United States v. Wright

PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_______________

Nos. 09-3467, 09-3731 & 09-3965

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UNITED STATES OF AMERICA

v.

CHRISTOPHER G. WRIGHT,

Appellant (No. 09-3467)

RAVINDER S. CHAWLA,

Appellant (No. 09-3731)

ANDREW TEITELMAN.

Appellant (No. 09-3965)

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On Appeal from the United States District Court

For the Eastern District of Pennsylvania

(D.C. Criminal Action No. 2-08-cr-00450-001/002/004)

District Judge: Honorable Eduardo C. Robreno

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Argued September 21, 2011

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Before: AMBRO, CHAGARES,

and VANASKIE, Circuit Judges

(Opinion filed: January 4, 2012)

Lisa A. Mathewson, Esquire (Argued)

123 South Broad Street, Suite 810

Philadelphia, PA 19109

Counsel for Appellant

Christopher G. Wright

Peter Goldberger, Esquire (Argued)

50 Rittenhouse Place

Ardmore, PA 19003

Counsel for Appellant

Ravinder S. Chawla

Ellen C. Brotman, Esquire (Argued)

Montgomery, McCracken, Walker & Rhoads

123 South Broad Street, 28th Floor

Philadelphia, PA 19109

Counsel for Appellant

Andrew Teitelman

William A. DeStefano, Esquire

Terri A. Pawelski, Esquire

Buchanan Ingersoll & Rooney PC

50 South 16th Street

Two Liberty Place, Suite 3200

Philadelphia, PA 19102-2555

2

Counsel for Appellants

Ravinder S. Chawla & Andrew Teitelman

Zane David Memeger, Esquire

United States Attorney

Robert A. Zauzmer, Esquire

Assistant U.S. Attorney

Jennifer Arbittier Williams, Esquire (Argued)

Assistant U.S. Attorney

Michael J. Bresnick, Esquire

Office of United States Attorney

615 Chestnut Street, Suite 1250

Philadelphia, PA 19106

Counsel for Appellee

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OPINION OF THE COURT

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AMBRO, Circuit Judge

A jury convicted appellants Christopher G. Wright,

Ravinder (“Ravi”) S. Chawla, and Andrew Teitelman

(“Appellants”) of honest services fraud in violation of, inter

alia, 18 U.S.C. § 1346, mail fraud (referred to below as

“traditional” fraud) in violation of, inter alia, 18 U.S.C.

§ 1341, and conspiracy to commit these offenses in violation

of 18 U.S.C. § 371. After sentencing, the Supreme Court’s

decision in Skilling v. United States, 130 S. Ct. 2896 (2010),

affected the law of honest services fraud. Among other

arguments on appeal, Appellants challenge the sufficiency of

the evidence and assert that Skilling undermines their

convictions. We agree that Skilling requires a new trial on

3

Appellants’ honest services fraud convictions and that

prejudicial spillover tainted their traditional fraud convictions.

We thus vacate and remand.

I. Background

From 2005 through 2007, Wright was Chief of Staff to

Philadelphia City Councilman John “Jack” Kelly. 1 Wright

was also a realtor. Chawla owned the real estate firm World

Acquisition Partners (“World Acquisition”), and Teitelman,

an attorney, did most of the firm’s legal work. Teitelman was

not a World Acquisition employee, but his offices were in its

office suite, and most of his work came from World

Acquisition. Chawla and Teitelman befriended Wright when

Wright had an office in the same building.

This case concerns a series of gifts that Chawla,

Teitelman, or both gave Wright and a simultaneous series of

official acts that Wright took on behalf of World Acquisition.

Wright received a free stint in an apartment, free legal

services, and was promised commissions on World

Acquisition deals. At the same time, Wright shepherded a

bill that Chawla favored through Kelly’s office, arranged

meetings about a World Acquisition development, and

communicated with City of Philadelphia offices for World

Acquisition.

More specifically, Wright received three main

benefits. First, he lived at least part-time in an apartment

(with a free parking space) for 14 months without paying rent.

World Acquisition had contracted to buy a building at 2000

Delancey Street in Philadelphia, then sold its right to buy the

1

Councilman Kelly was not implicated in any of the crimes

charged against Appellants.

4

building to another purchaser. Meanwhile, Wright was in

divorce proceedings and struggled with alcohol abuse.

Teitelman, concerned for Wright, helped him move into one

of the building’s vacant units. The parties contest the extent

to which Chawla knew about this arrangement. The new

purchaser’s agent soon discovered Wright, who left the

apartment months later after the new purchaser sought to

evict him.

Second, Wright received free legal help from

Teitelman and his associate. When the Delancey Street

building’s new owner attempted to evict Wright, Teitelman

defended him. Teitelman also took over negotiations with the

lawyer for Wright’s wife when Wright could no longer afford

his previous divorce lawyer. Finally, Teitelman defended

Wright in a bank foreclosure against Wright’s marital home.

For all that work, Teitelman billed Wright but $350, and did

so only after Teitelman learned that the FBI was investigating

their relationship. As with the apartment, the parties contest

Chawla’s involvement.

Third, Wright was promised commissions in his

capacity as a realtor. He occasionally “brought deals” to

World Acquisition in the same manner that any realtor could,

but none of those deals succeeded, so Wright never earned

anything. On one occasion, World Acquisition granted

Wright and his partner the exclusive right to approach a buyer

for a $100 million property. Had Wright succeeded in

making the sale, he would have earned a commission of $6

million, but that deal also fell through. Chawla offered

Wright “liaison work” as well, 2 but Wright declined that

offer.

