# Petition — Lemire v. United States > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385011_1474%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition - **Published:** January 1, 1984 - **Citation:** 467 U.S. 1226 ## Text JosePH C. LEMIRE, JON T. STEPHENS, LIONEL W. ACHUCK and INTERCONEX, INC., ; Petitioners, a v. : UNITED STATES OF AMERICA, i, Respondent. 3 3 PETITION FOR A WRIT OF CERTIORARI TO THE i UNITED STATES COURT OF APPEALS a FOR THE DISTRICT OF COLUMBIA CIRCUIT g Roszrt Gotp Joun W. VaRDAMAN, Jn. * Jon T. Brown Counsel of Record a Brown, RoaDy, BONVILLIAN pape x & Gow ttorneys for E 1800 Nineteenth St., N.W. Petitioner Stephens ei ——— Davp E. KENDALL (202) Attorney for Jamus T. Re.y Petitioner Intercones, Ine. ie Wr4.4aMs & CONNOLLY Lemire an wr ang INTERDONATO, LOMBARD, 20006 _ Remar & Comsrocx (202) 831-6000 Ave., N.W. *p4823% “gesdilt a 7 iz BH “ TABLE OF CONTENTS TABLE OF AUTHORITIES OPINION BELOW JURISDICTION 2 CONSTITUTIONAL PROVISIONS INVOLVED __. STATUTES INVOLVED STATEM?Y'NT AND CREATES A CONFLICT IN THE CIR- Wo sce Gi ea eee : ne iv ae TABLE OF AUTHORITIES __ Cases Page Alexander V, United States, 418 F.2d 1208 (D.C. Cir, 1969) 14 Beck V. United States, 298 F.2d 622 (9th Cir.), cert, denied, 370 U.S. 919 (1962) 18 Bollenbach Vv. United States, 826 U.S. 607 (1946).. 14 = Cameron V. Hauck, 383 F.2d 966 (5th Cir. 1967), ox cert. denied, 389 U.S. 1089 (1968) 18 Chiarella V. United States, 445 U.S. 222 (1980) .... sare é Cramer v. Fahner, 683 F.2d 1876 (7th Cir.), . ill cert. denied, 108 S. Ct. 8376 (1982) 00... = 18 é Baton v. City of Tulsa, 415 U.S. 697 (1974) 0... 12 ¢ Government of the Virgin Islands vy. Richards, 618 F.2d 242 (8d Cir. 1980) Haupt v. United States, $330 U.S. 681 (1947) _........ North Carolina vy. Alford, 400 U.S. 25 (1970) —.....: Phillips Vv. United States, 679 F.2d 192 (9th Cir. 1982) dive Raytheon Company V. Carver, et al., Supreme Court of Bermuda, No. 82-68 Samuel V. United States, 169 F.2d 787 (9th Cir. 1948) Street v. New York, 894 U.S. 676 (1969) ohg cle. Somber ¥. Caer, 88 US. 969981) -30 1 Terminiello v. City of Chicago, 887 U.S. 1 (1949). United States v. Adamson, 700 F.2d 958 (6th Cir. og Burt Karina iY id oad athe SE até See v TABLE OF AUTHORITIES—Continued a Page z United States v. Coz, 482 F.2d 1826 (D.C. Cir. Be 1970) ie United States v. Dansker, 687 F.2d 40 (84 Cir. : 1976), cert. denied, 429 U.S. 1088 (1977) a United States v. Franks, Nos. 81-2809 and 81-2310 : (10th Cir. December 27, 1983) 2 United States v. Gering, T16 F.2d 615 (9th Cir. : 1988) : United States v. Head, 641 F.2d 174 (4th Cir. t United States v. Herbert, 698 F.2d 981 (9th Cir.), cert. denied, 104 8. Ct. 87 (1988) United States V. Hoffman, 415 F.2d 14 (7th Cir.), cert. denied, 8396 U.S. 958 (1969) United States v. Irwin, 664 F.2d 671 (10th Cir. 1981), cert. denied, 456 U.S. 1016 (1982)... United States vV. Johnson, 700 F.2d 699 (11th Cir.. 1983) .... United States v. pest 518 F.2d 306 “(6th Cir. 1976) af ¢ 4 ove aes f +4 : "4 Rie SRO aT Ty ne RNOL See United Stats ¥. Lanch, 099 F.24 689 (Tih Gi. ag 16, ny United States v. Moynagh, 566 F.2d 799 (1st Cir. = 4 1977), cert. denied, 435 U.S. 917 (1978) —. : a ne ces ¥, Pine, 609 F.2d 106° (8a. Gir. a eRe Ae ueees Sots Bete OF Oe (Heh Cie. ~ : 2 vs — See ; eh ie y legs 2a © at 7 ad ” $ " rf » - a - +} . os FR a ee Rem 4433 {pits ite 33) yi te Be Tae iH Ta i ih ii ne} pad: itis ¢ ek i [te Ka F a fatal! dts me Far PE TR AL OED Poe RE Oe Te Sa ead Fone ae Eek ae Tone Pte Wien Cee ts Yipes PEE an , naa vl rs ee art + Ap Soe ys Ute 4 Si RPA y r- ‘ v ~ ay Ne ag | > 325 — COE Eas. SA ae RO - ’ Veh Ruel? ag tte - piv’ Sait : - - wanted that “some ed” by injury honest, loyal t any actual ). Poh aie gop - a wl ate : Te TG i! 27 5 nn HE iis + aA and fra the court found con or f the without sh Seat * tS ’ v ca Nec 2 ie A Ob Ho) genie ee Sg ee SN inten- Fgh wes an (App. also “have his employer Be 3 on theories uf guilt, one of which may not our interpretation of the law, can lay a sound basis for conviction” (App. 82a) (emphasis in original). Notwith- standing its conclusion that the indictment, as well as the instructions, set forth an invalid legal theory, creating the was evidence that the jury had acted on the erroneous theory. The court concluded that the record did “not sup- port an inference that the jury acted pursuant to [the] impermissibly broad interpretation of the statute” (App. 9a). REASONS FOR GRANTING THE WRIT ae A fi gis GUE pal bi oaif : He : Wel thats 4 2 He $29 + Hin Agile z 3908438 a g3 is Sas & . ~ tee en tote Poe SR GF e i fi if uF u if ! i : : nT tat ON ae ete bP CA eo ee =e po avniinbie tassiy- an hare y . ¥ Ph ¥ » . »¥ ¥ . Yas us r Auk Res 2 FE 440 Misch ore “gra * we a , © i ot i criminal conduct. Accordingly, procedural safeguards must govern such awards to insure that they do not exceed compensation for actual economic loss suffered. The decision below expands enormously the power of trial courts to impose economic judgments upon defend- ants in the form of restitution awards without the con- ingly popular part of the sentencing process. This has resulted in new legislation both at the state and federal levels. See, ¢.g., Victim and Witness Protection Act of 1982, § 5, 18 U.S.C.A. §§ 8579-80 (West Supp. 1982) (ap- plicable to crimes committed after January 1, 19838) ; Ga. Code Ann. § 17-14-1 to 14-16 (1982). Despite the new a j 18 to avoid “infringing on the constitutional rights of the Supp. 1982). Cir. ap In United States v. Tiler, 602 F.2d 80 (2d defendants were required to deposit $100,000 in escrow to Circuit said in Tiler, “generally restitution payments have been ordered only after actual damages have either been finally determined or formally conceded. See, ¢.g., United States v. Boswell, supra; United States v. Hoff- man, 415 F.2d 14, 22-23 (7th Cir.), cert. denied, 396 U.S. 958, 90 S. Ct. 481, 42 L. Ed.2d 428 (1969).” 602 F.2d at 34. - | : | g | | | | | E : tile HH Interconex bid offered the lowest rate. Not a single one sent MAI thet Uae thas ie ae Ge court below. Moreover, at no time in the either th» measure, or extent of, damages even ie 4 uit trial on the issue of damages, but they were afforded no right to a hearing on damages. Review of the court of appeals’ decision is warranted not only because of the effect on Stephens and Achuck, but more importantly, because of the precedent it establishes in creating almost limitless power in trial courts to impose huge restitution orders as a condition of probation with- out the procedural safeguards that due process demands. CONCLUSION For the foregoing reasons, petitioners respectfully mit that the petition for a writ of certiorari should be granted. Respectfully submitted, Rosert Gotp JoHN W. VARDAMAN, Jn. Jon T. Brown Counsel of Record re, dehiucl Sazan HeLene Duce Brown, RoaDY, BONVILLIAN pages & Gow ttorneys for 1800 Nineteenth St., N.W. Petitioner Stephens Washington, D.C. 20086 Davi E. KENDALL James T. Reniy Petitioner Interconesz, Ine. Attorney WriiaMs & ConNOLLY ’ | Pena © tail Wesbington’ D.O, 20008 Remy & Comsrocx (202) 881-5000 4801 Massachusetts Ave., N.W. , ~~ APPENDIX A—U.S.C.A. Opinion B—U.S.C.A. Judgment .. C—U.S.C.A. Rehearing Orders D—District Court Judgments E—Statutes F—Transcript of Jury Reinstruction . 4a project, and Raytheon’s senior official in Saudi Arabia. Carver was involved in the alleged fraud and conspiracy but is not an appellant in. this case. Defendant Joseph Lemire was the manager of several supporting subsidi- aries of Raytheon and was responsible for procuring and shipping this housing to Saudi Arabia. Prior to Raytheon entering the 1976 contract, Lemire and Carver became acquainted with defendants Jon or Ts ss e Pies Re ee ee he eis aN . f ‘ > = 7 a4 ree x ba sentatives of IMS to discuss their provision of houses to Saudi Arabia and, as a result of the meeting, Interconex and IMS signed an agreement that they would work together to get the Raytheon contract and to develop other business. That agreement provided that IMS would bid on the Raytheon contract, and, if successful, IMS would manufacture and deliver the prefabricated con- struction to port, and Interconex would ship and deliver the construction to the site in Saudi Arabia. On June 9, Lemire spoke to IMS on the telephone and discussed modular housing for Saudi Arabia. On June 21, Mr. Waxman notified modular house manufacturers, includ- ing IMS, of the contract specifications; he told them that the bids were to include shipping and that the bids were due by June 23. Raytheon received four bids, of which the IMS bid was lowest. The bids differed greatly in their shipping charges, with IMS charging the least amount—in this case, $91.11 per ton.