United
States Court of Appeals,
Tenth
Circuit.
UNITED
STATES of America, Plaintiff-Appellee,
v.
Gary
E. GALBRAITH, Defendant-Appellant.
No. 92-4103.
Feb.
17, 1994.
Rehearing
Denied June 24, 1994.
Defendant was convicted of wire fraud as
aider and abettor by the United States District Court for the District of Utah,
Bruce S. Jenkins, J., and he appealed.
The Court of Appeals, Tacha, Circuit Judge, held that: (1) inconsistency in jury's verdict was not
grounds for reversal, and (2) defendant's base-offense level could not be
enhanced based on intended or probable loss to victim, to the extent that, as
participant in undercover sting operation involving sale of stock to
nonexistent pension fund, debtor was incapable of inflicting any loss.
Affirmed in part and vacated and revised in
part.
West
Headnotes
[1] Telecommunications
363
That defendant was
present in his home state at time of his alleged "interstate" telephone call could be inferred, for
purposes of establishing interstate character of communication under wire fraud
statute, from evidence that defendant was present in his home state two days
before and two days after telephone call in question. 18 U.S.C.A. § 1343.
[2] Criminal Law
1144.13(3)
[2] Criminal Law
1144.13(5)
[2] Criminal Law
1159.2(7)
On challenge to
sufficiency of evidence to support conviction, Court of Appeals considers evidence and reasonable inferences therefrom,
viewed in light most favorable to government, to determine whether reasonable
jury could find defendant guilty beyond reasonable doubt.
[3] Criminal Law
1139
Sufficiency of
evidence to support conviction is question of law subject to de novo review.
[4] Telecommunications
362
Elements of crime
of wire fraud are a scheme to defraud and use of interstate wire communications
to facilitate scheme. 18 U.S.C.A. § 1343.
[5] Criminal Law
559
Jury may draw
reasonable inferences from basic facts to ultimate facts.
[6] Criminal Law
559
To be reasonable,
an inference must be based on more than speculation and conjecture.
[7] Criminal Law
559
While it is
impossible to draw the line between reasonable inferences and mere speculation
with any precision, if there is an experience of logical probability that
ultimate fact will follow a stated narrative or historical fact, then jury may
draw a conclusion, since there is reasonable probability that conclusion flows
from proven facts.
[8] Criminal Law
822(1)
[8] Criminal Law
1134(3)
On
challenge to jury instruction, Court of Appeals determines whether jury,
considering instruction as whole, was misled.
[9] Criminal Law
1038.1(2)
Challenged
instruction would be reviewed for plain error, where defendant failed to raise
timely objection.
[10] Criminal Law
1030(1)
"Plain
error" is one that effects defendant's right to fair and impartial trial.
[11] Criminal Law
1030(1)
To constitute
"plain error," error must be both obvious and substantial.
[12] Telecommunications
363
Jury instruction
given in wire fraud prosecution, which defined a "wire communication in
interstate commerce" to include the use of telephone without specifying
that telephone communication must be interstate, could not have misled jury to
point that defendant's right to fair and impartial trial was compromised, and
accordingly did not constitute "plain error," in light of other
instruction given by court that wire communication had to be in interstate
commerce. 18 U.S.C.A. § 1343.
[13] Criminal Law
1175
Inconsistency in
jury's verdicts, in convicting defendant of wire fraud without convicting him
of conspiracy charge based on same underlying acts, was not grounds for
reversal, as jury may have chosen to acquit defendant of conspiracy charge
solely as matter of lenity. 18 U.S.C.A. § 1343.
[14] Indictment and Information
159(1)
"Constructive
amendment" of indictment has occurred if evidence presented at trial,
together with jury instructions, raises possibility that defendant was
convicted of offense other than that charged in indictment; specific inquiry is whether jury was
permitted to convict upon set of facts distinctly different from that set forth
in indictment.
[15] Indictment and Information
159(2)
To rise to level of
"constructive amendment" of indictment, amendment must effectively
alter the substance of indictment.
[16] Criminal Law
1167(4)
[16] Indictment and Information
159(2)
When evidence
presented at trial, together with jury instructions, establishes that
indictment has been constructively amended, and that defendant may have been
convicted of offense other than that charged in indictment, defendant's conviction must be reversed; constructive amendment is reversible per se.
[17] Criminal Law
1175
Alleged
inconsistency in jury's verdict, in convicting defendant of wire fraud but
acquitting him of conspiracy charge based on same underlying facts, did not
establish that indictment had been "constructively amended" and was
not reversible per se.
