
USCA1 Opinion

	




                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________          No. 97-1209                                    UNITED STATES,                                      Appellee,                                          v.                                   JEROME E. ROSEN,                                Defendant, Appellant.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF MASSACHUSETTS                     [Hon. Robert E. Keeton, U.S. District Judge]                                             ___________________                                 ____________________                                        Before                               Torruella, Chief Judge,                                          ___________                            Aldrich, Senior Circuit Judge,                                     ____________________                              and Lynch, Circuit Judge.                                         _____________                                _____________________               Morris M. Goldings, with whom Richard S. Jacobs and Mahoney,               __________________            _________________     ________          Hawkes & Goldings were on brief for appellant.          _________________               Mark J. Balthazard,  Assistant United States  Attorney, with               __________________          whom Donald  K. Stern, United  States Attorney, was on  brief for               ________________          appellee.                                 ____________________                                  November 12, 1997                                 ____________________                    TORRUELLA, Chief  Judge.  Attorney Jerome Rosen appeals                    TORRUELLA, Chief  Judge.                                ____________          his conviction on four counts of federal mail fraud stemming from          certain representations Rosen made to  the trustee of a debtor in          bankruptcy.  He was sentenced  to two years probation,  including          eight months home confinement, and fined $30,000.  Rosen argues           that the elements  of mail fraud were  not met by his  failure to          disclose certain  information about  a proposed  asset sale,  and          that there was insufficient evidence to convict.  We affirm.                                      BACKGROUND                                      BACKGROUND                    On an appeal  from a jury conviction, we  must view the          evidence in the  light most favorable to the  jury's verdict, see                                                                        ___          United States  v. Gonz lez-Maldonado,  115 F.3d  9, 12 (1st  Cir.          _____________     __________________          1997), unless  presented  with a  claim  that suggests  that  the          jury's balanced  assessment of  the evidence  was itself  somehow          tainted, see United  States v. Roberts, 119 F.3d  1006, 1008 (1st                   ___ ______________    _______          Cir. 1997) (no  need to view  record in  light most favorable  to          government in  context of  prosecutorial misconduct  claim).   On          this appeal, we  are limited to the evidence  and inferences most          favorable to the  verdict, and on this basis  the following facts          could have been found by the jury.                    Rosen  served  as  legal  counsel  to  the  owners  and          operators of New England Tri-State Development Corporation ("Tri-          State").  Tri-State,  which was owned and operated  by George and          Kevin Kattar, operated a golf course in Massachusetts and held an          approximately 1,100 acre parcel of undeveloped land in Maine.  In          April1992, Tri-Statefileda voluntaryChapter11 bankruptcypetition.                                         -2-                    At some  point in the  winter of 1993-94,  Kevin Kattar          told  Rosen that  a  Maine lumberman  named  Michael Griffen  was          potentially interested  in purchasing  the Maine  property for  a          total  of approximately $1  million, to be  paid in installments.          Griffen  was  in  contact with  another  Maine  lumberman, Orland          Dwelley, who also had some interest  in purchasing and developing          the  Maine property.    In  March 1994,  the  Tri-State case  was          converted to a  Chapter 7 liquidation, and  Joseph Braunstein was          appointed as  trustee.  During the Chapter  7 conversion hearing,          Rosen,  appearing as the debtor Tri-State's attorney, stated that          Tri-State  had  received  an  offer  of  $500,000  for the  Maine          property, and also stated that Tri-State believed the property to          be worth $750,000.                    After the conversion, and no later than May 1994, Rosen          began negotiating a possible  sale price with Griffen.   Although          Kevin Kattar sought a $1 million sale price during a meeting with          Griffen  and  Rosen on  May  25,  1994,  no concrete  terms  were          assented to.  