* Lemire awarded the contract to IMS. When the housing contract was let, Lemire informed _ the Raytheon official responsible for approving procure- ment contracts that he had solicited bids C&F (cost and freight), that is, for both the housing and transportation. When questioned about his decision to have the manufac- turers provide shipping, Lemire responded that the com- petitive bid for shipping would save Raytheon money. Raytheon’s management then approved the contract. pany in which each had @ one-half interest. On June 10, 2 The shipping rates in the other bids were $115.07 per ton by 5: A Pe Fuh: 3 P y iy 7 D a a »* ux me ~ Ww 6a they travelled to Geneva where Achuck obtained special power of attorney over a Liberian company, Generation Holding (GH), and Stephens obtained a similar power over Coralda Trust, Ltd., a company based in Lichten- stein. When IMS was awarded the Raytheon contract, it entered into a subcontract agreement with Interconex. Rather than have IMS pay “nterconex the full $20.50 per square foot that the companies had agreed upon, IMS consented to pay $12.65 per square foot to Interconex and the remaining $7.85 per square foot to GH. When IMS was later awarded a second contract by Raytheon, it In the fall of 1976, Raytheon began an investigation of the IMS contracts, and in particular the shipping rates. In the course of this investigation, a company official and Lemire responded that he did not know. Raytheon also asked IMS and Interconex for cost information about the shipping, and both refused to supply the information.* Later in the fall, Raytheon got Interconex to cancel the fourth and final voyage upon which houses were being shipped. Raytheon itself chartered a boat to ship the houses, thereby achieving about $700,000 savings on the last trip. Tr. at 1148. Except for obtaining Interconex’s release from the shipping contract for the fourth voyage and arranging shipping for the houses itself, Raytheon took no further action. The government investigation leading to the indictment was prompted by surveillance of Mrs. Carver by a member of the Saudi Royal family. iF iH il Fie lif Hd iL ff : | : 7a The grand jury indicted the defendants and Mr, Carver on September 11, 1981.* B. The Parties’ Theories of the Case At trial, the government focused its proof primarily on its allegation that Interconex overcharged Raytheon for shipping. The government’s theory was that Interconex was able to submit a lower bid than its competitors be- cause of contract specification information that Lemire provided it well in advance of the bidding* This in- formation enabled Interconex to calculate its rate based on knowledge that it could charter an entire vessel to ship the housing, rather than booking shipments with a com- mon carrier. The government contended that this knowl- edge allowed Interconex to achieve inflated profits while still submitting the lowest bid. These express profits were then divided among Carver, Lemire, Stephens and Achuck. 8a contract and in awarding the contract to IMS. Moreover, the defense argued that Lemire did not deny Raytheon the opportunity to charter its own boat. Lemire testified that he would never have considered chartering a vessel because he was not free to make such arrangements, be- lieving he had to use Waterman. He pointed out that Raytheon had never before chartered its own boat. The defense explained the transfer of funds from GH to Carver and Lemire as independent of the award of the IMS contract. Lemire testified that he did not know that GH was the source of the funds, and in fact that he did not know of GH’s existence until the government investi- gation preceding the indictment. The defense contended that the funds were Stephen’s and Achuck’s capital in- vestment for an independent joint venture by Carver, Lemire, Stephens and Achuck to build a modular housing factory in Saudi Arabia. Thus, Lemire denies having gotten a kickback from Interconex for aiding them in getting the shipping contract. II. INSTRUCTIONS ON WiRE FRAUD The defendants contend on appeal that the instructions to the jury incorrectly stated the law on the essential ele- ments of wire fraud. They assert that the instructions erroneously allowed the jury to convict based on a theory that Lemire’s and Carver’s failures to disclose their con- flicts of interest due to their alleged joint venture with Stephens and Achuck, without more, constituted a ma- terial non-disclosure evidencing a specific intent to de- fraud Raytheon. The government responds that the in- structions were entirely correct, i¢., that a failure to a conflict of interest, when accompanied by a Sve ee 9a loyal and honest services of its employees Lemire and Carver. Although we agree with the defendants that the government’s interpretation of the wire fraud statute encompasses too much, we find that a fair reading of the instructions in light of the evidence and