibition. See Act of Oct. 12,

1984, Pub. L. 98-473, 98 Stat. 1837, 2143 (“embezzles, steals,

purloins, willfully misapplies, obtains by fraud, or otherwise

knowingly without authority converts to his own use or to the

use of another”) (emphases added). Under this version of the

statute, Shulick would have a better argument that the

condition qualifies all words before it, as a unitary whole. But,

by separating the intentional misapplication offense from that

qualifying language in the current text, Congress intended, we

believe, to reinforce that this term was not so limited. See Stone

v. INS, 514 U.S. 386, 397 (1995) (“When Congress acts to

amend a statute, we presume it intends its amendment to have

real and substantial effect.”).

Shulick counters this by pointing to snippets in the

legislative history which refer to Congress’ revisions as only a

“technical” amendment. S. Rep. No. 99-278, 99th Cong., 2d

Sess. (1986) (accompanying S. 1236, 99th Cong. § 59(a)

(enacted bill)), at 7 (1986); H.R. Rep. No. 99-797 (1986)

(accompanying H.R. 5241, 99th Cong. § 42(a) (House version)

(1986)), at 30). But such statements, which do not even address

the interpretive question at issue, cannot overcome what the

plain text commands. United States ex rel. Mistick PBT v.

Hous. Auth., 186 F.3d 376, 395 (3d Cir. 1999) (“[R]ecourse to

legislative history or underlying legislative intent is

25

unnecessary when a statute’s text is clear and does not lead to

an absurd result.”).

Our sister Circuits have also refused to limit intentional

misapplication under § 666(a)(1)(A) as Shulick asks us to do.

See United States v. Urlacher, 979 F.2d 935, 938 (2d Cir. 1992)

(“The first four prohibitions cover any possible taking of

money for one’s own use or benefit,” so “in order to avoid

redundancy, [‘intentionally misapplies’] must mean intentional

misapplication for otherwise legitimate purposes.”); United

States v. Cornier-Ortiz, 361 F.3d 29, 37 (1st Cir. 2004) (citing

Urlacher to conclude that using funds for legitimate purposes,

but in violation of conflict of interest rules, is still an intentional

misapplication); United States v. Frazier, 53 F.3d 1105, 1114

(10th Cir. 1995) (concluding there was a misapplication even

though “[t]he funds were [still] used to purchase computers and

computer equipment for the educational organization,” the

victim). We too have once stated that § 666(a)(1)(A) reaches

an unauthorized use of property which nevertheless benefits

the victim. See United States v. Baroni, 909 F.3d 550, 582 (3d

Cir. 2018) (“Misapplication includes the wrongful use of the

money or property for an unauthorized purpose, even if the use

actually benefitted the Port Authority.” (quoting the District

Court’s recantation of 3d Cir. Model Jury Inst. 6.18.666A1A-

3)).

Baroni, however, was reversed by Kelly v. United

States. 140 S. Ct. 1565 (2020). Under Kelly, says Shulick, the

rule of Model Instruction 6.18.666A1A-3 is no longer good

law. In Kelly, Bridget Anne Kelly and William Baroni, two

officials in the administration of former New Jersey Governor

Chris Christie, conspired to shut down toll plaza lanes on the

George Washington Bridge to punish the mayor of Fort Lee for

refusing to endorse Christie’s reelection bid. Id. at 1569-70. A

jury convicted Kelly and Baroni under § 666(a)(1)(A).

26

Reversing their convictions, the Supreme Court held that the

federal program theft statute was designed to safeguard only

against “property fraud” and not to “criminaliz[e] all acts of

dishonesty.” Id. at 1571. The defendants’ convictions were

therefore improper, because they never sought “to take the

government’s property”—they sought only to divert the State’s

regulatory power to injure a political adversary. Id. at 1572.

Shulick contends Kelly forecloses a conviction under §

666(a)(1)(A) where the jury has been instructed that a

misapplication of funds may still occur if the defendant’s

unauthorized spending still benefited the victim. Having heard

this instruction the jury may have convicted based on a belief

that Shulick did not take funds for his own or Fattah, Jr.’s

benefit, but simply spent them inconsistently with the budget

while still benefiting the School District. Kelly, however,

“confirms that §666(a)(1)(A) criminalizes [only] schemes to

‘obtain’ a victim’s property: ‘taking’ the property and

‘converting’ it to someone else’s use,” according to Shulick.

Appellant’s Reply 22 (quoting 140 S. Ct. at 1568, 1573-74).