In a letter of May 16, 1994, Rosen indicated to the          trustee that Rosen was attempting  to find a buyer for the  Maine          property at a price of "$500,000  cash."  In a letter to  Griffen          dated June 6, 1994, Rosen stated that,  based on the May 25, 1994          meeting with Griffen in Boston, it was Rosen's understanding that          Griffen wished to "buy the above  property . . . at a total  cost          to you which will  not exceed $1,000,000.00, including  legal and          consulting fees, payable  no more than $525,000.00  upon delivery          of good, clear, and marketable title  . . . and any balance  over                                         -3-          up to  four years."   The  June 6,  1994 letter  to Griffen  also          suggested two  approaches to selling  the Maine property,  one of          which was the following:                     2.   Having  you make  an  offer to  purchase                    directly to the trustee for $500,000 cash and                    then  hiring Kevin and  George Kattar to help                    you  develop  the  property at  a  salary  of                    $60,000.00  per  year  each  on  a  four year                    employment contract.1          Griffen did not sign or return Rosen's letter.                    Soon,  it became  clear that  Orland  Dwelley, and  not          Griffen, would be the most  likely purchaser and developer of the          Maine property.  Rosen telephoned Dwelley to  discuss a sale at a          net price  of $1 million, with $500,000 to  be paid up front.  On          July 12, 1994, Rosen  sent a letter to  Dwelley stating that  the          offer price was for $500,000, and adding the following:                      In  addition, our  understanding is  that                      you, with  Mr. Griffin,  will engage  the                      Kattar  boys as  your  consultants for  a                      total  amount of  $475,000, payable  over                      four years in  monthly payments totalling                      $9896.00 (each  of  the  two  Kattars  to                      receive one-half, or $4948.00 per month).                      Lastly,  you  will   pay  me  a  fee   of                      $25,000.00  if  you   are  successful  at                      acquiring   the    property,   but    not                      otherwise, payable at closing.          Dwelley signed  and returned  an attached letter  dated July  14,          1994, which Rosen had prepared, stating in pertinent part:                      we  (together  with our  associates)  are                      prepared to pay the sum of $1,000,000 for                      the   Property   in   approximately   the                                        ____________________          1  The  other approach discussed  in the letter  was reaching  an          understanding  with  the holders  of  the mortgage  on  the Maine          properties to buy  the property from the Trustee and then sell it          to Griffen.                                         -4-                      following manner: $500,000  upon delivery                      of  a  Deed  conveying  good  record  and                      marketable title,  . . . and  the balance                      (less  our  expenses for  your  services)                      over  a period  of years  (not to  exceed                      five)  either by way of a secured note or                      consulting fees, secured by a lien on the                      property.                      For your  services as aforesaid,  we will                      pay you  the sum of  $25,000, plus actual                      expenses, at Closing.                    Rosen also drafted  an offer letter from Dwelley to the          trustee, which stated a $500,000  offer price but did not mention          any further payments to be made  to either the Kattars or  Rosen.          The offer  letter, which was  signed by Dwelley and  forwarded by          Rosen to  the trustee  on July 18,  1994, stated  that "we  would          expect to seek  to employ one or  more of the former  officers of          Tri-State to  assist us in  marketing the property," but  did not          provide any further details.                    Rosen never disclosed  to the trustee the  substance of          the employment relationship discussed in his correspondence  with          Dwelley.  Rosen  did not provide the  trustee with a copy  of the          July 14,  1994 letter  that  Dwelley signed.    When the  trustee          questioned  Rosen  on  July  25,  1994  about  the  reference  in          Dwelley's offer letter to the possible employment of "one or more          of the former officers" of Tri-State, Rosen told the trustee that          there  "was  nothing definite  as  far as  what  the compensation          [would be] or even if they would be employed."                    