[18] Criminal Law
1139
[18] Criminal Law
1158(1)
Court of Appeals
reviews sentencing court's determination of intended or probable loss
occasioned by defendant's offense, for purposes of deciding whether defendant's
base offense level should be increased pursuant to sentencing guideline, under
clearly erroneous standard; however,
the factors that district court properly may consider in applying guideline are
reviewed de novo.
U.S.S.G. § 2F1.1, 18 U.S.C.A.App.
[19] Sentencing and Punishment
736
(Formerly 110k1254)
When defendant's
offense results in no actual loss, sentencing court may consider intended or
probable loss in deciding whether to increase defendant's base offense level
pursuant to sentencing guideline. U.S.S.G. § 2F1.1, 18 U.S.C.A.App.
[20] Telecommunications
363
Wire fraud
committed by defendant in connection with sale of stock, as part of undercover
sting operation, to pension fund that did not exist could not have occasioned
any loss, even if scheme had been completed;
accordingly, defendant's offense level could not be enhanced pursuant to
sentencing guideline based on the intended or probable loss to victim. U.S.S.G. § 2F1.1, 18 U.S.C.A.App.
[21] Sentencing and Punishment
736
(Formerly 110k1254)
Loss that defendant
subjectively intended to cause is not controlling, in deciding whether
defendant's base offense level may be enhanced pursuant to sentencing
guidelines based on intended or probable loss resulting from his criminal
activity, if defendant is incapable of inflicting that loss. U.S.S.G. § 2F1.1, 18 U.S.C.A.App.
[22] Sentencing and Punishment
736
(Formerly 110k1254)
Gain to defendant
from his criminal activity may be used to estimate actual or intended loss to victim,
for purposes of deciding whether defendant's sentence should be enhanced
pursuant to sentencing guideline, but may not support enhancement on its own if
there is no actual or intended loss. U.S.S.G. § 2F1.1, 18 U.S.C.A.App.
*1056 Scott M. Matheson, Jr., U.S. Atty., and Joseph W. Anderson, Asst. U.S. Atty., Salt Lake City, UT, for
plaintiff-appellee.
Michael G. Katz, Federal Public Defender, Jenine Jensen, Asst. Federal Public Defender, Denver, CO, for
defendant-appellant.
Before TACHA and BRORBY, Circuit Judges, and BROWN, [FN*] Senior District Judge.
FN* Honorable Wesley E. Brown, Senior District Judge,
United States District Court for the District of Kansas, sitting by
designation.
TACHA, Circuit Judge.
Defendant Gary E. Galbraith appeals from a
judgment of conviction for one count of wire fraud as an aider and abettor, in
violation of 18 U.S.C. § 1343 and 18 U.S.C. § 2(a), (b). He was
sentenced to twenty-one months' incarceration and three years' supervised
release, and ordered to pay $50,000 in restitution. We revise the sentence, vacate the restitution order, and affirm
the judgment in all other respects. [FN1]
FN1. After examining the briefs and appellate record,
this panel has determined unanimously that oral argument would not materially
assist the determination of this appeal.
See Fed.R.App.P. 34(a); 10th
Cir.R. 34.1.9.
The case is therefore ordered submitted without oral argument.
Defendant and others became involved in a scheme
to obtain control of the majority of stock of a public corporation, drive up
the price, then sell it to a European pension fund. However, the scheme was, in fact, an undercover sting operation,
and the pension fund did not exist. An
undercover agent paid defendant $50,000 as a "fee" for his services,
although the defendants requested $80,000.
The FBI terminated the investigation before any stock was bought or
sold.
Defendant was charged with one count of
conspiracy, one count of securities fraud, twenty-one counts of wire fraud, and
one count of offering to buy or sell nonregistered securities. Sixteen wire fraud counts and the
conspiracy count were submitted to the jury.
The jury acquitted defendant of all charges except one wire fraud count. That count involved a telephone call
between defendant and codefendant Robert Lund on September 24, 1989.
[1][2][3]
Defendant contends the evidence was insufficient to establish that the
September 24 telephone call was an interstate call. When the sufficiency of the evidence is challenged, the test is
whether the evidence and reasonable inferences therefrom, viewed in the light
most favorable to the government, would allow a reasonable jury to find guilt
beyond a reasonable doubt. United States v. Markum, 4 F.3d
891, 893 (10th Cir.1993). Sufficiency of the evidence is a question of law subject
to de novo review. Id.