2

In an email about the River City project, discussed below,

Wright concluded to Chawla that “I am there if you need

5

While he was receiving those benefits, Wright took

three sets of actions as Councilman Kelly’s Chief of Staff that

tended to benefit World Acquisition. First, Wright helped

Kelly propose and pass a “mechanical parking” ordinance.

Philadelphia law required developers planning to install

mechanical parking to get a zoning variance, a time-

consuming process. At Teitelman’s behest, Wright set up a

meeting at which Chawla and his partner suggested that Kelly

change that law. Kelly, who usually took a pro-development

stance, agreed. Chawla and Teitelman prodded Wright to

make the bill a priority, and Kelly soon after introduced the

bill. The City Council passed it by a vote of 15-0.

Second, Wright helped Chawla oppose an ordinance

that would cripple a planned World Acquisition project.

Chawla envisioned a large development called “River City”

south and west of Philadelphia’s Logan Square, where low-

rise residences predominate. When the neighborhood

association protested, Wright arranged a meeting between

Chawla and association leaders. Afterward, Wright wrote

Chawla and Teitelman advising that his “role as Jack’s Chief

of Staff” should be to focus City staff on River City’s

benefits. Nonetheless, in the face of continued opposition,

the City Council passed a building-height restriction that

thwarted the River City plans. Kelly joined the 15-0 vote.

Third, Wright worked with other City offices on World

Acquisition’s behalf. When the Parking Authority was

me.” In his brief reply twelve minutes later, Chawla wrote:

“Thanks for your offer. . . . We will need your help on going

forward with this project and would like to retain you as our

consultant to handle liaison work. We will discuss when we

meet next.”

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selling a certain property, Wright forwarded public

information about its “request for proposal” process to

Chawla and Teitelman. Wright also arranged a walkthrough

of the property. He obtained public information for World

Acquisition from Philadelphia Gas Works through a high-

level official rather than through the main call center.

Finally, Wright worked with the City’s Department of

Licenses and Inspections on a certification that the River City

property was not encumbered with zoning violations. City

Council staff often did so for their constituents, though this

certification was unusually complicated.

In 2008, a federal grand jury returned a fourteen-count

indictment against Chawla, Teitelman, Wright, and Chawla’s

brother Hardeep. The indictment charged honest services

fraud, traditional fraud, conspiracy to commit both kinds of

fraud, and bribery in connection with a federally funded

program. After a four-week jury trial, including five days of

deliberations, the jury convicted Chawla, Teitelman, and

Wright on three counts: (1) conspiracy to commit honest

services and traditional fraud (Count One); (2) honest

services fraud for the apartment arrangement (Count Ten);

and (3) traditional fraud for the apartment arrangement

(Count Twelve). The jury further convicted Chawla alone on

one honest services count for offering Wright liaison work

(Count Three). It acquitted on the other ten counts and

acquitted Hardeep Chawla of all counts.

The District Court sentenced Wright to 48 months’

imprisonment, Chawla to 30 months, and Teitelman to 24

months, followed in each case by two years of supervised

release. It also imposed fines and special assessments on

each person. After sentencing, they filed timely appeals to

our Court. The District Court had jurisdiction under 18

U.S.C. § 3231, and we have jurisdiction under 28 U.S.C.

§ 1291.

7

Appellants challenge their convictions on the grounds

that: (1) the evidence was insufficient to convict them on any

count; (2) the jury instructions on honest services fraud

constitute error after the Supreme Court’s intervening

decision in Skilling; (3) if the honest services fraud

convictions are vacated for any reason, the traditional fraud

convictions must be as well due to “prejudicial spillover;” (4)

the Government constructively amended the indictment; (5)

the District Court allowed inadmissible evidence; and (6) it

improperly calculated Appellants’ Guidelines sentencing

ranges.

We stayed the briefing schedule pending the Supreme

Court’s decision in Skilling. After that decision, all

defendants were released on bail without the Government’s

objection.

II. Discussion

A. Honest Services Fraud: Sufficiency of the

Evidence

“Honest services fraud” has proven hard to define. We

recently reviewed its history at length, see United States v.

Riley, 621 F.3d 312, 326-27 (3d Cir. 2010), so a shorter

treatment is sufficient here. The District Court instructed the

jury that it could convict for honest services fraud under

either a “conflict of interest” theory (whereby it is fraud for a

public servant not to disclose a conflict of interest resulting in

personal gain) or a “bribery” theory (whereby it is fraud for a

public servant to accept benefits in exchange for taking an

official action). At the time, this instruction properly stated

our law. See United States v. Panarella, 277 F.3d 678, 690

(3d Cir. 2002). However, the Supreme Court later construed

“honest services fraud” to exclude the conflict-of-interest

theory, holding that this interpretation of the statute would

8

render it unconstitutionally vague. Skilling, 130 S. Ct. at

2927-35. The jury’s general verdict, encompassing both

theories, could thus be defective.

Appellants contend that the evidence was insufficient

to convict them on the bribery theory alone, requiring that we

vacate their convictions. This contention echoes their motion

for a judgment of acquittal under Federal Rule of Criminal

Procedure 29, which the District Court denied.

“The burden on a defendant who raises a challenge to

the sufficiency of the evidence is extremely high.” United

States v. Lore, 430 F.3d 190, 203 (3d Cir. 2005) (quoting

United States v. Serafini, 233 F.3d 758, 770 (3d Cir. 2000)).