In  a letter  to  Dwelley dated  August 2,  1994, Rosen          wrote:                                         -5-                      I  forgot  to  mention in  our  telephone                      conversation that if you get a  call from                      the   Trustee,  whose   name  is   Joseph                      Braunstein,  or his  associate  . .  .  I                      would prefer that you  not give either of                      them  the   salary  details   about  your                      agreement to hire the Kattar  boys if the                      sale goes through.          Rosen  used another  attorney, John  Rodman, as  the attorney  of          record for  Dwelley.  When Rodman  asked Rosen if  there had been          any  specific employment arrangements for the Kattars, Rosen told          him that there was nothing  in writing and no specific agreement,          which information Rodman later relayed to the trustee.                    In  November  1994,  the  trustee  ultimately  accepted          Dwelley's  second written offer  for the Maine  properties, which          again offered $500,000, but with  a higher initial deposit.  That          offer tracked the language of the first offer letter and had been          mailed to  Rosen, who  then forwarded  it  to the  trustee.   The          trustee sought  bankruptcy  court  approval  for the  sale.    On          January  3, 1995, Rosen attended  the bankruptcy court hearing on          the motion to sell the  property to Dwelley, and said  nothing to          contradict  the notion  that  Dwelley's  $500,000  was  the  best          available offer for the  debtor's Maine property, or  to indicate          that  a larger  offer  of  $1 million  had  been contemplated  by          Dwelley.                    Before  the scheduled closing,  an attorney working for          Dwelley   in  Maine  asked   Rosen  to  explain   the  employment          arrangement regarding the  Kattars.  That attorney,  Laurie Dart,          then informed  the trustee  that there  may have been  additional          arrangements for future payments to the Kattars.  Upon hearing of                                         -6-          the  previously  undisclosed  arrangements, the  trustee  filed a          motion to revoke the court-approved sale of the Maine property.                      In the fall  of 1995, the trustee ultimately received a          third offer from  Dwelley, and entered into an  agreement to sell          the Maine property  to Dwelley for  $730,000 in  cash.  No  terms          regarding  any subsequent  payments  (or regarding  the  Kattars'          employment) were part of the final sale transaction.                    At trial, the  government sought to prove  that Rosen's          failure  to disclose  information regarding  what the  government          referred to as the "side agreement" with Dwelley was a fraudulent          scheme intended to prevent the  trustee from receiving as much as          possible from  the sale  of the  debtor's estate.   Specifically,          Rosen was charged with using the  mails in the course of tricking          the trustee into approving a $500,000 sale which in fact was a $1          million dollar sale, with the remainder to be paid to the Kattars          and Rosen.  The four counts of Rosen's indictment under 18 U.S.C.            1341 comprised of two mailings related to each of Dwelley's two          offers  to  purchase  the  property  for  $500,000  --  including          mailings  from  Dwelley to  Rosen  that  Rosen forwarded  to  the          trustee in July and October 1994.                    The jury rendered  guilty verdicts on all  four counts.          Prior  to the  end of  trial, the  district court  denied Rosen's          motion for judgment of acquittal.   On appeal, Rosen again argues          that  there  was insufficient  evidence to  support a  mail fraud          conviction, in essence because there was not a binding employment          agreement between Dwelley and the Kattars.                                         -7-                                      DISCUSSION                                      DISCUSSION                    Rosen's chief contention  on appeal is that  to support          his conviction  under 18 U.S.C.    1341, the government  bore the          burden  of  proving  beyond a  reasonable  doubt  that  a binding          employment agreement existed between the purchaser, Dwelley,  and          Rosen's  clients, the  Kattars, that  Rosen  failed to  disclose.          Thus,  Rosen  argues  that  either his  motion  for  judgment  of          acquittal should have been granted  -- because such proof was not          offered -- or, in the  alternative, his proposed jury instruction          stating that  proof of an  employment agreement was  necessary to          support  a guilty verdict should  have been incorporated into the          district court's instructions.                    