[4]
The elements of the crime of wire fraud are 1) a scheme to defraud, and 2) use
of interstate wire communications to facilitate the scheme. United States v. Drake, 932 F.2d
861, 863 (10th Cir.1991). Defendant concedes there was evidence that
the September 24 telephone call between himself and Lund was recorded on a
wiretap placed on one of Lund's Utah telephone lines, and that he lives in
Washington state. Further, evidence
was presented that an FBI agent telephoned defendant at a Spokane, Washington,
telephone number on September 22, and met with defendant in Spokane on
September 26.
*1057 [5][6][7]
The government contends the jury could have reasonably inferred that defendant
did not leave Washington state between September 22 and 26. The jury may draw reasonable inferences
from basic facts to ultimate facts. Jackson v. Virginia, 443 U.S. 307,
319, 99 S.Ct. 2781, 2789, 61 L.Ed.2d 560 (1979). An
inference must be more than speculation and conjecture to be reasonable,
however. Sunward Corp. v. Dun &
Bradstreet, Inc., 811 F.2d 511, 521 (10th Cir.1987). While
"[t]he line between 'reasonable inferences' and mere speculation is
impossible to define with any precision," id., " '[i]f there is an experience of logical
probability that an ultimate fact will follow a stated narrative or historical
fact, then the jury is given the opportunity to draw a conclusion because there
is a reasonable probability that the conclusion flows
from the proven facts,' " id. (quoting Tose v. First Pa. Bank, N.A., 648
F.2d 879, 895 (3d Cir.),
cert. denied, 454 U.S. 893, 102 S.Ct. 390, 70
L.Ed.2d 208 (1981)). We conclude there is both a reasonable and
logical probability that a person who is in his home state two days before and
two days after a given date would have been there on the given date. Therefore, there was sufficient evidence
for the jury to find that the September 24 telephone call was an interstate
call.
Defendant next argues the jury was
erroneously instructed that the government had to prove, as an element of the
crime of wire fraud, that the defendant "used or caused to be used, any
means or instruments of transportation or communication in interstate commerce,
or used the mails in furtherance of the scheme." R.Supp. Vol. III, doc. 235, JI-30 (emphasis added). He maintains that wire fraud is not proven
by evidence of use of the mails, and the jury must have been confused because
mail fraud had been alleged as part of the securities fraud count.
[8][9][10][11] In a challenge to a jury instruction, we
determine "whether the jury,
considering the instructions as a whole, was misled." United States v. Smith, 13 F.3d
1421 (10th Cir.1994). Because defendant did not timely object to
this instruction, we review for plain error.
Id. Plain error is one that "affects the
defendant's right to a fair and impartial trial." Id. It must
have been both " 'obvious and substantial.' " Id. (quoting United States v. Brown, 996 F.2d
1049, 1053 (10th Cir.1993))
(additional citations omitted).
[12] Jury instruction 33 clarified that to establish
the relevant element of wire fraud, the government had to prove that "the
defendant used or caused to be used wire communication in furtherance of the
unlawful scheme." R.Supp. Vol.
III, doc. 235, JI 33 (emphasis added).
Defendant argues, however, that JI 33 was also erroneous because it
instructed the jury that "[t]he use of wire communication ininterstate
commerce means to use the telephone."
Id. (emphasis added). He notes
that mere use of a telephone, as opposed to interstate use, is insufficient to
prove wire fraud. Again, because no
objection was made on this basis, we review for plain error.
Jury instruction 29 informed the jury that
the wire communication had to be in interstate commerce. Id., JI 29. Jury instruction 30 defined the relevant element of the offense
of wire fraud as requiring proof that the defendant "used or caused to be
used, any means or instruments of transportation or communication in interstate
commerce." Id., JI 30 (emphasis
added). Given that these instructions
specified the wire communication had to be in interstate commerce, we conclude
the instructions could not have misled the jury to the point that defendant's
right to a fair and impartial trial was compromised.
[13] Next, defendant argues that because the indictment
alleged the same acts that constituted the conspiracy
charge also constituted the scheme to defraud element of the wire fraud charge,
and he was acquitted of conspiracy, he should have been acquitted of wire
fraud. The issue presented is one of
inconsistent verdicts. The government
concedes the inconsistency, but maintains that this does not provide grounds
for reversal. We agree.
The Supreme Court held in Dunn v. United States, 284 U.S.
390, 393, 52 S.Ct. 189, 190, 76 L.Ed. 356 (1932), that consistency in verdicts is not
necessary. Where inconsistent verdicts
are rendered,
*1058 "[t]he most
that can be said in such cases is that the verdict shows that either in the
acquittal or the conviction the jury did not speak their real conclusions, but
that does not show that they were not convinced of the defendant's guilt. We interpret the acquittal as no more than
their assumption of a power which they had no right to exercise, but to which
they were disposed through lenity."