We must affirm the jury’s verdict so long as “there is

substantial evidence that, when viewed in the light most

favorable to the government, would allow a rational trier of

fact to convict.” United States v. Lee, 612 F.3d 170, 178 (3d

Cir. 2010) (quotation marks and citation omitted).

We thus turn to the definition of honest services fraud.

The bribery theory, which is the only theory left standing to

convict for honest services fraud in our case,3 “requires a quid

pro quo,” United States v. Kemp, 500 F.3d 257, 281 (3d Cir.

2007), that is, “a specific intent to give or receive something

of value in exchange for an official act.” United States v.

Sun-Diamond Growers of Cal., 526 U.S. 398, 404-05 (1999)

(emphasis in original). (The Supreme Court has contrasted

3

In addition to bribery, Skilling held that honest services

fraud may encompass kickbacks. 130 S. Ct. at 2932

(“Reading [28 U.S.C.] § 1346 to proscribe bribes and

kickbacks—and nothing more—satisfies Congress’

undoubted aim . . . .”). Kickbacks are not at issue here.

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bribery with a gratuity, which is “merely a reward for some

future act that the public official will take[,] and may already

have determined to take[,] or for a past act that he has already

taken.” Id. at 405.) The bribery theory does not require that

each quid, or item of value, be linked to a specific quo, or

official act. Rather, a bribe may come in the form of a

“stream of benefits.” United States v. Bryant, 655 F.3d 232,

240-41 (3d Cir. 2011). The public official need not even

perform the official acts if he stood ready to do so having

intended to accept a bribe. Id. Intent is the determinant.

“The key to whether a gift constitutes a bribe is whether the

parties intended for the benefit to be made in exchange for

some official action; [indeed,] the government need not prove

that each gift was provided with the intent to prompt a

specific official act.” Kemp, 500 F.3d at 282.

An honest services fraud prosecution for bribery after

Skilling thus requires the factfinder to determine two things.

First, it must conclude that the payor provided a benefit to a

public official intending that he will thereby take favorable

official acts that he would not otherwise take. Second, it must

conclude that the official accepted those benefits with the

intent to take official acts to benefit the payor. See Bryant,

655 F.3d at 240-41; Kemp, 500 F.3d at 281-82. The intent of

both parties may be inferred from circumstantial evidence.

“The quid pro quo can be implicit, that is, a conviction can

occur if the Government shows that [the official] accepted

payments or other consideration with the implied

understanding that he would perform or not perform an act in

his official capacity ‘under color of official right.’” United

States v. Antico, 275 F.3d 245, 257 (3d Cir. 2001).

As noted, the jury convicted all three Appellants on

Count One, conspiracy to commit honest services fraud in

violation of 18 U.S.C. § 371. “The specific elements of

conspiracy to violate federal law are: . . . an agreement to

10

commit an offense proscribed by federal law; . . . the

defendants intentionally joining in the agreement; [and] one

of the conspirators committing an overt act . . . in furtherance

of the conspiracy.” United States v. Rigas, 605 F.3d 194, 206

n.9 (3d Cir. 2010) (en banc). In the honest services fraud

context, the Government must prove overt acts in furtherance

of a quid pro quo, such as mutual and contemporaneous

benefits.

There were mutual and contemporaneous benefits in

this case. Teitelman provided Wright a free place to live and

free legal services. As we discuss below, Chawla likely knew

of their arrangement and could have encouraged it. That

arrangement supported the convictions of all three Appellants

on Count Ten, a specific instance of alleged honest services

fraud. Chawla also was undeniably involved in extending

Wright his exclusive potential commission, and Teitelman

sent the email expressly granting that opportunity. In

addition, Chawla sent Wright the email offering him “liaison

work,” which was the basis for his conviction on Count

Three. At the same time, Wright helped Chawla bring

mechanical parking to Kelly’s attention. Thereafter, Wright

made sure that Councilman Kelly’s office quickly prepared a

bill and had Kelly introduce it. Wright also set up meetings

for Chawla to persuade the Logan Square Neighborhood

Association to support River City. He did so even though his

boss, Kelly, planned to vote for the anti-River City height

restriction because Logan Square’s councilman supported it.

Finally, Wright used his influence and knowledge to work

with City agencies on World Acquisition’s behalf more

effectively than Chawla or Teitelman could.

Intent, which the Government must prove both for

conspiracy in Count One and for the specific frauds in Counts

Three and Ten, is the more difficult question. Parties to a

bribery scheme rarely reduce their intent to words, but the law

11

does not require that. “The official and the payor need not

state the quid pro quo in express terms, for otherwise the

law’s effect could be frustrated by knowing winks and nods.

The inducement from the official is criminal . . . if it is

implied from his words and actions . . . .” Evans v. United

States, 504 U.S. 255, 274 (1992) (Kennedy, J., concurring in

part and in the judgment). Furthermore, Count One is a

conspiracy charge, and “the very nature of the crime of

conspiracy is such that it often may be established only by

indirect and circumstantial evidence.” United States v.

Brodie, 403 F.3d 123, 134 (3d Cir. 2005). Inferring mental

state from circumstantial evidence is among the chief tasks of

factfinders. We rely on the good sense of jurors (and, where

applicable, trial judges) to distinguish intent from knowledge

or recklessness where the direct evidence is necessarily

scanty.

