                             UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT


                             No. 09-4724


UNITED STATES OF AMERICA,

                Plaintiff - Appellee,

           v.

ERNEST HAROLD PITT,

                Defendant - Appellant.



Appeal from the United States District Court for the Middle
District of North Carolina, at Greensboro.   Malcolm J. Howard,
Senior District Judge. (1:08-cr-00325-MJH-1)


Argued:   December 9, 2011                   Decided:    June 1, 2012


Before TRAXLER,   Chief   Judge,   and   GREGORY   and   WYNN,   Circuit
Judges.


Vacated and remanded by unpublished opinion.      Judge Gregory
wrote the opinion, in which Judge Wynn joined except as to Part
II.B. Judge Wynn wrote a separate opinion concurring in result
only as to Part II.B.     Chief Judge Traxler wrote an opinion
concurring in part and dissenting in part.


ARGUED: Christopher R. Clifton, Michael Andrew Grace, Sr.,
GRACE, TISDALE & CLIFTON, P.A., Winston-Salem, North Carolina,
for Appellant. Frank J. Chut, Jr., OFFICE OF THE UNITED STATES
ATTORNEY, Greensboro, North Carolina, for Appellee.  ON BRIEF:
Anna Mills Wagoner, United States Attorney, Greensboro, North
Carolina, for Appellee.


Unpublished opinions are not binding precedent in this circuit.
GREGORY, Circuit Judge:

        In    this    case,    appellant       Harold     Pitt     challenges       his

convictions for mail fraud in connection with a real estate sale

on grounds that the district court improperly denied his motion

for judgment of acquittal and that the jury instructions were

improper      under     Skilling   v.    United     States,      130    S.   Ct.   2896

(2010).       Finding that that the jury instructions were plainly

erroneous, we vacate his convictions.



                                         I.

        Harold Pitt was the chairman of the board of the Housing

Authority of Winston-Salem (“HAWS”), a public body created by

the     North   Carolina      legislature      as   a   municipal        corporation.

HAWS’s purpose is to provide public housing for the Winston-

Salem area.       The members of the board are appointed by the mayor

of Winston-Salem, and the board then elects its chairman.                          The

board’s role is very similar to that of a board of directors of

a corporation:          each member takes an oath of office administered

by the mayor and is a fiduciary of HAWS.                  The members also serve

as members of the board of Forsyth Economic Venture (“FEV”), a

non-profit organization that is owned and controlled by HAWS.

North        Carolina     state    law        prohibits       housing        authority

commissioners from acquiring an interest in a housing project or

property planned to be included in any project.                        N.C. GEN. STAT.

                                              2
§ 157-7.     The        statute       also     provides    a     duty     to   disclose    any

conflict of interest.                Id.      HAWS receives the majority of its

funding     from        the        U.S.     Department      of      Housing      and    Urban

Development (“HUD”).

     Pitt and his business partner Thomas Trollinger formed a

limited liability partnership known as East Pointe Developers

(“EPD”).     EPD purchased a 41-lot subdivision known as Lansing

Ridge and built low-income housing on 18 of those lots, leaving

23 undeveloped.           Eventually, EPD sold the undeveloped lots to

another entity, Wolfe Investment (“Wolfe”), for $358,000.                                 Two

hundred forty-nine thousand dollars was borrowed from a trust

fund,    secured    by        a    first    deed   of    trust.         EPD    provided    the

remaining    $183,000,             taking    a   second     deed     of    trust   in     that

amount.     Wolfe, however, failed to develop Lansing Ridge.                              Pitt

informed Wolfe that HAWS might be interested in purchasing the

property and advised Wolfe not to sell to anyone else before

HAWS made a decision.                Around the same time, the HAWS board met

and Pitt, without disclosing EPD’s interest in Lansing Ridge,

moved to authorize the executive director of HAWS to enter into

negotiations       to    purchase          the   property      to    develop     low-income

housing.    The board approved the resolution.

     A    foreclosure             proceeding     was    brought     by    the   trust     fund

holding the first deed of trust.                       Foreclosure on the first deed

would have extinguished the second deed held by EPD.                                    Pitt,

                                                   3
Trollinger, and EPD’s attorney, Andrew Hart, met to discuss the

situation.          They agreed that Trollinger would purchase Lansing

Ridge at the foreclosure sale and then sell the property to

HAWS.            Trollinger,       as   the    only          bidder,     successfully      bid

$285,100.         He later assigned his bid to EPD, ostensibly to avoid

capital gains tax.               Afterward, EPD borrowed $220,000 from Branch

Bank       and    Trust    (“BB&T”)     to    pay       for    the    purchase;    Pitt    and

Trollinger         also     individually       contributed             personal    funds    --

$29,050 and $14,795 respectively.