Id. (quoting Steckler v. United States, 7 F.2d
59, 60 (2d Cir.1925)). Dunn was applied to uphold a conviction for using the
telephone to facilitate the offenses of conspiracy to possess cocaine and
possession of cocaine, although the defendant was acquitted of the underlying
drug charges. United States v. Powell, 469 U.S.
57, 69, 105 S.Ct. 471, 479, 83 L.Ed.2d 461 (1984). See also
United States v. Hill, 971 F.2d
1461, 1468-69 (10th Cir.1992). These decisions compel us to conclude the
inconsistent verdicts in this case are not grounds for
reversal.
[14][15][16]
The next issue is whether the indictment was constructively amended. A constructive amendment occurs " 'if
the evidence presented at trial, together with the jury instructions, raises
the possibility that the defendant was convicted of an offense other than that
charged in the indictment.' " Hunter v. New Mexico, 916 F.2d
595, 599 (10th Cir.1990)
(quoting United States v. Apodaca, 843 F.2d
421, 428 (10th Cir.), cert.
denied, 488 U.S. 932, 109 S.Ct. 325, 102
L.Ed.2d 342 (1988)), cert.
denied, 500 U.S. 909, 111 S.Ct. 1693, 114
L.Ed.2d 87 (1991). "The specific inquiry is whether the
jury was permitted to convict the defendant upon 'a set of facts distinctly
different from that set forth in the indictment.' " 916 F.2d at 599 (quoting United States v. Chandler, 858
F.2d 254, 257 (5th Cir.1988)
(further citations omitted). To rise
to the level of a constructive amendment, "the amendment must effectively
alter the substance of the indictment."
Id. A
constructive amendment is reversible per se.
Id.
[17] Defendant argues there was a constructive
amendment because he was acquitted of the conspiracy charge, which involved the
same scheme to defraud as alleged in the wire fraud charge. Therefore, defendant speculates, the jury
must have convicted him of committing some other scheme to defraud than that
alleged in the indictment.
The problem with this argument
is that it assumes, as in the case of the inconsistent
verdicts argument, that the acquittal on the conspiracy charge was the jury's
"correct" conclusion, that is, that the jury did not find the
government had proven the scheme which underlay both the conspiracy and wire
fraud charges. However, it is equally
possible that the jury was convinced of defendant's guilt but through mistake,
compromise, or lenity, acquitted him on the conspiracy charge. See Powell, 469 U.S. at 65, 105 S.Ct.
at 476.
Further, defendant has not
identified any evidence presented at trial that could have supported a guilty
verdict based on a scheme to defraud other than that alleged in the
indictment. He has not convinced us
that the jury was permitted to convict him upon a set of facts distinctly
different from that set forth in the indictment.
[18] Defendant's next contention is that the district
court erred in finding, for purposes of sentencing, that the intended or
probable loss of the scheme was $80,000, which resulted in a five-level
increase in the base offense level of six.
U.S.S.G. § 2F1.1 (1987). [FN2] "We
review a district court's determination of a U.S.S.G. § 2F1.1 loss under the clearly erroneous standard, but the
factors a district court properly may consider [are] reviewed de
novo." United States v. Gallegos, 975
F.2d 710, 712 (10th Cir.1992).
FN2. The district court also added a two-level
enhancement for more than minimal planning and/or more than a single victim,
and a three-level enhancement for defendant's role in
the offense, resulting in a total offense level of sixteen.
The government argued that the probable or
intended loss should be $623,920, which represented the number of shares owned or
controlled by the defendants multiplied by the price at which they intended to
offer the shares. Instead, the
district court found the probable or intended loss was $80,000, which was the
amount defendants requested from *1059 the undercover agent as a fee for
their services.
[19][20] As there was no actual loss, "intended or
probable loss may be considered." United States v. Smith, 951 F.2d
1164, 1166 (10th Cir.1991)
(citing Application note 7, Guidelines §
2F1.1). Defendant contends that because his offense
was committed in response to an undercover sting operation structured so there
was no possibility of loss to a victim, the intended or probable loss was zero. He relies on United States v. Sneed, 814
F.Supp. 964 (D.Colo.1993).
In Sneed, the defendant was also caught in an undercover
sting operation involving a scheme to manipulate the value of stock. The district court concluded that "the
correct loss figure in an undercover 'sting' operation--at least one structured
such as this one was--is zero." Id. at 969. The court
reasoned that it would be a misapplication of the guidelines to rely on the loss that the defendant subjectively thought he was
inflicting, as opposed to the loss that his activities probably would have
caused in the normal course of events. Id. at 970-71.