In this case, a reasonable jury could find that each

Appellant had fraudulent intent. Therefore, Appellants have

failed to show that the evidence against them was insufficient,

as a jury could find that the Government had proven each of

the elements of honest services fraud and conspiracy to

commit it. We consider the inferences that a jury could have

made about each Appellant in turn.

First, consider Wright. The language of some of his

emails could persuade a jury that he intended to be

influenced. For example, the request-for-proposal

information about the Parking Authority property that Wright

provided to Chawla and Teitelman was publicly available.

But in advising Chawla of a certain deadline, Wright added

that “[t]he party must sign in and this will be [a] public record

- it would not be [a] good thing for me to sign for this RFP -

so you should do it or someone from [World Acquisition]

should do [it.]” Regarding River City, Wright emailed

Chawla (copying Teitelman) without prompting to offer his

12

help. “[Y]ou need someone to contact and monitor City

Planning efforts,” Wright wrote. “My role as Jack’s Chief of

Staff should be to keep City Planning’s focus on what [R]iver

[C]ity will . . . bring to . . . Philadelphia’s tax base/economy

for the next twenty years.”

This is the language of collaboration and influence. In

the spring of 2007, the date of both emails, Wright was living

in the Delancey Street apartment and receiving Teitelman’s

legal help. Mere simultaneity does not create an exchange,

but, coupled with the emails, a jury could infer intent. In

addition, the Government presented other evidence that could

indicate Wright’s intent. In one heated exchange with Kelly

in the summer of 2006, Kelly told Wright that he should be

paying rent for the apartment and that Wright’s relationship

with World Acquisition should be “squeaky clean.” Though

he knew it was an issue, Wright lived in the apartment for a

year thereafter without paying rent.

Second, a jury could infer that Chawla knew of and

approved the benefits that Wright received. The contract

under which Chawla sold his rights to buy 2000 Delancey

Street, the site of Wright’s free apartment, forbade Chawla

from putting new tenants there. Wright’s presence before

closing would risk the deal’s collapse. Yet, sometime around

the closing, a friend had told Chawla that Wright was “happy

and comfortable” in the apartment. Chawla, rather than being

surprised or upset, “was happy about that.” Chawla also

conceded to Kelly in mid-2007 that “Andy [Teitelman] gives

[Wright] free legal advice.” Teitelman was Chawla’s lawyer

working in Chawla’s office. As Teitelman was representing

Wright in a divorce, a foreclosure, and an eviction, it is

plausible that Chawla approved of it. A reasonable jury could

combine that knowledge with Chawla’s emails to infer

fraudulent intent. Chawla told Teitelman to “chase Chris” on

the mechanical parking issue, which Teitelman promptly did.

13

And when he learned unfavorable news about River City,

Chawla wrote Wright, requesting simply: “Chris: Please call

Andy or me asap. Thanks.” Shortly thereafter, Wright

arranged for Chawla to meet with the Logan Square

Neighborhood Association. Finally, in the email on which his

Count Three conviction was based, Chawla proposed that

Wright handle “liaison work” for World Acquisition, though

he declined.

Third, it is plausible that Teitelman intended to help

influence Wright. There is no dispute that Teitelman got

Wright fourteen free months in an apartment with a parking

space in an affluent neighborhood. When the agent of the

Delancey Street building’s new owner found Wright there,

everyone passed the buck to Teitelman, who promised to

have Wright moved out when the owner requested. Instead,

Teitelman defended Wright in the eviction attempt, drafting

the answer to the eviction complaint referred to in Count Ten.

And there is no dispute that Teitelman acted as Wright’s

personal lawyer in other matters when Wright could no longer

afford one. Teitelman himself sent many of the emails

soliciting official acts from Wright, and he (Teitelman) was

copied as a recipient on most others. A jury could infer that

Teitelman conferred these benefits on Wright so that he

would help the business of Teitelman’s main client, Chawla.

Thus, drawing all possible inferences in the

Government’s favor, a reasonable jury could have found that

Chawla and Teitelman conferred benefits on Wright intending

to secure his favors, and that Wright accepted those benefits

intending to aid Chawla and Teitelman. The evidence was

therefore sufficient to convict Appellants of honest services

fraud, and conspiracy to commit that fraud, under the bribery

theory alone.

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B. Honest Services Fraud: Erroneous Jury

Instruction

Appellants also challenge their honest services fraud

convictions in Counts One, Three, and Ten on the ground that

Skilling rendered the District Court’s jury instructions

erroneous. Both sides agree that the “jury [was] instructed on

multiple theories of guilt, one of which is improper.”

Hedgpeth v. Pulido, 555 U.S. 57, 61 (2008) (per curiam). In

light of Skilling, the jury should have been instructed on the

bribery theory but not the conflict-of-interest theory.

“This determination, however, does not necessarily

require reversal of the [honest services fraud] conviction[s];

. . . errors of [this] variety are subject to harmless-error

analysis.” Skilling, 130 S. Ct. at 2934. We presume that such

errors are not harmless “unless it can be ‘prove[d] beyond a

reasonable doubt that the error complained of did not

contribute to the verdict obtained.’” United States v. Waller,

654 F.3d 430, 434 (3d Cir. 2011) (quoting Chapman v.

California, 386 U.S. 18, 24 (1967)). That Appellants

objected to the District Court’s honest services fraud

instruction on other grounds suffices to preserve this issue for

our review. See Black v. United States, 130 S. Ct. 2963, 2970

(2010) (“[B]y properly objecting to the honest-services jury

instructions at trial, Defendants secured their right to

challenge those instructions on appeal.”).