Without doubting  that a  binding employment  agreement          would have  made Rosen's  incomplete disclosures  to the  trustee          more egregious, or  more obviously illegal, we find  that proving          Rosen's  failure  to  disclose  a binding  agreement  was  not  a                                            _______          necessary prerequisite to establishing this mail fraud violation.          When the  evidence  is viewed  as  a  whole, in  the  light  most          favorable to the verdict, drawing all credibility issues in favor          of  the verdict,  as is  appropriate in  reviewing  a sufficiency          claim, see,  e.g., United States  v. Fulmer, 108 F.3d  1486, 1490                 ___   ____  _____________     ______          (1st Cir. 1997), we see a  set of facts that would be  sufficient          to "allow a rational jury" to render  a guilty verdict.  Id.; see                                                                   ___  ___          also United States v. Batista-Polanco,  927 F.2d 14, 17 (1st Cir.          ____ _____________    _______________          1991) (stating standard of review for sufficiency claims).                                         -8-                    The elements  of a mail  fraud offense under  18 U.S.C.            13412   are:   (1)   the  defendant's   knowing   and   willing          participation in  a scheme to  defraud with a specific  intent to          defraud; and  (2) the  use of  the mails  in  furtherance of  the          scheme.  See  United States v. Montminy,  936 F.2d 626, 627  (1st                   ___  _____________    ________          Cir.  1991)  (listing elements  of mail  fraud); see  also United                                                           _________ ______          States v. Ruiz,  105 F.3d 1492, 1501  (1st Cir. 1997) (same).   A          ______    ____          defendant need not have been  successful in his scheme to defraud          in order  to be  convicted under  the  mail fraud  statute.   See                                                                        ___          United  States v.  Jordan,  112  F.3d 14,  19  (1st Cir.),  cert.          ______________     ______                                   _____          denied,  ___ U.S.  ___, No.  97-5823,  1997 WL  562297 (Oct.  14,          ______          1997).   Section  1341's scope  is  broad.   It covers  deceptive          schemes  to deprive  victims of  a wide  variety of  tangible and          intangible property  interests; such a scheme must, at a minimum,          contemplate either  some "articulable  harm" befalling the  fraud          victim  or "some  gainful use"  of the  object of  the fraudulent          scheme  by the  perpetrator, regardless  of whether  this use  is                                        ____________________          2  18 U.S.C.   1341 (Supp. 1997) provides in pertinent part:                      Whoever, having  devised or  intending to                      devise any scheme or artifice to defraud,                      or  for obtaining  money  or property  by                      means of  false or  fraudulent pretenses,                      representations, or  promises .  . .  for                      the purposes of  executing such scheme or                      artifice or attempting  to do so,  places                      in   any   post  office   or   authorized                      depository for mail matter, any matter or                      thing whatever to be sent or delivered by                      the Postal  Service, .  . .  or takes  or                      receives therefrom, . . . any such matter                      or thing, shall be fined under this title                      or imprisoned  not more than  five years,                      or both.                                         -9-          profitable in  the economic sense.   United States  v. Czubinski,                                               _____________     _________          106 F.3d  1069, 1074-75 (1st Cir. 1997).                    Direct proof of fraudulent intent is often difficult to          find, and thus we have long permitted the inference of fraudulent          intent from circumstantial evidence.  See, e.g., United States v.                                                ___  ____  _____________          Goodchild, 25 F.3d 55, 60 (1st Cir. 1994).  Here, there was ample          _________          evidence to support  the jury's conclusion that Rosen  acted with          the  purpose of defrauding  Tri-State's trustee in  bankruptcy of          amounts  that a buyer, Orland Dwelley, was willing to pay for the          debtor  Tri-State's  Maine   property.    It  is   certainly  not          irrational  to  conclude  that  information  regarding  Dwelley's          willingness to pay a total of one million dollars over time would          have been valuable  to the trustee, regardless of  whether it was          proven that Dwelley would have been willing to pay what  he later          paid,  namely  $730,000, at  the  time  of  his second  offer  of          $500,000.                    