[U]se of 'intended' loss as a measure of harm under section 2F1.1 is limited by a requirement that a sentencing
court examine the circumstances objectively to see whether it was realistically
possible for defendant to inflict the intended loss.... Where the scheme could not possibly have
resulted in the intended loss under any circumstances, then 'intended' loss
should not be used.
The Sneed court relied, in part, on this court's decision in
United States v. Santiago, 977
F.2d 517 (10th Cir.1992). There, the defendant was convicted of
attempting to defraud his insurance company by reporting that his car had been
stolen when, in fact, he had delivered it to a coworker to be destroyed. Id. at 519. He
submitted a claim of $11,000 for the "stolen" car. Id. However,
due to police intervention, no insurance money was ever paid. The car's "blue book" value was
$4,800, which was the highest amount the insurance company would have paid
under its policy. Id.
After observing there was no
actual loss because defendant's attempt to defraud his insurance company was
prevented by police intervention, we concluded that the intended and probable
loss were both $4,800. This was because an intended loss under §
2F1.1 "cannot
exceed the loss a defendant in fact could have occasioned if his or her fraud
had been entirely successful," regardless of whatever loss the defendant
subjectively believed he or she could impose on the fraud victim. Id. at 524. Because
the defendant's insurance company would not have paid more than the $4,800 blue
book value, his intended loss could not have been greater, regardless of his
subjective belief as to his car's value.
We cautioned that the loss subjectively intended by a defendant should
not control "when the economic reality is that the probable or actual loss
could not in any circumstances have exceeded a discernible lesser
amount." Id. See also Smith, 951 F.2d at 1168 (to meet requirements of §
2F1.1, must show by
preponderance of evidence that defendant realistically intended a certain loss,
or that a loss in that amount was probable);
United States v. Watkins, 994 F.2d
1192, 1196 (6th Cir.1993)
(regardless of intent, defendant may not have sentence enhanced for harm he or
she was incapable of inflicting).
[21] Under applicable authority, the loss defendant
subjectively intended to cause is not controlling if he was incapable of
inflicting that loss. Because this was an undercover sting operation which was
structured to sell stock to a pension fund that did not exist, defendant could
not have occasioned any loss even if the scheme had been completed.
[FN3] We conclude the intended or probable loss
was zero.
FN3. We reject the government's attempt to distinguish Sneed based on language in that opinion that a different
result would obtain if any of the schemers had intended for the stock to get
into the hands of the public. 814 F.Supp. at 968. The
government notes that defendant intended for the stock to be sold to the
"public," i.e., the pension fund.
Regardless of defendant's subjective intent, however, the shares could
not have been sold to this "public" because the pension fund did not
exist.
*1060 [22] The government maintains that $80,000 was a
measure of the defendant's gain, which may be considered as an alternative
estimate of loss. Application note 8 to §
2F1.1 permits the
court to estimate actual loss in several ways, including by measuring
gain. United States v. Haddock, 12 F.3d
950, 960 (10th Cir.1993). However, the loss enhancement "is only
for loss to victims, not for gain to defendants. The defendant's gain may be used only as an 'alternative
estimate' of that loss; it may not
support an enhancement on its own if there is no actual or intended loss to the
victims." Id. Because
there was no actual or intended loss to victims in this case, gain to the
defendant cannot be used as an alternative estimate of loss.
The government points out
that, although the Sneed court found the loss to be zero, it upwardly
departed from the guidelines due to the seriousness of the defendant's
conduct. 814 F.Supp. at 979. The
government argues that the district court would have imposed the same sentence
in this case regardless of whether it calculated the loss at $80,000 or, as in Sneed, found the loss to be zero but then upwardly
departed. We cannot make that
assumption, however, and the government has not argued that we should remand
for resentencing. Defendant notes that the maximum sentence for his adjusted
offense level of eleven would be fourteen months, which he has already served. He also has not requested
resentencing. We conclude the sentence
should be revised to fourteen months, and defendant should be released from
further custody.
Finally, the parties agree the $50,000
restitution order was invalid under Hughey v. United States, 495 U.S.
411, 110 S.Ct. 1979, 109 L.Ed.2d 408 (1990). We agree
and vacate that order.
The sentence is REVISED to fourteen months
and defendant is released from further custody. The restitution order is VACATED. The judgment of conviction of the United States District Court
for the District of Utah is AFFIRMED in all other respects.
END OF DOCUMENT