We do not believe that the Government has proven

beyond a reasonable doubt that the jury instruction on the

conflict-of-interest theory did not affect the honest services

verdict. That theory required nondisclosure of a financial

interest that could conflict with a public official’s duty to

provide honest services. See Panarella, 277 F.3d at 690.

There is ample evidence on which the jury could have

convicted Appellants under that theory. By contrast, the

15

evidence supporting the bribery theory, while sufficient, is

less than the “overwhelming” evidence needed to hold that an

error is “harmless beyond a reasonable doubt.” United States

v. Balter, 91 F.3d 427, 440 (3d Cir. 1996).

In particular, the jury may have drawn inferences

about Appellants’ intent that would not sustain a verdict

based on the bribery theory. In the sufficiency-of-evidence

context, we must draw all reasonable inferences in the

Government’s favor. Without that constraint here, we believe

that other inferences about Appellants’ intent are plausible.

As above, we will address the intent of each Appellant in

turn.

First, Wright may have intended not to be influenced,

but merely to do his job. By reputation and by his own trial

testimony, Councilman Kelly favored developers and

business interests. He also testified that constituent services

advancing his policy goals were part of Wright’s job. Wright

therefore could not “pick and choose” which developers he

would assist. Kelly no less than Chawla encouraged Wright

to make mechanical parking a priority in his office. On cross-

examination, Kelly approved of Wright’s other “official acts”

as within the scope of his job. Kelly’s legislative assistant

also testified that while Chawla and his brother “called a lot,”

they were among many constituents who did so. The

President of the Northeast Philadelphia Chamber of

Commerce, for example, testified that Wright went personally

to visit with its members and worked with many City

departments on their behalf. When Chawla’s requests

extended beyond “constituent services,” as in his offer of

liaison work, Wright declined. On this evidence, the jury

could have acquitted Wright of honest services fraud under

the bribery theory because he lacked the required intent to be

influenced.

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Second, it is not clear beyond doubt that the jury found

Chawla seeking to bribe Wright. The Government presented

little evidence that Chawla directed Teitelman’s gifts or even

that he was closely involved with them. There was no direct

evidence that Chawla knew that Wright stayed in the

apartment for free until well after Wright had performed the

official acts at issue. This is a critical distinction because,

were Wright paying, his tenancy could not constitute a gift.

The jury thus could have inferred that Chawla knew only that

Teitelman had found Wright a place to live. And while

Chawla knew of Teitelman’s free legal services for Wright,

there is no evidence that he asked Teitelman to perform them.

Chawla openly admitted knowledge of these legal services

when Kelly was asking him about his ties to Wright in a

conversation that the FBI instigated and recorded. Moreover,

Chawla’s brief emails do not necessarily show sinister intent.

High-level executives are known for quick missives tapped

out on mobile devices between meetings. The jury thus might

have concluded that while Chawla knew the possible

ramifications of Teitelman’s gifts to Wright, he did not intend

thereby to influence Wright.

Third, Teitelman’s friendship with Wright offers a

motive for his generosity other than fraud. The evidence

establishes, and the Government does not dispute, that Wright

and Teitelman were close friends. It is equally clear that

Wright was in dire personal straits at the time. His mother

had just died of cancer, he was embroiled in a marital fight

and divorce, he was essentially broke, and he was drinking

heavily. Teitelman was among Wright’s few friends who

intervened and helped him enter rehabilitation. Those same

friends agreed that Wright should walk to work in Center City

Philadelphia rather than drive to and from his brother’s home.

While friendship is no bar to an honest services fraud

conviction (as the parties involved are often friends), these

facts show a close friendship. Here, the jury could have

17

found that friendship, not fraud, motivated Teitelman to find

the apartment in Center City and to act as Wright’s lawyer.

In addition to these alternate inferences about

Appellants’ intent, the context of the trial suggests that the

jury may have convicted based on the erroneous conflict-of-

interest instruction. See Virgin Islands v. Martinez, 620 F.3d

321, 338 (3d Cir. 2010) (“While many . . . cases focus on the

quantum of evidence against the defendants, harmless-error

analysis must, by necessity, take into account the totality of

the circumstances.” (citation omitted)). For example, the

Government insisted in its opening argument that public

disclosure forms exist to ensure that “public service is not

being tainted.” It also linked the Pennsylvania ethics laws to

bribery in its closing arguments. And the jury instructions

themselves devoted about eight times more words to the

conflict-of-interest theory than they did to the bribery theory.

Considering these plausible alternate inferences about

Appellants’ intent and a trial environment that emphasized

the conflict-of-interest theory, we cannot say that the

erroneous instruction did not contribute to the verdict. We

therefore vacate Appellants’ honest services fraud convictions

and remand for a new trial.

C. Traditional Mail Fraud: Sufficiency of the

Evidence

Appellants’ other convictions were for traditional mail

fraud. In addition to charging a conspiracy to commit honest

services fraud, Count One charged that Appellants conspired,

in violation of 18 U.S.C. § 371, to commit traditional fraud.

Count Twelve, the only specific instance of traditional fraud

in the indictment, charged that Appellants committed mail

fraud in violation of, inter alia, 18 U.S.C. § 1341. The jury

convicted on both counts. Appellants challenge these

18

convictions, as they challenged their honest services fraud

convictions, on the ground that the evidence was insufficient.