       EPD       then     sold    Lansing     Ridge      to    FEV,     the   wholly     owned

subsidiary of HAWS, for $414,000.                        At the closing, Trollinger

was given a check for $413,172, made payable to EPD.                               Pitt took

the check from Trollinger and deposited it in EPD’s account at

BB&T.       The proceeds were used to pay off EPD’s loan to purchase

Lansing          Ridge;     Pitt    and      Trollinger         then     distributed       the

remainder to themselves, $84,000 to each.

       HAWS’s       board    was    not     aware       of    the    purchase     of   Lansing

Ridge, nor did it seek approval from HUD prior to the sale, as

is custom.         HAWS did eventually submit an acquisition package to

HUD, but HUD denied the acquisition request on two independent

grounds:          the land was not suitable for development, 1 and HUD


       1
       While the dissent asserts that Lansing Ridge “was not
well-suited for use as an affordable-housing development,” the
evidence is decidedly mixed on that question.      One of the
(Continued)
                                                    4
discovered that Pitt had a conflict of interest.                  HUD’s denial

barred the use of federal funds to develop the property.                 After

Pitt’s   conflict    of   interest   was       discovered,   he   resigned   as

chairman of the board.       As a result of the lack of HUD funding,

HAWS had to use non-federal development fees to retire its debt.

     Pitt was indicted on one count of wire fraud, four counts

of financial transactions in a criminally deprived property, and

two counts of mail fraud in violation of 18 U.S.C §§ 1341 &

1346.    He was tried on all counts but found guilty only of the

two counts of mail fraud.       The jury did not reach a verdict on

the remaining counts.



                                     II.

     Pitt challenges his conviction on two grounds.                He contends

that the district court improperly denied his Rule 29 motion for

a judgment of acquittal and that the jury instructions were in

error under the Supreme Court’s recent decision in Skilling v.

United States.      We address each claim of error in turn.




Government’s own witnesses, Janet DeCreny, testified that apart
from Pitt’s conflict of interest, the property was usable for
Hope VI. J.A. 861. Several Government witnesses testified that
while the land would need work before it was construction-ready,
it could be used for a housing development project.     J.A. 208
(testimony of Jeff Corbett); J.A. 831-35 (testimony of David
MacPherson); J.A. 861-70 (testimony of Janet DeCreny).



                                           5
                                          A.

     Pitt first alleges that there was insufficient evidence for

the jury to have convicted him of mail fraud.                   We disagree.

     When an appellate court reviews the denial of a motion for

judgment of acquittal, “the relevant question is whether, after

viewing     the   evidence    in    the        light    most    favorable    to   the

prosecution, any rational trier of fact could have found the

essential    elements    of   the   crime          beyond   a   reasonable   doubt.”

Jackson v. Virginia, 443 U.S. 307, 319 (1979) (citing Johnson v.

Louisiana, 406 U.S. 356, 362 (1972)).                  There are two elements of

mail fraud:       “(1) the existence of a scheme to defraud [money or

property or honest services] 2 and (2) the use of the mails . . .

for the purpose of executing the scheme.”                        United States v.

Delfino, 510 F.3d 468, 471 (4th Cir. 2007).                       To establish the

first element, the Government “must prove that the defendants

acted with the specific intent to defraud, which may be inferred

from the totality of the circumstances and need not be proven by

direct evidence.”       United States v. Godwin, 272 F.3d 659 (4th

Cir. 2001) (citations omitted).                 Fraud includes “acts taken to

     2
        While a defendant may be convicted under an honest
services or pecuniary theory of fraud, here we evaluate the
sufficiency-of-the-evidence claim under a pecuniary theory only:
the Supreme Court’s recent decision in Skilling v. United
States, 130 S. Ct. 2896 (2010), requires proof of a bribery or
kickback scheme to make out a case for honest services fraud,
and there is no indication Pitt engaged in either.



                                               6
conceal,       create    a      false   impression,          mislead,         or     otherwise

deceive in order to prevent the other [party] from acquiring

material information.”               United States v. Colton, 231 F.3d 890,

898    (4th    Cir.     2000)    (citing      RESTATEMENT (SECOND)         OF      TORTS   § 550

(1977)).          “Thus,        fraudulent          concealment      --        without          any

misrepresentation or duty to disclose -- can constitute . . .

fraud.”       Id. at 899.

       Pitt first argues that the evidence was insufficient to

prove that he concealed his conflict of interest.                               The evidence

at trial, however, was sufficient for a reasonable jury to find

otherwise.        Prior to the sale, Pitt told another individual,

Jeff    Corbett,       that     he   could     not       develop    the       Lansing       Ridge

property       with    federal       funds    because        he    had    a     conflict        of

interest.       Moreover, North Carolina state law provides that “If

any commissioner or employee of an authority owns or controls an

interest       . . .    in    any    property           included   or     planned          to   be

included in any housing project, he shall immediately disclose

the same in writing to the authority and such disclosure shall

be entered upon the minutes of the authority.                              N.C. GEN. STAT.