arguments the jury heard, does not support an inference that the jury acted pursuant to such an impermissibly broad interpre- tation of the statute. A. The Scope of Criminal Fraud The elements of wire fraud are (1) formation of a “scheme to defraud,”* and (2) use of interstate wire communication to further that scheme.” See Uhiited States v. Pollack, 584 F.2d 964, 971 (D.C. Cir.), cert. denied, 429 U.S. 924 (1976) ; cf. Pereira v. United States, 347 U.S. 1, 8 (1954) (elements of mail fraud) ; United States v. Diggs, 618 F.2d 988, 997 (D.C. Cir. 1979) (same) ; United States v. George, 477 F.2d 508, 511 (7th Cir.) (same), cert. denied, 414 U.S. 827 (1978). Con- gress did not define “scheme or artifice to defraud” when it first coined that phrase, nor has it since. See United * The requisite elements of “scheme to defraud” under the wire fraud statute, 18 U.S.C. § 1848 and the mail fraud statute, 18 U.S.C. § 1841, are identical. Thus, cases construing mail fraud apply to the wire fraud statute as well. See United States v. Feldman, 711 F.2d 768, 768 n.1 (7th Cir. 1988); United States v. Computer Sciences Corp., 689 F.2d 1181, 1188 n.14 (4th Cir. 1982), cert. denied, —— U.S. ——, 108 S.Ct. 729 (1988); United States v. Giovengo, 637 F.2d 941, 944 (8d Cir. 1980), cert. denied, 450 U.S. 1082 (1981). 718 U.S.C. § 1848 provides: % Bee kant ey ie oe PEt nats Bs + 10a States v. Reid, 583 F.2d 1255, 1264 (D.C. Cir. 1976); United States v. Von Barta, 685 F.2d 999, 1005 (2d Cir. 1980), cert. denied, 450 U.S. 998 (1981).* Instead that expression has taken on its present meaning from 111 years of case law.* See Von Barta, 635 F.2d at 1006 (leg- islative history helpful), United States v. McNeive, 536 F.2d 1245, 1247 n.3 (8th Cir. 1976) (same). At the core of the judicially defined “scheme to defraud” is the notion of a trust owed to another and a subsequent breach of that trust. But “[n]ot every breach of a fidu- ciary duty works a criminal fraud.” George, 477 F.2d at 508. In their attempts to delineate which breaches of duty rise to the level of criminal fraud, courts have used var- ious limiting doctrines. Some, including this court, have required that the fraud be “active’—that the fiduciary utilize his trusted position to obtain a benefit for himself at the expense of the person whose trust he breaches. See Post v. United States, 407 F.2d 319, 829 (D.C. Cir. 1968), cert. denied, 398 U.S. 1092, 1969); United States v. Epstein, 174 F.2d 754, 766 (6th Cir. 1949). Other courts have required that the breach be accompanied by some material non-disclosure or misrepresentation to the party owed the duty. See, e.g., United States v. Ballard, 663 F.2d 534 (5th Cir. Unit B 1981), modified in part and reh’g denied, 680 F.2d 352 (5th Cir. Unit B 1982); Von Barta, 635 F.2d at 1006. The crux of these require- ®In Reid, we quoted with approval the Fifth Circuit’s comment \ Poe Bs: Ay ty ‘““ 4 lla ments is that the wire fraud statute makes criminal only breaches of duty that are accompanied by a misrepre- sentation or non-disclosure that is intended or is contem- plated to deprive the person to whom the duty is owed of some legally significant benefit. See Diggs, 618 F.2d at 997 (“proof of fraudulent intent is critical’) ; Ballard, 663 F.2d at 541 n.17 (relating materiality to active fraud). Although critical ambiguities about the scope of the wire fraud statute remain, there is judicial consensus about certain requisite elements of a scheme to defraud. The duty breached need not arise from state or federal law; in particular, it may stem from an employment re- lationship of the sort that imposes discretion and conse- quently obligations of loyalty and fidelity on the employee. See, ¢.g., Ballard, 663 F.2d at 541; Von Barta, 685 F.2d at 999; United States v. Bohonus, 628 F.2d 1167, 1172 (9th Cir.), cert. denied, 447 U.S. 928 (1980); United States v. Reece, 614 F.2d 1259, 1261 (10th Cir. 1980); United States v. Bryza, 522 F.2d 414, 422 (7th Cir. 1975), cert. denied, 426 U.S. 912 (1976). And although the scheme to defraud must threaten some cognizable . tangibles as well. See, ¢.g., United States v. Condolon, 600 F.2d 7, 8 (7th Cir. 1979) (scheme to obtain sexual favors by false promises of modelling or acting job) ; United States v. Louderman, 576 F.2d 1888, 1887-88 (9th Cir.) (scheme to invade privacy by obtaining confidential information from telephone company), cert. denied, 489 U.S. 896 (1978). With the broadening of the scope of | j i : : a certain amount of confusion and controversy over the Se REN ta ence