Our standard of review in the sufficiency-of-evidence

context, while technically plenary, is stringent. To repeat, we

must affirm the jury’s verdict so long as “there is substantial

evidence that, when viewed in the light most favorable to the

government, would allow a rational trier of fact to convict.”

Lee, 612 F.3d at 178 (quotation marks and citation omitted).

This challenge thus “‘places a very heavy burden on [the]

appellant[s].’” United States v. Dent, 149 F.3d 180, 187

(citation omitted).

We read § 1341 to contain three elements: “(1) a

scheme to defraud; (2) use of the mails to further that scheme;

and (3) fraudulent intent.” United States v. Jimenez, 513 F.3d

62, 81 (3d Cir. 2008) (quotation marks and citation omitted).

We have elaborated that “‘fraudulent representations, as the

term is used in [section] 1341, may be effected by deceitful

statements or half-truths or the concealment of material facts

and the devising of a scheme for obtaining money or property

by such statements or concealments.’” United States v.

Olatunji, 872 F.2d 1161, 1167 (3d Cir. 1989) (modification in

original) (quoting United States v. Allen, 554 F.2d 398, 410

(10th Cir. 1977)).

Traditional mail fraud under § 1341 involves

defrauding a private party of money or property, whereas

honest services fraud under § 1346 involves defrauding the

public of an official’s “honest services.” (Unlike honest

services fraud, Skilling did not disturb the law of traditional

fraud.) Both Count Ten and Count Twelve were based on the

same facts: Wright’s occupancy of the Delancey Street

apartment and the answer that Teitelman mailed in Wright’s

19

eviction case. 4 But whereas Count Ten charged that the

scheme defrauded Philadelphia’s citizens of Wright’s honest

services, Count Twelve charged that the scheme defrauded

the building’s owner, PBRG, of rent payments.

We believe that, under the demanding standard of

review applied here, we cannot say the evidence was

insufficient to convict Appellants of traditional fraud. We

consider each of the three elements of traditional mail fraud

in turn.

The first element is that there was a fraudulent scheme.

A reasonable jury could have found that Appellants sought to

defraud PBRG of Wright’s rent. PBRG bought the building

to renovate it and convert it to condominiums. For that

reason, PBRG’s principal, Robert Guttman, testified that he

“certainly wanted to know” how many units of the mostly

vacant building were occupied. Yet at the closing no one

mentioned that Wright had just moved in. That was not for

want of opportunity. Guttman had bought his right to

purchase the building from Chawla, and Teitelman formed

PBRG as an entity for the purpose of Guttman and his brother

buying buildings from World Acquisition. Moreover, at

closing Guttman was provided with a document that listed

Wright’s apartment as empty. The Government presented no

evidence that Chawla or Teitelman prepared that document.

But it would be possible for a jury to infer that, because

Chawla had sold PBRG its right to purchase the building, he

had to approve the list.

Appellants contend that, far from concealing Wright’s

presence, as Olatunji requires, they were forthright about it.

4

These facts also formed part of the basis for the conspiracy

charged in Count One.

20

When PBRG’s realtor found Wright while inspecting the

building, Wright did not make up a story about his presence

there or say that he was paying rent. The Government also

does not contest that Wright complained to PBRG’s initial

building manager about his apartment’s plumbing.

Ultimately, Appellants argue, any scheme to conceal Wright

from PBRG failed, as PBRG served him with an eviction

notice early in 2007.

A reasonable jury need not have found these

arguments persuasive. Chawla knew that it was important to

PBRG that the building be as vacant as possible. A jury

could have concluded that Wright’s absence on the closing

documents constituted concealment of his presence there. It

could also conclude that Wright’s outreach to building

managers was consistent with a scheme to defraud, as those

managers may have assumed that PBRG had approved what

Wright was doing.

The second element of traditional mail fraud is that the

mailing alleged for mail fraud purposes—the answer that

Teitelman’s associate filed in Wright’s eviction case—

furthered the alleged fraudulent scheme. Appellants point out

that “a mailing cannot . . . be considered even incident to an

essential part of the scheme[] when it occurs after the scheme

has reached fruition.” United States v. Yusuf, 536 F.3d 178,

187 (3d Cir. 2008). Any scheme to defraud PBRG by

concealing Wright’s occupancy, Appellants argue, must have

ended by the time that Teitelman’s associate mailed a public

legal document admitting that Wright was there. Therefore,

they contend, the sole alleged mailing could not have

furthered the scheme.

A reasonable jury could have viewed the nature of the

scheme differently, so that it did not end as soon as PBRG

became aware of Wright’s presence. The indictment alleges

21

that the nature of the scheme was “[t]o continue allowing

[Wright] the free use of the Delancey Street Apartment and

parking space . . . .” The affirmative misstatement alleged

toward that end was the claim, made in the mailed answer,

that Wright had PBRG’s permission to live in the building.

Viewing the scheme in this way, a jury could conclude that

the mailed answer furthered the scheme.

The third element is that the defendant(s) knew about

the alleged scheme and, therefore, could have had the

requisite intent to defraud. Chawla and Wright each claim

that, to the extent that any such scheme existed, he did not

know about it. Chawla asserts that there was no evidence that

he knew of Wright’s eviction, though he knew that Wright

was in the apartment and that Teitelman was helping him

with legal issues. Wright similarly points to the lack of

evidence that he knew about his exclusion from the closing

documents or about any false statements made on his behalf

during his eviction proceedings.