§ 157-7.       Pitt, however, failed to comply with this obligation.

Trollinger       also     testified          that       he   and    Pitt        agreed      that

Trollinger would purchase the property in his own name, rather

than EPD’s, to conceal Pitt’s conflict of interest.



                                                    7
     Pitt next argues that there is insufficient evidence he had

the requisite intent.          But again, the evidence at trial was

sufficient for a reasonable jury to find he had the intent to

defraud HAWS of a pecuniary interest.           When Wolfe was first

contemplating selling off Lansing Ridge, Pitt spoke with Wolfe

and suggested that HAWS might purchase the property; once the

foreclosure action commenced, Pitt and Trollinger agreed that

they would bid at the auction and then re-sell the property to

HAWS,   thereby   making   a    substantial   profit.   Moreover,   as

discussed above, Pitt consummated the sale while concealing his

conflict of interest.      A reasonable jury could infer from these

facts that Pitt intended to defraud HAWS of the Lansing Ridge

purchase money.

     As to the second element of mail fraud, Pitts does not

challenge that he used the U.S. mails in connection with the

land sale as to each of the counts of which he was convicted.

We therefore reject Pitt’s argument that insufficient evidence

was presented at trial to convict him.

                                    B.

     Pitt goes on to suggest that the instructions given to the

jury were erroneous under Skilling v. United States, 130 S. Ct.

2896, 2931 (2010), and that he is entitled to a reversal of his

conviction.   We agree.



                                         8
                                         1.

       In     Skilling,      the      Supreme         Court        considered         the

constitutionality of 18 U.S.C. § 1346, which defines the term

“scheme or artifice to defraud” to “include a scheme or artifice

to deprive another of the intangible right of honest services.”

18 U.S.C. § 1346 (1988).             In Skilling, the Court limited the

reach    of   § 1346,     holding    that     “honest      services      fraud”   only

covers bribery and kickback schemes.                      Skilling, 130 S.Ct. at

2931.       Because the defendant in that case was convicted by a

general verdict after the jury was instructed on alternative

theories of guilt -- one valid, and one invalid -- the Court

reversed the conviction.            Id. at 2934 (citing Yates v. United

States, 354 U.S. 298, 312 (1957) (“[A] verdict [must] be set

aside in cases where the verdict is supportable on one ground,

but not on another, and it is impossible to tell which ground

the jury selected.”).

       Skilling is applicable to cases on direct appeal, Griffith

v. Kentucky, 479 U.S. 314, 328 (1987), and the district court

did    instruct   the     jury    that   it       could    convict      on   either     a

deprivation-of-property or an honest-services theory of fraud.

When    the   district    court     instructed      the     jury   on    the   honest-

services theory, it did not include, as Skilling now requires,

an instruction limiting application of that theory to bribery or

kickback schemes.         Moreover, the Government did not allege that

                                              9
Pitt accepted a side payment.              Thus, as the Government concedes,

there    was   error   and,   moreover,       Pitt   “did     not   commit   honest

services fraud.”       Skilling, 130 S. Ct. at 2934.

                                       2.

     The mere fact that the jury instructions were erroneous,

however, does not end the inquiry.                   If a defendant fails to

object to an erroneous jury instruction at trial, Rule 52(b)

would apply and this Court would review only for plain error.

FED. R. CRIM. P. 52(b).            We note first that Skilling was not

handed    down   until   long      after    Pitt’s    trial    --   indeed,    both

parties filed their briefs in this Court months before Skilling

was decided. 3 That is, Pitt had no way of knowing at trial that

the proposed jury instructions were in fact contrary to law.

However, the Supreme Court has held that Rule 52(b) applies even

in cases where the relevant rule of law was not established

until after trial.       Johnson v. United States, 520 U.S. 465, 464-

66 (1997).       We must, therefore, apply plain error here.                     To

demonstrate plain error, the appellant must show that (1) there

was error, (2) the error was plain, (3) the error affected his

substantial rights, and (4) the error seriously affected the

fairness,      integrity,     or   public     reputation       of   the   judicial


     3
       As a result, we ordered the parties to file supplemental
briefs addressing the Skilling issue.



                                             10
proceedings,    or    the     defendant      is      actually        innocent.         United

States v. Cedelle, 89 F.3d 181, 184 (4th Cir. 1996) (citing

United States v. Olano, 507 U.S. 725, 731-37 (1993)).                                      With

respect to Yates errors in particular, this Court has held that

a defendant who fails to preserve his objection to a flawed

instruction    “must       demonstrate      that        the    erroneous          instruction

given     resulted    in    his    conviction,          not        merely    that     it    was

impossible to tell under which [theory] the jury convicted.”