ey. : sees 2 eo Roe Ab 12a employee breakdowns, better handled in the civil courts.” Carried to its logical extreme, such a theory would crimi- nalize any intentional undisclosed breach of duty to an employer. The government appears to be arguing just such a theory here, but we are not inclined to accept it for the following reasons. An employer values the loyalty of his employees and prohibits conflicts of interest primarily because such con- flicts create an incentive for the employee to act in a manner detrimental to the employer’s tangible monetary interests. Employee loyalty is not an end in itself, it is a means to obtain and preserve pecuniary benefits for the 10 See, e.g., Coffee, The Metastasis of Mail Fraud: The Continu- ing Story of txe “Evolution” of a White Collar Crime, 21 Am. Crim. L. Rev. 1 (1988) ; Coffee, From Tort to Crime: Some Reflections on L. Rev. 428 (1988); Comment, supra note 9. In corporate law, the notion of what constitutes fraud on a com- pany by a senior official as opposed to a mere conflict of interest, which may be approved in advance or even ratified in retrospect by the company’s governing board, has changed considerably over the voidable if fair or if material facts of transaction revealed at time it is ratified); N.Y. Bus. Corp. Law §7138 (McKinney Supp. 1982) (same), and the Model Business Corporation Act § 41 (1979). In disclose 13a employer. An employee’s undisclosed conflict of interest does not by itself necessarily pose the threat of economic harm to the employer. Therefore it does not alone con- stitute a sufficient indicium that the employee intended any criminally cognizable harm to the employer.“ Other surrounding circumstances may of course provide the nec- essary proof that the employee intended such harm.” We hold today, however, that an intentional failure to dis- close a conflict of interest, without more, is not sufficient evidence of the intent to defraud an employer necessary under the wire fraud statute.” See United States v. Feldman, 711 F.2d 758, 763 (7th Cir. 1983). There 11“[(T]f merely depriving the victim of the loyalty and faithful service of his fiduciary constitutes criminal fraud, the ends/means distinction is lost. Once the ends/means distinction is abolished and trust; g : 3 l4a must be a failure to disclose something which in the knowledge or contemplation of the employee poses an independent business risk to the employer. Other courts have so held. Von Barta, 625 F.2d at 1005 n.14; United States v. Dizon, 586 F.2d 1888, 1400-01 (2d Cir. 1976). At the same time, we are not unaware that undisclosed conflicts of interest create fertile ground for subsequent misuse of the employee’s position. “The vice against which [courts] seek to guard... is that the adverse interest of the individuals may overcome [their] duty [as] officials, and induce agreements and transactions detrimental to the [employer] and unduly beneficial to the individuals.” Epstein, 174 F.2d at 764, (quoting Wy- man V. Bowman, 127 F, 257, 273 (8th Cir. 1904)). Ac- loss of his employee’s loyalty and fidelity. So long as the ad ‘ba rial non-disclosure” ie Ballard, 663 F.2d 534, which in- volved a scheme to channel oil through a chain of oil com- panies in order to generate commissions. The scheme’s mastermind, Mr. Granlund, was hired by the Florida Power Company to obtain oil during the 1973 oil short- age. The Florida Power Company paid him for this and also allowed him to receive commissions from the oil com- panies. By channelling the purchases through five com- . panies, Granlund received five commissions on each sale; channelling in turn was arranged by giving kickbacks to employees of the intermediary companies responsible for purchases and sales of oil. The intermediaries were subject to price controls which limited the profit they could make on sales of oil. The Ballard court held that in light of these price controls the employees of the in- termediaries did not intend to defraud their employers because the employers already received the maximum profits on each sale. The court reasoned that the failure of the employees to disclose the scheme to the intermedi- ary employers would therefore not have altered their business conduct, so the non-disclosure was not material.” it obtain a city contract at the same time his firm was working to get the contract for a competitor) , cert. denied, 456 U.S. 915 (1982) ; United States v. Newman, 664 F.2d 12 (2d Cir. 1981) (reversal of 16a In Ballard, the Fifth Circuit stated that a non-disclosure is material only if the employee “has reason to believe that the information would lead a reasonable employer to change its business conduct.” 