He contends that just as Kelly and Baroni “exercised the

regulatory rights of ‘allocation, exclusion, and control’—

deciding that drivers from Fort Lee should get two fewer lanes

while drivers from nearby highways should get two more,” 140

S. Ct. at 1573, so too did he exercise the rights given to him in

reallocating the budget—an act unauthorized by the contract,

but not one which § 666(a)(1)(A) criminalizes.

In evaluating this argument, we first note that no other

Court of Appeals has yet to read Kelly as Shulick asks us to.

Urlacher, Cornier-Ortiz, and Frazier—which all support that

intentional misapplication does not necessarily require that

property be taken for another’s benefit—have never been

overruled and remain the law of the Second, First, and Tenth

Circuits.

27

If Shulick is correct and Kelly indeed changed the law,

then this occurred in 2020 when Kelly was decided. The timing

is important because Shulick’s trial took place in 2018—it

preceded Kelly and that change. “Where there were no legal

grounds for challenging an instruction at the time it was given,

but such grounds have arisen, due to the articulation of a new

rule of law between the time of conviction and the time of

appeal, we review for plain error.” United States v. Andrews,

681 F.3d 509, 517 (3d Cir. 2012). Because the law of our

Circuit in 2018 was the directive provided in Model Instruction

6.18.666A1A-3 and recited in Baroni, and because Kelly

would have reversed that rule only after Shulick’s jury

rendered its verdict, we review for plain error. See id. at 521

(applying plain error review where “there was no plain error in

the District Court’s instructions at the time of trial, [but] the

error became apparent when the Supreme Court

in Skilling limited honest services fraud to bribes and

kickbacks.”); United States v. Retos, 25 F.3d 1220, 1230 (3d

Cir. 1994) (applying plain error review “where the error was

unclear at the time of trial but becomes clear on appeal because

the applicable law has been clarified” (quoting United States v.

Olano, 507 U.S. 725, 734 (1993))).

Under plain error review, we may correct an error “only

if the appellant demonstrates that: (1) there was an error; (2)

the error is clear or obvious; and (3) the error affected the

appellant’s substantial rights, which in the ordinary case means

it affected the outcome of the district court proceedings.”

Andrews, 681 F.3d at 521 (citation and internal quotations

omitted). “If all three conditions are met,” we “may then

exercise [our] discretion to notice a forfeited error, but only if

. . . the error seriously affect[s] the fairness, integrity, or public

reputation of the judicial proceedings.” Id. (quoting Johnson v.

United States, 520 U.S. 461, 467 (1997)).

28

When we apply this standard, Shulick cannot prevail.

Even if the District Court’s instructions were erroneous under

Kelly, and its error clear and obvious, the mistake would not

have prejudiced his substantial rights. 7 In this third step of the

analysis, the “defendant bears the burden of demonstrating that

the error was not harmless, i.e., that there is ‘a reasonable

probability that the error affected the outcome of the trial.’” Id.

at 520 (quoting Olano, 507 U.S. at 734). Shulick does not meet

that burden.

“Where there is a clear alternative theory of guilt,

supported by overwhelming evidence, a defendant likely

cannot show that an instruction permitting the jury to convict

on an improper basis was not harmless error.” Id. at 521. Here,

the Government did put forth a clear, unquestionably Kelly-

compliant theory—Shulick actually embezzled contract funds

and used them for his own benefit. In other words, Shulick’s

“aim [was] to obtain money,” a classic property fraud. Kelly,

140 S. Ct. at 1574.

This “alternative theory”—which was the

Government’s primary theory of the case—was well-supported

and compelling. First, the Government presented

overwhelming evidence that Shulick spent only a fraction of

the $2,096,000 he received under the contract on Southwest.

He did not hire promised counseling and security personnel,

understaffed Southwest’s teaching staff, and cut corners on

salaries and benefits. The records demonstrating these facts

were carefully and thoroughly summarized and explained by a

7

To note, we need not presently decide whether Kelly

prohibits instructing the jury that a misapplication of funds

may occur even if the spending still benefits the victim.

Shulick’s claim unquestionably fails under prong three of plain

error review.

29

credible FBI agent, and the deficiencies were repeatedly

confirmed by several former DVHS employees who testified

against Shulick. Even the testimony of Shulick’s witness,

Hamilton, indicated that he spent only $1,186,001 on items

designated for Southwest. 8 This was not the case of a

contractor being a few dollars short here and there.