The  letters between  Rosen and  Dwelley  in July  1994          support  the conclusion  that  a  side  agreement to  employ  the          Kattars  --   and  for  Dwelley   to  thereby  pay  a   total  of          approximately  $1 million -- existed.   The language of Dwelley's          reply  letter  to Rosen  dated  July  14,  1994  is  particularly          telling,  stating that "[w]e  (together with our  associates) are          willing  to  pay  a  total  of $1,000,000  for  the  Property  in          approximately the following  manner: $500,000 upon delivery  of a          Deed  .  . .  and the  balance .  .  . over  a period  of years."          Comparing these  letters with  the testimony  of the  trustee and                                         -10-          with the  offer letters to  the trustee indicates that  Rosen was          not forthcoming in his representations regarding the structure of          the asset sale.   Furthermore, Rosen asked Dwelley  in writing to          "not give [the trustee or his associate] the salary details about          your agreement to hire the Kattar boys if the sale goes through."          All of this  evidence can  support a  rational jury's  conclusion          that Rosen, in  structuring the initial offer by  Dwelley, sought          to induce the  trustee "into believing that a  $500,000 offer had          been made to buy  the Maine property, when in fact  the offer was          for $1 million," as Rosen's indictment alleged.                    Rosen  argues  that  any  side  agreement  between  the          Kattars and Dwelley was not binding.  The side agreement need not          have been binding, however, in order to establish that hiding the          information from the trustee  satisfied the element of a  "scheme          or artifice  to defraud"  in this  case.  18  U.S.C.    1341.   A          rational  jury  could  have  found  that  a  legally  non-binding          agreement between Rosen and Dwelley regarding a $1 million dollar          purchase  price was intentionally  kept hidden from  the trustee,          and that  regardless of its  non-binding nature, the  trustee was          thereby  tricked into  believing  that $500,000  represented  the          extent of Dwelley's interest in the properties.  Simply put, from          the point  of view of  the trustee, the value  of the information          that Rosen concealed derives from  the fact that Dwelley may have          been willing  to pay more  than $500,000  for the property  -- it          does not turn  on whether that  interest was fixed  in a  legally          binding agreement.                                         -11-                    A mail fraud  conviction may be based  on a defendant's          "deceptive  conduct," a category  that certainly may  include the          dissemination  of  incomplete  information,  where  the  specific          intent to defraud exists.  McEvoy Travel Bureau, Inc. v. Heritage                                     __________________________    ________          Travel, Inc., 904 F.2d 786, 791 (1st  Cir. 1990); see also United          ____________                                      ________ ______          States v.  D'Amato, 39  F.3d 1249, 1257  (2d Cir.  1994) ("'[T]he          ______     _______          withholding or  inaccurate reporting  of  information that  could          impact on  economic decisions  can provide the  basis for  a mail          fraud prosecution.'") (quoting United States v. Wallach, 935 F.2d                                         _____________    _______          445,  462-63 (2d  Cir.  1991)).   The jury  could  choose not  to          believe  Rosen's  explanation  for his  failure  to  disclose the          understanding reached with Dwelley, which is that he believed the          trustee did not want to  entertain offers that involved  payments          over time.   A rational jury could  also infer an intent  to harm          the  debtor  estate, which  under the  most basic  bankruptcy law          principles is  entitled to  the full value  of the  consideration          paid  for an  estate asset.   11  U.S.C.   541(a)(6);  see, e.g.,                                                                 ___  ____          United  States v.  Knight, 336  U.S.  505, 508  (1949) ("All  the          ______________     ______          consideration which is paid for  a bankrupt's assets becomes part          of the  estate.   No device or  arrangement, however  subtle, can          subtract or divert any of it.").                      Rosen  also seems to  argue that the  indictment itself          alleged  that a  binding  employment agreement  was  part of  the          fraudulent scheme.  We might concur,  but for the fact that Rosen          himself  described  the   correspondence  with   Dwelley  as   an          "agreement."  He  cannot  now  be heard  to  complain  about  the                                         -12-          government's  and court's  adoption of  his own  definition.   