683 F.2d at 541; see also Feldman, 711 F.2d at 768 (simple concealment of conflict of interest in customer’s accounts immaterial be- cause it would not itself have enabled defendant to trade without advancing sufficient collateral); United States v. Bethea, 672 F.2d 407 (5th Cir. Unit B 1982) (pro- curement officer’s ordering storage for servicemen who did not request it, thereby giving business to cosigner of defendant’s loan, not fraud unless activities were not in furtherance of servicemen’s best interest). Since an employer presumably would “change its business conduct” only if, upon disclosure of the conflict and any other rele- vant information, it saw new opportunities for profit or savings, or dangers of economic harm, the notion of ma- opportunity or economic benefit. If the jury believed the government’s evidence that the defendants schemed to 1 d i i i : & : F § i E } i { rE | wrt iva cerely believe Raytheon could not charter a boat itself because of its Waterman commitment. Or, if the jury found that Lemire had solicited bids for modular housing C&F or had otherwise altered the standard procedure for letting the contract in order to enable Interconex to get the shipping contract to the detriment of Ray- theon’s best interests, then it might justifiably convict the defendants of wire fraud. If the jury, however, found only an undisclosed breath of fiduciary duty on Lemire’s and Carver’s part due to their interest in a joint venture with Interconex’s principals, then it could not properly convict because there was nothing inherent in that failure to disclose that spelled business loss or harm to Raytheon. We turn then to the trial judge’s instructions to see if they could reasonably be interpreted by the jury to allow a conviction of wire fraud upon a mere finding of failure to disclose Lemire’s and Carver’s conflict of interest stemming from the joint venture. If in light of all the circumstances—the language of the instructions, the arguments of counsel, and the evidence itself—we find that the jury may have convicted the defendants solely upon that undisclosed conflict, those convictions must be reversed. See, ¢.g., Ballard, 668 F.2d at 544 (reversing and remanding because “the jury was au- thorized to find [defendant] guilty if the government out facts supporting any of the criminal theories in the [district] court’s charge to them,” in- i cluding those rejected by the court of appeals). Alter- natively, if these factors cumulatively indicate that it is highly improbable that the jury found the defendants guilty under an improper legal theory, technical errors in the instructions are deemed harmless, and we will affirm. See Alezander Vv. United States, 418 F.2d 1208 (D.C. Cir. : . | . pened at trial —.: — 188 dence, no reasonable possibility that error had materially affected verdict); United States v. Brooklier, 685 F.2d 1208 (2d Cir. 1982) (insufficient evidence of extortion meant that charge dealing with extortion on RICO count was erroneous, but error “harmless beyond reasonable doubt” since prosecutor told jury that defendants were not involved in the extortion and not to consider extor- tion in assessing guilt or innocence under RICO), cert. denied, —— U.S. ——, 108 S. Ct. 729 (1983); United States v. Pine, 609 F.2d 106, 108 (3d Cir. 1979) (proper test is to determine improper instructions’ effect on jury’s understanding of the law) .” The defendants mainly challenge the portions of the charge that address the legal requirements of a “scheme or artifice to defraud.” In stating those requirements, the judge instructed: the first alleged object was to defraud Raytheon Company of its right to the honest, conscientious, faithful, loyal, disinterested and unbiased services, 16 The standard for determining when an error in a jury instruc- tion requires reversal is the general standard for determining harm- less error after objection by the defense. See Hamling v. United States, 418 U.S. 87, 108 (1978); Alexander, 418 F.2d at 1207; United States v. Valle-Valdez, 664 F.2d 911, 916 (9th Cir. 1977). Under that standard, “[i)}t is our responsibility . . . to reverse ap- B ~~ vee , Aye wy er bh Carver and Lemire, free from bribery, corruption, Now the object of the scheme need not be money or any form of tangible property. The government need not prove any actual loss of money by the Ray- theon Company. A scheme to defraud an employer of the