Next, the Government presented extensive testimonial

and documentary evidence of what happened to the unspent

money. Shulick diverted the funds to co-conspirator Fattah, Jr.,

who took his cut and paid other of Shulick’s obligations,

including expenses entirely unrelated to Southwest and the

School District of Philadelphia. Some payments, for example,

were remitted to cover the costs of running other charter

schools outside of the School District. Others were used to

cover bills, consulting fees, business solicitation services, and

public relations expenses that Shulick incurred to make his

business ventures profitable. These ventures included DVHS

but also his personal law firm, the Law Offices of David T.

Shulick. In short, the Government showed that contract funds

were disbursed in ways which personally benefited Shulick

and Fattah, Jr. and which did not benefit the School District of

8

Hamilton explained an exhibit containing his

summation of all expenditures “specific to” Southwest. App.

4240. The total was $1,186,001. The defense sought to increase

this figure by having Hamilton explain why it would be

appropriate to allocate certain other shared business and non-

Southwest expenses to Shulick’s total expenditures on

Southwest, but as we previously concluded, this was

undisclosed expert testimony properly excluded by the District

Court. See supra Part II.B.3. The admissible evidence plainly

showed that Shulick fell far short of what the budget required

him to spend.

30

Philadelphia in any way. Accordingly, the object of the

conspiracy’s scheme advanced at trial was in fact property—

Shulick took money entrusted to DVHS and embezzled it for

the conspirators’ personal benefit.

This is not a case “where evidence on the valid

alternative theory is relatively weak, the government relies

heavily on the improper theory, and the district court’s

instructions on the improper theory are ‘interwoven’

throughout the jury charge.” Andrews, 681 F.3d at 522. As

described above, there was strong evidence that Shulick

actually converted hundreds of thousands of dollars. The

Government did not heavily rely on the potentially Kelly-

31

violative theory of guilt either. Rather, prosecutors consistently

maintained that Shulick “embezzled” funds for his own gain. 9

The jury charge likewise reflected this core theory. It

identified several Kelly-compliant ways by which Shulick

could be found guilty of misappropriating the money. See App.

4425 (listing “embezzle,” “obtain by fraud,” and “convert”).

The intentional misapplication instruction did not dominate the

9

For example, the prosecution frequently and

consistently described Shulick’s crime as an embezzlement or

theft act in opening and closing arguments. App. 1319-20

(“You’re going to hear that [the contract funds] went into

David Shulick’s pocket . . . Mr. Shulick would put the money

into an account and then use that account like his personal

piggybank, cutting business checks to pay for personal

expenses . . . Now, for his actions, he stands charged with

embezzling”); 1325 (“Now, the first thing Fattah Junior did

was take his own cut. . . . And the remaining 60,000 went to

pay Mr. Shulick’s expenses in other places”); 1330 (“Mr.

Shulick is guilty of embezzlement and conspiracy to

embezzle”); 4276 (“Here is a man who is dedicated to stealing

money”); 4276 (“He embezzled nearly a million dollars”);

4300 (“we’ll move on to the embezzlement”); 4306 (“So, now,

we come to counts 1 and 2, the embezzlement of the school

district funds. The defendant embezzled $1 million . . .”); 4307

(“the defendant is charged in a conspiracy with Mr. Fattah Jr.

to embezzle school district funds. He’s also charged separately,

by himself, in count 2, with embezzling school district

funds.”); 4310 (“It’s criminal agreement . . . [t]o embezzle,

from a federally funded program . . . So what are the elements

of embezzlement?”); 4317 (“There’s money to be stolen

here.”); 4326 (“You should find him guilty of his conspiracy

with Fattah Jr. and with embezzling $1 million”).

32

charge. It was listed once alongside these other statutory

prohibitions—all three of which are unquestionably forms of

property fraud. A “single [challenged] instruction . . . may not

be judged in artificial isolation, but must be viewed in the

context of the overall charge.” United States v. Park, 421 U.S.

658, 674 (1975) (internal quotation marks and citation

omitted). Viewing the charge in its entirety, it is clear that the

disputed line was not interwoven throughout the greater whole,

repeated, or otherwise emphasized. See Andrews, 681 F.3d at

522 (upholding conviction even where “the District Court

[incorrectly] referred to ‘honest services’ on several occasions

in its final instructions,” because the erroneous term was not

“interwoven throughout the jury charge.”). The whole charge

placed far greater emphasis on Shulick as a property taker. See,

e.g., App. 4442 (“Count 2 of the indictment charges the

defendant, David. T. Shulick, with embezzling funds from the

School District of Philadelphia . . .”) (emphasis added). The

District Court also warned the jury “not to single out any one

instruction” but to “consider as a whole all of the instructions.”