United States v. Robinson, 627 F.3d 941, 954 (4th Cir. 2010).

     The first two Olano prongs are clearly satisfied.                                As the

Government     concedes,       there      was        error:        the     district    court

improperly instructed the jury as to the honest services fraud

count.          Moreover,          this         error         is         plain:      Skilling

straightforwardly          holds     that       such        jury      instructions          are

improper.      That    it    was    not     plain      at     the    time     of    trial    is

immaterial; the Supreme Court held in Johnson that “in a case

. . . where the law at the time of trial was settled and clearly

contrary to the law at the time of appeal[,] it is enough that

an error be ‘plain’ at the time of appellate consideration.”

Johnson, 530 U.S. at 468.

     We     further    find       that    the     error       substantially          affected

Pitt’s rights.        Generally, for an error to affect a defendant’s

substantial rights, it “must have been prejudicial: It must have

affected the outcome of the district court proceedings.”                               Olano,

                                                11
507   U.S.       at    734.         The    defendant      must    “show    a     reasonable

probability       that,       but    for    the   error,”       the    outcome    would    be

different.        United States v. Dominguez Benitez, 542 U.S. 74, 76

(2004).      Here there is every reason to believe that the outcome

would     have     been      different      had     the   district       court     properly

instructed the jury.                 From start to finish, the Government’s

case revolved around honest services fraud.                            The theory of the

prosecution’s         case    was    that    Pitt      abused    his    position    as    the

chairman of HAWS and deprived the public of his honest services

by failing to disclose that he had a conflict of interest in the

Lansing Ridge sale.            In its closing, the Government argued, “The

heart of this case is this idea of public duty.                           It’s called in

the federal criminal statutes [sic] that the judge is going to

instruct you on honest services, the duty of honest services.”

J.A. 1260.            It went on to say that it need not prove Pitt

engaged in pecuniary fraud to get a conviction.                                E.g., J.A.

1262-63, 1281-82, 1313-14.                 The deprivation of honest services,

the Government informed the jury, was all it needed to find Pitt

guilty.

      If instead, the official or employee acts or makes a
      decision based on a personal interest . . . , the
      official or employee has violated the duty to provide
      honest services to the public even though the public
      agency involved may not suffer any loss . . .     The
      crime is the violation of the duty.

J.A. 1262.


                                                  12
      Further, when the district court charged the jury, it spent

a substantial amount of time explaining the now-invalid honest

service theory.        E.g., J.A. 1339-40.           In contrast, the district

court     mentioned    only     once    the     still-valid        pecuniary    fraud

theory.    J.A. 1338.

      While the Government correctly notes it argued at trial

that Pitt received a monetary benefit from the Lansing Ridge

sale, those allegations were wrapped up in the honest services

theory of the case.            The Government argued that, in order to

receive a personal benefit, Pitt defrauded HAWS of its right to

his   honest   services.        E.g.,   J.A.       1263,   1264,    1267,   1269-70,

1285-86,    1314.      The     pecuniary   interest,       in   other   words,    was

offered primarily as a motive to engage in honest-services fraud

rather than as an independent theory of guilt.

      We also note the jury’s failure to convict Pitt on the

additional counts on which he was indicted.                     Pitt was indicted

and tried on several additional charges of wire fraud and money

laundering     --     counts    that    involved      financial       transactions.

Although     these    additional       counts      specifically      involved     the

transfer of funds, the jury could not reach a verdict.                           This

contrasts starkly with other cases, cited by our fine colleague

in dissent, in which contemporaneous convictions on additional

and related charges ameliorated the problem of the infirm honest

services charge.         For example, in United States v. Jefferson,

                                              13
674 F.3d 332 (4th Cir. 2012), this Court was also confronted

with a Skilling problem in a jury charge, for conspiracy to

commit honest services wire fraud.                 In that case, however, the

jury also convicted the defendant of two substantive bribery

offenses, and the circumstances surrounding the bribery offenses

and the conspiracy were the same.

      Our conclusion is buttressed by the fact that an honest-

services    theory    and    a    pecuniary      theory    of   mail       fraud   have

different   elements       with   respect     to   intent.      As     noted   above,

there are two elements of mail fraud:                 “(1) the existence of a

scheme to defraud [money or property or honest services] and (2)

the use of the mails . . . for the purpose of executing the

scheme.”     Delfino, 510 F.3d at 468.                To establish the first

element, the Government “must prove that the defendants acted

with the specific intent to defraud . . . .”                    Godwin, 272 F.3d

at 659 (citations omitted).             Under an honest-services theory,

the Government need only show the defendant had the intent to

defraud    another    of    the   intangible       right   of   honest      services.