honest, faithful and unbiased services of its employees can also come within the meaning of scheme or artifice to defraud as set forth in the wire fraud statute. Tr. at 8175-76. By themselves, these words are am- biguous; conceivably they could be interpreted to allow a conviction solely on the basis of a knowing failure to disclose a conflict of interest, such as Lemire’s interest in the joint venture with the principals of Interconex. The remainder of the instructions, however, lead us to ing whether they constituted prejudicial error. United States v. Park, 421 U.S. 658, 674-75 (1975); United “ 2 ; ee. SEY Pe ls Ess tae es 20a ately following the troublesome language confirmed the admonition that both a breach of fiduciary duty and material non-disclosure were required by the statute.” of specific intent and willfulness, was necessary to support a convic- tion.” Id. at 978. ‘8 The full charge relating to the meaning of “scheme or artifice to defraud” read: Now, the essential elements of the offense of wire fraud, each of which the government must prove beyond a reasonable doubt, are as follows: The first essential element: The government must prove that Number one, the first alleged object was to defraud the Raytheon Company of its right to honest, conscientious, faith- ful, loyal, disinterested and unbiased services, and Fl g Fz ; I iH i | g ; show that someone was defrauded since success of scheme was not required); United States v. Reid, 583 F.2d at 1261-62 (not necessary to show victim actually incurred loss), the emphasis on “actual harm” (emphasis supplied)’ projects to the layman a requirement that there be a threat of monetary loss. Later instructions on specific intent also helped to cure any defect in the instructions on “scheme to defraud.” financial loss to another or bringing about some financial gain to one’s self. Tr. at 3209-10 (emphasis supplied). Although the em- show they intended to take a financial or business ad- vantage of Raytheon.” Moreover, although the central instruction on “scheme to defraud” failed to define a legally significant term like “material non-disclosure,” and the curing instruc- disclose Lemire’s and Carver’s conflicts of intercat with- out any other action on their part against Raytheon’s business interests was sufficient to constitute wire fraud. As the defense itself noted, “[tjhe evidence introduced = g | g F E i § p. 32 We reached a similar conclusion in Post, 407 F.2d at 329, where we found that the phrases “intentionally converted” and “know- ingly use[d)” in the charge sufficiently apprised the jury of the need to find specific intent to defraud. In Post, the district court had stated in a prior instruction thet the jury was to acquit if it found that a golf club’s directors used the club’s funds for the club's benefit. Jd. at 828; see also Feldman, 711 F.2d at 765 (“intent to defraud” not in statement of elements of mail fraud, but definition elsewhere made clear that jury could only convict if it found that defendant committed acts with purpose of defrauding employer) 24a have had to shift from consideration of the major thrust of the government’s evidence and arguments and dwell sand from the Raytheon Company by fraud in an agreement That’s what it all really boils down to. Tr. at 2904. Conversely, we find unpersuasive defendants’ sugges- tion that the government’s closing argument “played upon the theme” of mere failure to disclose Lemire’s and Carver's conflict of interest. Brief for Appellant at 31. The prosecutor himself focused on the need to show the defendants’ specific intent to defraud Ray- theon of money when he argued : I would like to say also that while I will make these remarks, eae Aen 25a on a few ambiguous lines in an eighty-six page charge in order to convict on an improper theory. The verdict itself also suggests that the jury did not was payment would not have been consummated but for the fraud. This conclusion would not follow from a find- ing of a mere failure to disclose a theoretical conflict of i : i é : £ : i e conviction on count two thus carries a necessary impli- : E § 5 : E 7 l mind when he did something, and it is important that—the totality of what we have shown. if ft i EF iF Ht fi : fit fi f tE fi i - toad - .S Pry ro. 26a defrauded Raytheon of at least $775,008. Hence it is reasonable to assume that the conviction on the mail fraud counts was based on the same finding that a scheme existed to defraud Raytheon of that money. Even were we less certain that the offending language of the instructions