The Government responds with two arguments that a

reasonable jury could have found persuasive. First, the

evidence was sufficient for the jury to make the necessary

inferences. Wright, as Teitelman’s client, could have known

what documents were being filed on his behalf. Indeed,

Wright asked Teitelman to handle the eviction complaint.

And Chawla told Kelly in 2007 that he knew that Wright was

living in the building and that Wright was tight on money.

Second, even if Chawla and Wright did not personally know

of or intend a fraud, co-conspirators act as mutual agents for

one another. See, e.g., United States v. Pungitore, 910 F.2d

1084, 1147 (3d Cir. 1990). As such, each becomes

responsible for the acts of the other. On these grounds, a jury

could have inferred not only that Wright and Chawla knew

about the scheme to defraud but also that they intended it.

22

Teitelman raises a fourth issue in his brief. He asserts

that if Appellants did conceal any information from PBRG,

that information was not material, as the law requires. See

Neder v. United States, 527 U.S. 1, 16 (1999) (“[A] false

statement is material if it has ‘a natural tendency to influence,

or [is] capable of influencing, the decision of the

decisionmaking body to which it was addressed.’” (quoting

United States v. Gaudin, 515 U.S. 506, 509 (1995))).

Teitelman argues that Wright’s presence was not material

because it did not impair PBRG’s ability to convert the

building into condominiums. However, Guttman testified

that the presence of any renters or squatters in the building

would have been material to him as, in effect, its purchaser.

A reasonable jury could have determined, then, that

information about Wright’s presence might have changed

Guttman’s mind about the building’s value.

Based on the evidence recounted above, a reasonable

jury could conclude that Appellants agreed on a scheme to

defraud PBRG of payment for Wright’s tenancy by

concealing his presence, that the answer mailed in Wright’s

eviction case furthered that scheme, and that all three

Appellants knew of the scheme and intended that it succeed.

Therefore, a reasonable jury could have convicted Appellants

under 18 U.S.C. § 1341 and our interpretations thereof.

D. Traditional Mail Fraud: Prejudicial Spillover

Appellants’ traditional fraud convictions may be

tainted by “prejudicial spillover” from the honest services

fraud convictions that we vacate and remand. When two

charges are closely linked and we vacate a conviction on one

of them, we must ensure that the error on the vacated charge

has not affected the remaining charge. If there has been such

prejudicial spillover, we must order a new trial on the

23

remaining charge as well. United States v. Murphy, 323 F.3d

102, 122 (3d Cir. 2003).

We apply a two-step test for prejudicial spillover.

First, we ask “whether the jury heard evidence that would

have been inadmissible at a trial limited to the remaining

valid count[s].” United States v. Cross, 308 F.3d 308, 317

(3d Cir. 2002). If all evidence on the discarded counts (here,

the honest services fraud counts) would remain admissible at

a trial on the remaining valid counts (here, the traditional

fraud counts), then our inquiry ends. We would remand for

resentencing on the valid counts only.

If some evidence would be inadmissible, then we

proceed to the second step. There, we ask whether that

evidence (the “spillover evidence”) was prejudicial. Id. We

answer that question by weighing four factors: “whether (1)

the charges are intertwined with each other; (2) the evidence

for the remaining counts is sufficiently distinct to support the

verdict on these counts; (3) the elimination of the invalid

count significantly changed the strategy of the trial; and (4)

the prosecution used language of the sort to arouse a jury.”

Murphy, 323 F.3d at 118 (quotation marks omitted) (citing

United States v. Pelullo, 14 F.3d 881, 898-99 (3d Cir. 1994)).

We evaluate these factors in a light “‘somewhat favorable to

the defendant.’” Murphy, 323 F.3d at 122 (quoting Pelullo,

14 F.3d at 898). If the otherwise inadmissible evidence was

prejudicial, we remand for a new trial on the “tainted” count.

Applying this two-step test, we hold that there was

spillover evidence from the honest services convictions to the

traditional fraud convictions and that it was prejudicial. As to

the first step, much of the evidence at this trial would be

inadmissible at a hypothetical trial on traditional mail fraud

alone. The bulk of the prosecution concerned Wright’s

allegedly corrupt relationship with Chawla and Teitelman.

24

Proving that Appellants defrauded PBRG of rent would not

require proving that Wright was a public servant, that Chawla

and Teitelman sought to influence him, or that he sought to be

influenced. Evidence of the latter sort fills most of this case’s

four-volume appendix.

Specifically, the following evidence likely would be

inadmissible at a trial on traditional mail fraud alone: (1)

Kelly’s testimony about Wright’s official duties as his Chief

of Staff; (2) the testimony of City agency staff 5 about their

interactions with Wright, which the Government alleges were

undertaken to aid Chawla and Teitelman; (3) the testimony of

Russell Meddin of the Logan Square Neighborhood

Association about Wright’s work on the River City project;

(4) the myriad emails among Appellants about the mechanical

parking proposal and River City; (5) any evidence pertaining

to a $1,000 check that Chawla’s brother Hardeep gave to

Wright at a holiday party; and (6) the testimony by the

Executive Director of the Pennsylvania State Ethics

Commission and the General Counsel to the Philadelphia

Board of Ethics regarding Wright’s disclosure obligations

under state law (which pertained only to the conflict-of-

interest theory of honest services fraud). This evidence is

essentially irrelevant to the question of whether Appellants

schemed to defraud PBRG of rent. See Fed. R. Evid. 401,

402.

5

These agency staff included the head of Major Tax

Enforcement, the Tax Enforcement Administrator, the

Director of Corporate Communications at Philadelphia Gas

Works, the Contract Administration Manager for the

Philadelphia Parking Authority, and a clerk in the Licenses

and Inspections Department.