United States v. Harvey, 532 F.3d 326, 333 (4th Cir. 2008).                          In

a pecuniary fraud theory, by contrast, the Government must prove

the   defendant      intended     to   deprive      another     of     a    pecuniary

interest.     See United States v. United Med. & Surgical Supply

Corp., 989 F.2d 1390 (4th Cir. 1993).                 As a result, an honest-

service fraud conviction does not necessitate a pecuniary fraud

                                            14
conviction.    Here, the fact that the jury found Pitt intended to

defraud HAWS of its right to his honest services does not compel

the   conclusion    that   he     also   intended   to   deprive    HAWS   of   a

pecuniary interest.

      Finally, we exercise our discretion to notice the error by

finding that the erroneous jury instructions seriously affected

the fairness, integrity, or public reputation of the judicial

proceedings.    In this case, the district court’s instructions to

the jury were clearly erroneous.                Had the jury been properly

instructed, the outcome would not merely have been different,

but Pitt likely would have been found not guilty of the charges

brought against him.        He instead was branded as a felon and is

forced   to    endure      “the     official     expression    of    society’s

condemnation   of   his    conduct.”       United   States    v.   Turner,   532

F.Supp. 913, 915 (N.D. Cal. 1982).              Moreover, as Skilling makes

clear, any jury instruction that fails to properly limit the

reach of honest services fraud to bribery or kickback schemes

runs afoul of the Due Process Clause, depriving the defendant of

his constitutional rights.          See Skilling, 130 S. Ct. at 2927-35.

If the Government remains convinced that Pitt is guilty, it can

choose to retry him pursuant to a proper jury instruction.                   But

to uphold the conviction in light of the facts presented here

would be nothing less than a “miscarriage of justice.”                Cedelle,

89 F.3d at 184.

                                           15
    Having found that the faulty jury instructions constituted

plain     error,       we    are     compelled        to    vacate      both    of    Pitt’s

convictions.       The two convictions rely on the same underlying

scheme to defraud -- EPD’s sale of the Lansing Ridge property to

HAWS.      The     only      difference     between         the    two     involves      what

documents Pitt caused to be sent through the U.S. mails:                                 while

Count Six alleges that it was “closing documents,” Count Seven

asserts it was “loan documents regarding a loan between M&F Bank

and FEV.”       Because sending documents through the U.S. mails is

not a federal crime unless it is done in the context of an

underlying fraud, both convictions must be vacated.



                                           III.

        While    the    district       court     did       not    err    in    denying    the

Appellant’s Rule 29 motion, we find that the jury instructions

were plainly erroneous.                We therefore vacate the Appellant’s

convictions       and       remand    to   the    district         court       for   further

proceedings.

                                                                   VACATED AND REMANDED




                                                 16
WYNN, Circuit Judge, concurring in result only as to Part II.B.:

     Defendant Harold Pitt challenges his convictions for mail

fraud in connection with a real estate sale, arguing that the

jury instructions were improper under Skilling v. United States,

130 S. Ct. 2896 (2010).              Because I agree that the instructions

were indeed plainly erroneous, I, too, conclude that Defendant’s

convictions must be vacated.



                                            I.

     18 U.S.C. § 1341 prohibits the use of the mail to further

“any scheme or artifice to defraud, or for obtaining money or

property        by     means    of     false          or    fraudulent     pretenses,

representations, or promises . . . .”                      18 U.S.C. § 1346 defines

“scheme or artifice to defraud” to include “a scheme or artifice

to deprive another of the intangible right of honest services.”

     In Skilling, the Supreme Court held that “honest services

fraud” covers only bribery and kickback schemes.                      Skilling, 130

S. Ct. at 2928, 2931.            In so doing, the Supreme Court rejected

the argument that “honest services” should encompass conflict-

of-interest          cases   involving      “undisclosed        self-dealing   by   a

public official or private employee—i.e., the taking of official

action     by    the     employee    that        furthers     his   own   undisclosed

financial interests while purporting to act in the interests of

those to whom he owes a fiduciary duty.”                     Id. at 2932 (quotation

                                                 17
marks   omitted).       Because     the   defendant        in   Skilling      had    been

convicted by a general verdict after the jury was instructed on

alternative theories of guilt, one of which was invalid, the

Supreme Court      reversed    the    conviction.           Id.   at   2934       (citing

Yates v. United States, 354 U.S. 298, 312 (1957) (“[A] verdict

[must] be set aside in cases where the verdict is supportable on

one ground, but not on another, and it is impossible to tell

which ground the jury selected.”)).