App. 4395; see United States v. Bryant, 655 F.3d 232, 247 (3d

Cir. 2011) (rejecting a challenge to the wording of a specific

instruction partly because jury was told “to consider all of the

‘instructions as a whole’”).

This case is not like Kelly, where the prosecution’s

claim of property fraud rested only on a novel theory that the

defendants temporarily “commandeer[ed]” the George

Washington Bridge (despite obviously not stealing the massive

structure) or caused only incidental wage expenses associated

with carrying out their regulatory action. 140 S. Ct. at 1572.

Shulick committed a real, tangible taking of money that was

rightly owed to the School District and the at-risk children of

Southwest. That was the Government’s consistent, chief theory

throughout the trial, and the evidence of this reality was

33

overwhelming. See Cupp v. Naughten, 414 U.S. 141, 147

(1973) (“[A] judgment of conviction is commonly the

culmination of . . . witnesses, argument of counsel, receipt of

exhibits in evidence, and instruction of the jury” so “not only

is the challenged instruction but one of many . . . but the

process of instruction itself is but one of several components

of the trial which may result in the judgment”). Therefore, we

conclude that even if Shulick’s reading of Kelly was correct

and the jury instruction clearly erroneous, he still would have

been convicted of federal program fraud irrespective of the

error.

Further challenging the jury instructions on federal

program theft, Shulick next postulates error when the District

Court refused to instruct on § 666(c), a safe harbor provision

excluding from criminal liability “bona fide salary, wages,

fees, or other compensation paid, or expenses paid or

reimbursed, in the usual course of business.” 18 U.S.C. §

666(c). We review a refusal to give a specific jury instruction

for an abuse of discretion. Friedman, 658 F.3d at 352. A

defendant is entitled to an instruction on a theory of defense “if

(1) he proposes a correct statement of the law; (2) his theory is

supported by the evidence; (3) the theory of defense is not part

of the charge; and (4) the failure to include an instruction of the

defendant’s theory would deny him a fair trial.” United States

v. Hoffecker, 530 F.3d 137, 176 (3d Cir. 2008) (citation

omitted).

Shulick fails to show that his theory is supported by the

evidence. He offers only a cursory, single paragraph as to why

he was entitled to a safe harbor instruction. He says, in effect,

that while his expenditures fell short for certain items in the

34

budget, he exceeded the budget for other items and other of his

spending benefited the School District. However, Shulick cites

no case law in support of his position and, as the Government

aptly notes, he has not even attempted to identify the salary,

wages, fees, compensation, or expenses that would supposedly

fit within the safe harbor. Nor has he provided this missing

information in his reply brief, even after the Government

pointed out the deficiency. See Doeblers’ Pa. Hybrids, Inc. v.

Doebler, 442 F.3d 812, 820 n.8 (3d Cir. 2006) (“Judges are not

like pigs, hunting for truffles buried in the record.”) (internal

quotation marks and citation omitted). The District Court did

not abuse its discretion in declining to provide the instruction.

Shulick asserts several errors in the District Court’s

calculations at sentencing. We review an interpretation of the

sentencing guidelines, including what constitutes loss, de novo,

and factual findings for clear error. United States v. Napier,

273 F.3d 276, 278 (3d Cir. 2001).

He first contends the District Court erred in computing

a fraud loss of $795,735 for the § 666 counts. The District

Court calculated the School District’s loss by subtracting the

amount that Shulick actually spent on various budgeted items

from the amount the budget required him to spend. In

performing this calculation, the Court referenced Note 3(F)(ii)

to Sentencing Guideline § 2B1.1. It provides that “[i]n a case

involving government benefits (e.g., grants, loans, entitlement

program payments),” the loss is “the value of the benefits

obtained by unintended recipients or diverted to unintended

uses, as the case may be.” U.S.S.G. § 2B1.1, cmt. n.3(F)(ii).

Shulick argues that Note 3(F)(ii) does not apply here, and

should not have been relied upon, because DVHS’s

35

management of Southwest was a “fee-for-service business

deal” and not a “a case involving governmental benefits.”

Appellant’s Br. 72-73. The District Court, says Shulick, should

have used the general definition of fraud loss set forth in Note

3(A): “the greater of actual loss or intended loss.” U.S.S.G. §

2B1.1 cmt. n.3(A).

We agree with the Government that whether the moneys

are “governmental benefits” or not does not matter under the

facts of this case and the calculation performed. In calculating

the fraud loss, the District Court properly applied our

precedent, United States v. Nagle, 803 F.3d 167, 180 (3d Cir.