did not control the verdict, we would still hesitate to reverse. To the extent the instructions were confusing and even misleading, the defense had ample opportunity to make clarifying suggestions. Rule 80 of the Federal Rules of Criminal] Procedure states: No party may assign as error any portion of the charge or omission herefrom unless he objects thereto before the jury retires to consider its verdict, stating distinctly the matter to which he objects and the grounds for the objection. (Emphasis supplied.) “The rule requires that illegal their immediate correction.” United States v. Campbell, 684 F.2d 141, 148 (D.C. Cir. 1982); United States v. Williams, 521 F.2d 950, 956 (D.C. Cir. 1975). At the of : : YT INH a3 + Hip rth ag eee is rt i: : Hn ee Hie strep eer i ik hie TL ine : THEE bee i sll 5 ag ore at i UE REE HSE j % ay Sey ey ok eee OLE eee the ; Mangieri, 694 F.2d at 1277; Gaither, 418 F.2d at here the indictment gave warning that the government might argue for a verdict based on depriva- tion of employee loyalty. In addition, its proposed in- structions before the trial repeated that theory. ¢ Z | i : g 5 g proof of inflated shipping charges.” ; The defense cites Smolar, 557 F.2d 18, and United ; States v. San Juan, 645 F.2d 814 (2d Cir. 1976) as q F- “(t]he applicable cases” holding “that the government ¥ : may not change the theory of the case after the evidence i has been closed.” Reply Brief for Appellants at 10. M Smolar, however, involved a change of the theory of the case from “outright fraud as charged in the indictment, z| Pia BS ing = Les - “ re 7 pie oy = a renee 2 : ex. . ys wh. je on matters rise. " ‘= ae PE re j : 4 A es Sheek enti Rhnienneties ot then. wr Gah - wrdiagerery hat 2 a Peer de > ~ » a 4, oe are: Sia tts el cael ‘a oe et de X ye cpmeatinne ty wlgrtets! - : sl , . q 4 ‘4 Pe, a - re Ss . . eet inant Heuny Wille ait fegcat pet aplela Dy +s fn Huh atte E ? site ated et La HT ae aL eT a ROTA aE Tihs b HS i u! : Hunn Tadd 3 iu fF 7 4 y Eee ae poem - J ee a on a ee ee 28 Sf ee eee ee eS “ f, tant Bats "a . ay hia 3 ‘ 40a anything other than what was already in evidence.” Hence, the defendants’ contentions that Kasper intro- duced otherwise inadmissible evidence are unfounded. A third danger posed by summaries of evidence is that they provide an extra summation for the government that comes from the witness stand rather than the counsel’s lecturn. The distinction between valid summary testi- the word “argument” connotes a taking of sides in a con- are best left to the closing argument of counsel. Here, however, the summary involved only routine computations and culling through of documents to eliminate confusing and extraneous evidence. Consequently we find no force to the argument that Kasper’s testimony provided an unwarranted second closing for the government. 4la * Thus, allowing Kasper to testify was no abuse of discre- be: tion by the district court. a B. Ewcluded Defense Exhibits igeeeas 8 Hee paid He | ite ie Hh iain afl Decent VR yor he i oe Ne aaa 2. Exhibit DX155 DX155 (dealing with pre-contract proposed Waterman freight rates) was excluded on the grounds that it was - » Pie eee ‘ ser rey y— ren eee vite ple y ate ; : i a Pee LEE RS eh ee EE SR a nag SN eT Tieton eet, oo : sth « et ee vba eos erred from bounty that he hrrcge Catan" vail - - «aE z i: 83% 38 | CR (ite pi ei lfat ai case i 3 asf F riltlasts iH | Ee 5 : ii slit Hl ae - Hea i | ahi Upon entering a judgment of conviction of any of- fense not punishable by death or life United States v. Consuelo-Gonealez, 521 F.2d 267, 264 9th Cir. 1975) ). = The defendants, however, premise their appeal against 4 the condition of restitution on other, more specific, lan- | guage later in the Probation Act: 4 May be required to make restitution or reparation to aggrieved parties for actual damages or loss the offense for which conviction was had ee eR eee MHC Ht re enti ‘litle 2 re : +f 2a Me eels if : AEH Hoe a i Atha He a" ‘ a, 5 244 = : 3 F TR | Pee e HSHTIE ii hi Oe i he iilets Glan oe rt ee , es . ° tf 12 Ran Hil ie a8 aad I Hi HHH ae & ‘ 78a money from the Raytheon Company by means of false pretenses and representations which defendants knew would be and were false when made. signs, signals or sounds over the wires in interstate or foreign commerce. Counts one, three, four and five allege such transmittions to have occurred on or about September 21, 1976, January 7, 1977, January 24, 1977, --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385011_1474%3A1. Public record. Not legal advice.