      Skilling     applies     to    this       case.       While      it    postdates

Defendant’s trial, it was decided during the pendency of his

direct appeal and thus before his case was final.                       See Griffith

v. Kentucky, 479 U.S. 314, 328 (1987) (“[A] new rule for the

conduct of criminal prosecutions is to be applied retroactively

to all cases, state or federal, pending on direct review or not

yet final . . . .”).

      Defendant’s indictment did not allege, and the Government

did not present any evidence, that Defendant participated in any

bribery   or     kickback     schemes.          Further,    the     district        court

instructed the jury that it could convict Defendant on an honest

services theory of fraud without limiting the application of

that theory to bribery or kickback schemes.                       In so doing, the

district court erred.          See Skilling, 130 S. Ct. at 2928, 2931.

And   because    the   jury   returned      a    general    verdict,        one    cannot



                                            18
easily discern whether the verdict rested on the invalid honest

services theory or on the valid pecuniary fraud theory.

     When       a    jury       is    instructed             on     alternative           theories      of

criminal liability and returns a general verdict of guilty that

might     have       rested          on     an     invalid          theory,          it    constitutes

constitutional error.                     See Yates, 354 U.S. at 311-12.                              While

Defendant’s convictions suffer from such error, “errors of the

Yates     variety           are       subject           to        harmless-error             analysis.”

Skilling, 130 S. Ct. at 2934.                       Generally, to determine whether a

Yates    error       is   harmless,          “the        relevant         appellate         inquiry     is

whether    the       error      was       harmless           beyond       a    reasonable        doubt.”

United States v. Jefferson, 674 F.3d 332, 361 (4th Cir. 2012).

     However, Rule 30 of the Federal Rules of Criminal Procedure

mandates    that         “[a]       party    who       objects       to       any    portion     of    the

instructions         .    .     .    must        inform       the    court          of    the   specific

objection    and         the    grounds          for    the     objection           before      the   jury

retires to deliberate.”                     Fed. R. Crim. P. 30(d).                         Rule 30 is

mitigated by Rule 52, which allows this Court to nevertheless

review    for       plain      error.            Fed.    R.       Crim.       P.    52(b).       Because

Skilling    was       not      handed       down        until       after      Defendant’s        trial,

Defendant, not surprisingly, failed to object to the now-clearly

erroneous       honest          services          instruction.                 Nevertheless,           the

Supreme Court has held that the plain error standard applies

even in cases where the relevant rule of law was not established

                                                         19
until after trial.       See Johnson v. United States, 520 U.S. 461,

464-66 (1997).        We must, therefore, review this issue through

the plain error lens.

     To demonstrate plain error, an appellant must show that (1)

there was error, (2) the error was plain, (3) the error affected

his substantial rights, and (4) the error seriously affected the

fairness,     integrity,   or     public    reputation      of   the   judicial

proceedings.     Id. at 467 (citing United States v. Olano, 507

U.S. 725, 732 (1993)).          And as to Yates errors specifically,

this Court has held that a defendant who failed to preserve his

objection to a flawed instruction “must demonstrate that the

erroneous   instruction     given    resulted    in   his    conviction,    not

merely that it was impossible to tell under which [theory] the

jury convicted.”       United States v. Robinson, 627 F.3d 941, 954

(4th Cir. 2010) (quotation marks and alterations omitted).



                                     II.

     Applying the law to this case, Defendant has met the first

two Olano prongs.       The district court improperly instructed the

jury as to honest services fraud.           Further, that error is plain:

Skilling makes clear that jury instructions such as those given

here, which allow a jury to convict under an honest services

theory   in     the     absence     of     bribery    or     kickbacks,    are

constitutionally infirm.          Skilling, 130 S. Ct. at 2931.            That

                                           20
the   error    may     not   have        been    plain    at    the    time       of     trial    is

irrelevant:       “[W]here the law at the time of trial was settled

and clearly contrary to the law at the time of appeal—it is

enough    that    an    error       be     ‘plain’       at    the     time       of    appellate

consideration.”        Johnson, 520 U.S. at 468.

      Further,        the     error        substantially            affected        Defendant’s

rights.        Generally,          for     an    error    to    affect        a    defendant’s

substantial rights, it “must have been prejudicial:                                       It must

have affected the outcome of the district court proceedings.”

Olano, 507 U.S. at 734.                    Further, because we are limited to

reviewing      for     plain       error,        Defendant      must        show       that     “the

erroneous instruction given resulted in his conviction . . . .”

Robinson,      627    F.3d     at    954        (quotation      marks       and        alterations

omitted).

      I believe that the erroneous instruction indeed resulted in

Defendant’s conviction.              The Government’s case focused on honest

services      fraud,     and       specifically          the    theory       that       Defendant

abused his position as the chairman of HAWS and deprived the

public of his honest services by failing to disclose that he had

a   conflict     of    interest       in    the     Lansing         Ridge    sale.         In    its

closing    argument,         the    Government          plainly       stated       that       “[t]he

heart of this case is this idea of public duty.                               It’s called in

the   federal        criminal       statutes       that       the    judge        is    going     to

instruct you on honest services, the duty of honest services.”