25

The Government counters that the enumerated

evidence would be relevant to show Appellants’ motive to

conceal Wright’s tenancy from PBRG. As we explained in

Cross, “[t]he existence of an overarching scheme can provide

circumstantial evidence of a defendant’s guilt by explaining

his motive in committing the alleged offense.” 308 F.3d at

322-23. However, were motive the sole purpose of this

considerable body of evidence, a trial court likely would

exclude some of it under Federal Rule of Evidence 403 or

404. 6 The probative value on the question of motive in

several hundred pages of testimony and documentary

evidence is outweighed by the costs of “needless presentation

of cumulative evidence.” Also, insofar as the evidence

portrays Appellants as corrupt, any probative value on motive

could be outweighed by its danger of unfair prejudice. And

because the “motive” evidence tends to show one type of

fraud (honest services) in a trial about another type

(traditional), it may be inadmissible character evidence under

Rule 404(b).

For these reasons, acknowledging the generous

discretion that these rules vest in district courts, much of the

enumerated evidence would be inadmissible at a trial on

Count Twelve alone. Here, as in Murphy, “the quantum of

6

Rule 403 provides that “[t]he court may exclude relevant

evidence if its probative value is substantially outweighed by

a danger of one or more of the following: unfair prejudice,

confusing the issues, misleading the jury, undue delay,

wasting time, or needlessly presenting cumulative evidence.”

Rule 404(a)(1) provides that “[e]vidence of a person’s

character or character trait is not admissible to prove that on a

particular occasion the person acted in accordance with the

character or trait.”

26

evidence . . . would not be necessary absent the [honest

services fraud] theory.” 323 F.3d at 121.

We thus proceed to the second step of the prejudicial

spillover inquiry. Weighing the four Pelullo factors, we

conclude that the otherwise inadmissible evidence was

prejudicial.

First, the traditional fraud charge was intertwined with

the honest services fraud charges. The same facts underlay

both Count Ten (honest services) and Count Twelve

(traditional): Wright’s presence in the apartment and the

answer that Teitelman’s associate filed in the eviction case.

As in Pelullo, the charges “described similar, if not identical,

methods used in the alleged frauds.” 14 F.3d at 898.

Furthermore, because Count One charged both an honest

services fraud conspiracy and a traditional fraud conspiracy,

the jury instructions on that Count intermingled the two

theories. The Government points out that, because the jury

did not convict on all counts, it must have understood the

counts separately. Cf. Lee, 612 F.3d at 181 (holding that

charges were not intertwined, in part, because the jury

convicted on one but acquitted on the other). But in this case

the jury convicted all three Appellants on the two counts most

likely to be confused.

Second, there was scant evidence that would support a

traditional fraud conviction yet be distinct from the honest

services fraud charges. The apartment was the most valuable

of the alleged bribes that Wright accepted. Yet without his

stint there being rent-free—the crux of the traditional fraud

charge—the jury could not characterize it as a bribe or as an

impediment to Wright’s honest services. Thus little of the

traditional fraud evidence is independent of the honest

services fraud evidence.

27

Third, the parties’ strategy likely would have differed

in a trial on traditional mail fraud alone. We have addressed

this factor in much the same way that we address the first part

of the prejudicial spillover test. Namely, we assess the extent

to which the parties would have called different witnesses

and, correspondingly, the extent to which their opening and

closing arguments would have differed. See Lee, 612 F.3d at

182-83; Pelullo, 14 F.3d at 898-99. In this case, the parties

would not have needed to present evidence or opening and

closing arguments about the allegedly corrupt relationships

among Wright, Chawla, and Teitelman.

Fourth and finally, the prosecution’s language about

honest services fraud was “of the sort to arouse a jury.” In its

opening argument, for example, the Government told the jury

that “[t]he Chawla brothers bought big, big properties, but

they didn’t buy them to . . . develop them, no, they . . . ma[de]

a quick profit with no investment in time or rehabilitation.”

As for Wright, “he was seduced by that money, the free

apartment, the potential for future wealth,” seduction that

eventually “had become a full-blown affair.” The closing

argument used similar rhetoric that likewise did not pertain to

the traditional fraud charge. The Government proclaimed that

“Chris Wright was bought and paid for . . . to do their

personal bidding, to be their personal public servant,” and that

he “was no longer looking after the good of the City of

Philadelphia.” This language speaks for itself. It is

provocative, and it went well beyond Appellants’ motive for

allegedly defrauding PBRG.

Having concluded that both parts of the inquiry are

satisfied, we hold that there was prejudicial spillover in this

case. We therefore vacate Appellants’ traditional fraud

convictions as well as their honest services fraud convictions,

and remand for a new trial.

28

III. Conclusion

We believe that the evidence was sufficient to convict

Appellants on each count. However, the Skilling decision that

followed trial made the District Court’s instructions on honest

services fraud incorrect. Because our law of honest services

fraud leaves so much to intent and because intent leaves so

much to the jury’s ability to make reasonable inferences, we

cannot say that this error was harmless. Further, as the

evidence of honest services fraud overlapped substantially

evidence submitted on traditional fraud, prejudicial spillover

tainted Appellants’ traditional fraud convictions. We thus

vacate all four counts of conviction and remand for a new

trial. 7

7

In this context, we need not reach Appellants’ constructive

amendment, evidentiary, and sentencing challenges.

29