2015). There, we explained that “[w]e need not decide whether

the [disadvantaged business enterprises] program is a

‘government benefit’ and, therefore, whether Note 3(A) or

Note 3(F)(ii) applies.” Id. at 180. “[U]nder either application

note,” we said, “the amount of loss [the defendants] are

responsible for is the face value of the contracts . . . minus the

fair market value of the services . . . provided under the

contracts.” Id. at 180. Nagle confirms that the challenged

computation—the contract’s face value less the value of

services Shulick actually provided—is in fact correct. This

difference constitutes the actual pecuniary loss the School

District suffered when Shulick spent only a fraction of the

contract funds on its students.

Shulick next argues that the District Court erred in

calculating credits against loss. Note 3(E)(i) instructs that the

fraud loss is to “be reduced by the value of the services

rendered by a defendant to the victim.” U.S.S.G. § 2B1.1, cmt.

n.3(E)(i). Shulick claims that the Court reduced the loss figure

by some, but not all, of the value of the services he rendered to

Southwest.

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It was Shulick’s burden to show that he was entitled to

specific offsets, because the Government made out a prima

facie case of the loss amount. United States v. Jimenez, 513

F.3d 62, 86 (3d Cir. 2008). The District Court held that he

failed to meet that burden. It rejected the calculations of

Shulick’s accounting expert, Hamilton, who allocated to

Southwest (1) 34% of expenditures that also covered Shulick’s

law office and three other schools; (2) DVHS’s income taxes,

accounting expenses, and insurance premiums; (3) substantial

payments to Fattah, Jr.; and (4) a number of payments to

persons not provided for in the Southwest contract, including

the salaries of employees of other schools and a car and

benefits package for DVHS’s bookkeeper, whose

responsibilities also included working on Shulick’s personal

finances. Declining to calculate the offsets as Hamilton

proposed was not clearly erroneous. Shulick simply did not

carry his burden to show that additional money was spent for

the benefit of Southwest.

Lastly, Shulick challenges the District Court’s

restitution and forfeiture calculations. He first argues that the

Mandatory Victims Restitution Act limits restitution to

“pecuniary loss” suffered as a “direct and proximate” result of

the defendant’s conduct. 18 U.S.C. § 3663A(c)(1)(B), (a)(2)).

His argument merely re-ups the same theories which he

unsuccessfully advanced above and which also fail here; the

District Court properly calculated the actual loss suffered

under Nagle. As to forfeiture, Shulick argues the District Court

failed to expressly find that Shulick acquired the funds. But it

did. The Order of Forfeiture states: “Based upon the facts and

arguments set forth in the government’s Memorandum

Regarding Fraud Loss . . . and the record as a whole, the sum

of $649,735.00 represents the value of property the defendant

obtained directly or indirectly . . . .” District Ct. Dkt. #216 at 2.

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Shulick’s final argument attacks the District Court’s

decision to supplement the record with a binder that defense

expert Hamilton relied upon while testifying at Shulick’s

sentencing. Hamilton brought the binder to the stand with him,

but Shulick’s counsel did not ask about it on direct

examination. When Shulick’s counsel concluded, the District

Court permitted the Government to review the binder and

during cross-examination, the Government questioned

Hamilton about various materials in the binder. Although the

District Court stated that the binder “was referred to, so we may

want to put it in the record,” App. 4658, this was not done at

the time. Instead, the Court instructed Hamilton to provide

prosecutors with a copy of the binder, which they agreed to

accept instead of having it formally entered into the record. A

copy never arrived, so the Government moved to supplement

the record. The District Court granted the motion.

We review the District Court’s decision to supplement

the record for an abuse of discretion. Arrowpoint Capital Corp.

v. Arrowpoint Asset Mgmt., LLC, 793 F.3d 313, 327 n.16 (3d

Cir. 2015). A district court may supplement the record if

“anything material to either party is omitted from or misstated

in the record by error or accident.” Fed. R. App. P. 10(e)(2)(B).

Here, the District Court determined that the binder had been

omitted by error, because the defense had not delivered a copy

as instructed. The binder was material, according to the District

Court, as it contained information supporting the foundation

for Hamilton’s fraud loss calculation—an issue which Shulick

himself raises on appeal. In light of the discretion afforded to

the District Court on this matter, we cannot say that it abused

its discretion in supplementing the record. The binder was not

“new evidence,” having been relied upon by a testifying expert

and specifically referenced by the Government on cross-

38

examination; supplementation was, thus, for the proper

purpose of “correct[ing] inadvertent omission.” In re Adan,

437 F.3d 381, 389 n.3 (3d Cir. 2006).

For the foregoing reasons, we will affirm.

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