                                                   21
J.A. 1260.      The Government then repeatedly told the jury that

the Government did not need to prove that Defendant engaged in

pecuniary    fraud    to     get   a   conviction.      For     example,     the

Government told the jury:

          Public officials and public employees inherently
     owe a duty to the public to act in the public’s best
     interest   and  Judge  Howard,   when  he   reads  the
     instructions, he will say, if instead, the official or
     employee acts or makes a decision based on personal
     interest such as receiving a personal benefit from an
     undisclosed conflict of interest, the official or
     employee has violated the duty to provide honest
     services to the public even though the public agency
     involved may not suffer any monetary loss in the
     transaction. The crime is the violation of the duty.

J.A. 1262.      This contrasts starkly with Skilling, in which the

Government “mentioned the honest-services theory in relation to

Skilling only once”—in its rebuttal closing argument—and “never

argued   that   the   jury    should   convict   Skilling      solely   on    the

honest-services theory . . . .”           United States v. Skilling, 638

F.3d 480, 483 (5th Cir. 2011).

     Further, and crucially, when the district court actually

charged the jury here, it spent a substantial amount of time

explaining to the jury the now-invalid honest services theory.

By contrast, the district court barely mentioned the still-valid

pecuniary    fraud    theory—together     with   a   mention    of   the     now-

invalid honest services theory:

     [F]or you to find Mr. Pitt guilty of mail fraud in
     count six or seven, you must be convinced that the
     government has proved each element beyond a reasonable

                                         22
       doubt:    First, that Mr. Pitt knowingly devised or
       participated in a scheme to fraudulently deprive the
       public and the Housing Authority of Winston-Salem of
       money, property, or of the intangible right of honest
       service . . . .

J.A. 1338.

Nowhere in its charge did the district court explain or expound

upon, in conjunction with the mail fraud counts, the pecuniary

fraud theory.

       Moreover,    while      Defendant        was    indicted     and    tried    on

multiple other charges for wire fraud and money laundering, he

was    not   convicted   on    a     single   one.      On    all   of   those   other

counts, which specifically involved the transfer of funds, the

jury could not reach a verdict.                     That contrasts starkly with

cases cited by the dissent, in which contemporaneous convictions

on additional and related charges ameliorated the problem of the

infirm honest services charge.                For example, in Jefferson, 674

F.3d 332, this Court confronted a Skilling problem in a jury

charge for conspiracy to commit honest services wire fraud.                         But

because the jury had also convicted the defendant on two bribery

counts, and the circumstances surrounding the bribery offenses

and    the   conspiracy       were    the     same,    the    Skilling    error     was

harmless.      Id. at 362.

       Similarly, in United States v. Hastings, 134 F.3d 235, 242

(4th Cir. 1998), also a plain error case, this Court emphasized

that    “[a]    reviewing      court     must       attempt   to    ascertain      what

                                               23
evidence the jury necessarily credited in order to convict the

defendant under the instructions given.                   If that evidence is

such that the jury must have convicted the defendant on the

legally adequate ground in addition to or instead of the legally

inadequate ground, the conviction may be affirmed.”                       The Court

then determined that “in making the factual finding necessary to

convict under the erroneous instruction, the jury necessarily

found facts establishing” the elements of the validly instructed

offense.      Id.     Under such circumstances, this Court held that

the defendant could not establish plain error.                     Id.        See also

United States v. Rodrigues, ___ F.3d ___, 2012 WL 1001349, at *8

(9th Cir. 2012) (“[T]he Court determines that in light of the

jury’s verdict, as affirmed by the Ninth Circuit, it is clear

that the jury had to have found that Petitioner engaged in a

kickback scheme.”); United States v. Coppolla, 671 F.3d 220, 238

n.12 (2d Cir. 2012) (deeming Yates error “harmless under any

conceivable     standard”      where     proof     of     the    invalid        theory

“necessarily establishes the facts required to show” the valid

theory).

     While the Hastings jury’s conviction necessarily captured

the factual findings needed for a valid conviction, the same

cannot   be    said    in   this   case.        Indeed,    the    jury    was     told

repeatedly    that    it    need   not   find   pecuniary       fraud    to    convict



                                           24
Defendant of the mail fraud charges—and nothing indicates that

the jury made any such pecuniary fraud finding.

       This        case    also    contrasts      starkly     with    United     States       v.

Joshua, 648 F.3d 547 (7th Cir. 2011), also cited in the dissent.