It          follows  that  the district  court  did  not  err in  failing  to          instruct  the jury  that it  must find  that a  binding agreement          between Dwelley  and the  Kattars was formed.   Our review  of an          alleged legal error in a jury instruction is de novo.  We find no                                                       _______          error  in the district  court's instructions, which  informed the          jury  that the government  "must prove beyond  a reasonable doubt          that there  was an agreement  to pay additional money,"  and that          gave an acceptable definition of an "agreement" as requiring that          the  parties  manifest  an  agreement  to the  same  terms.    As          discussed above, the mail fraud statute plainly does  not require          that Rosen's deceptive behavior regarding a buyer's true level of          interest  be in  relation  to a  binding, as  opposed  to a  non-          binding,  agreement with  the  buyer to  pay  additional sums  of          money.                    Finally, relying  on United  States v.  D'Amato,3 Rosen                                         ______________     _______          argues that,  in the absence  of a necessary harm  resulting from          the fraudulent scheme, the government had to prove Rosen's intent          to defraud  with independent  evidence. See  D'Amato, 39  F.3d at                                                  ___  _______          1257  ("Where the  scheme does  not cause  injury to  the alleged          victim  as  its  necessary result,  the  government  must produce          evidence   independent  of  the   alleged  scheme  to   show  the                                        ____________________          3  Rosen  cites United States  v. Sawyer, 85  F.3d 713, 715  (1st                          _____________     ______          Cir. 1996), for the same proposition.  Sawyer, however, pertained                                                 ______          to proof regarding  the elements, not of    1341, but of    1346,          the "honest  services fraud"  provision. The  citation to  Sawyer                                                                     ______          thus  adds nothing  to  Rosen's argument  under  D'Amato on  this                                                           _______          point.                                         -13-          defendant's fraudulent intent.").   We disagree with  the premise          that  Rosen's scheme  does not  necessarily  contemplate a  harm.          Viewing the evidence in the  light most favorable to the verdict,          we see an attempt to prevent all of the proceeds of an asset sale          from going to the debtor's estate itself.  To deprive the trustee          of  a  debtor  in bankruptcy  of  accurate  information regarding          greater amounts that a  potential buyer is willing to pay is harm          enough.  Compare with Czubinski, 106 F.3d at 1074 (no deprivation                   ____________ _________          of  property interest in confidential information for purposes of          federal fraud statute  where no gainful use  or other articulable          harm followed from mere browsing  of taxpayer files).  Here, once          the side agreement was unearthed, the trustee took quick steps to          dissolve  the approved  $500,000 sale,  and  eventually sold  the          property to the same buyer at  $730,000.  The two cases cited  by          Rosen in  support of  his contention that  no harm  is implicated          here are readily distinguishable on the facts.  See United States                                                          ___ _____________          v. Jain, 93 F.3d 436 (8th Cir. 1996), cert. denied, ___ U.S. ___,             ____                               _____ ______          117 S. Ct.  2452 (1997) (reversing conviction where  there was no          evidence of harm  to patients from scheme in  which hospital paid          kickbacks to referring  psychologist);  United States  v. Ashman,                                                  _____________     ______          979  F.2d 469,  479 (7th  Cir.  1993) (violation  of a  commodity          brokerage practice not a deprivation of property because customer          would have received identical price).  Unlike in Jain and Ashman,                                                           ____     ______          the scheme  at issue  here threatened  to place  its victim  in a          tangibly worse position, namely one  in which a trustee could not          extract the maximum value for the debtor's assets.                                         -14-                                      CONCLUSION                                      CONCLUSION                    For  the reasons stated in this  opinion, we affirm the                                                                 ______          judgment of the district court.                                         -15-