In Joshua, “special verdicts unambiguously reveal[ed] that the

jury      accepted         both    of      the    prosecution’s       theories:        honest

services fraud, and a conventional fraudulent scheme to obtain

money.       The latter form of mail fraud is untouched by Skilling

and remains illegal.                 Thus, even if honest services fraud is

erased from the picture, the jury would have convicted on the

monetary fraud theory.”                   Id. at 553 (citation omitted).                 Here,

by     contrast,          there    were     no    special     verdicts,        and    nothing

indicates          that    the    jury    would     have    convicted     Defendant      on    a

pecuniary fraud theory.

       On the contrary, the jury was repeatedly told that it need

not worry about pecuniary fraud to convict Defendant of mail

fraud.        The jury was then barely instructed on pecuniary fraud

as   to      the    mail    fraud        charges.        Instead,    it   was    instructed

extensively on the now-defunct honest services theory and told

that a conflict of interest was enough to convict.                                   The jury

proceeded to convict Defendant of only mail fraud and not of any

of     the     other        charges,       all      of     which    involved         financial

transactions.             And substantial evidence before the jury spoke to

Defendant’s          conflict       of    interest,        regardless     of    whether       he

                                                    25
defrauded      HAWS     or    anyone    else    of     money    or    property.           For

example, trial testimony made clear that: Defendant, who served

as chairman of the HAWS Board of Commissioners, was a fiduciary

and    had    an    obligation    to    disclose      conflicts       of    interest      and

avoid    acquiring      an    interest     in   a     housing    project;       Defendant

moved to authorize HAWS to enter into negotiations to purchase

Lansing Ridge without disclosing his interest in that property

or his role in EPD; and Defendant allowed the Lansing Ridge

purchase to occur without informing anyone of his conflict or

even    securing       HAWS   board     approval       for   the     purchase        or   the

related loans.          Under all of these circumstances, I conclude

that    the    third    Olano    prong     is   met,    that    the    jury     convicted

Defendant on the defunct honest services theory, and that the

related       instructional       error    affected      Defendant’s          substantial

rights.

       Finally, regarding the fourth Olano prong, I believe that

the plainly erroneous jury instructions seriously affected the

fairness      and     integrity    of     Defendant’s        judicial        proceedings.

Indeed, as Skilling indicates, any jury instruction that fails

to properly limit the reach of honest services fraud to bribery

or    kickback      schemes     runs    afoul    of    the     Due    Process        Clause,

depriving       a    defendant     of     his   constitutional             rights.        See

Skilling, 130 S. Ct. 2896.



                                                26
                                   III.

     In sum, the district court committed plain (even if, at the

time, understandable) error when it instructed the jury that it

could   convict   Defendant   of   mail    fraud   based   on   an   honest

services theory in the absence of allegations and evidence of

bribes or kickbacks.     I therefore agree that Defendant’s mail

fraud convictions must be vacated.




                                      27
TRAXLER, Chief Judge, concurring in part and dissenting in part:

     I agree that the evidence was sufficient to support Pitt’s

mail fraud convictions, and I therefore concur in Section II.A

of the majority opinion.           I likewise agree that the district

court’s    jury   instructions,        though      proper      when    given,    were

improper in light of the Supreme Court’s opinion in Skilling v.

United States, 130 S. Ct. 2896 (2010).                  I am convinced, however,

that the Skilling error was harmless beyond a reasonable doubt,

and I therefore dissent from the reversal of Pitt’s convictions.



                                        I.

     18 U.S.C.A. § 1341 prohibits use of the mails to further

“any scheme or artifice to defraud, or for obtaining money or

property    by     means     of     false         or     fraudulent      pretenses,

representations,    or     promises.”         18       U.S.C.A.   §   1346    defines

“scheme or artifice to defraud” to include “a scheme or artifice

to deprive another of the intangible right of honest services.”

In   Skilling,     the     Supreme       Court          held   that,     to     avoid

constitutional     questions      of   vagueness,         honest-services       fraud

under § 1346 must be limited to the conduct at the core of the

doctrine as historically applied: “fraudulent schemes to deprive

another of honest services through bribes or kickbacks supplied

by a third party who had not been deceived.”                      Skilling, 130 S.

Ct. at 2928.       In so limiting § 1346, the Court specifically

                                             28
rejected the argument that the honest-services doctrine should

encompass      conflict-of-interest         cases      --      those        involving

“undisclosed      self-dealing    by    a     public    official       or     private

employee” or “the taking of official action by the employee that

furthers    his     own   undisclosed            financial     interests       while

purporting to act in the interests of those to whom he owes a

fiduciary   duty.”        Id.    at    2932       (internal    quotation       marks

omitted).

      The indictment in this case alleged that Pitt and his co-

defendants devised a scheme to defraud the Housing Authority of

Winston-Salem (“HAWS”) and the public of both the $414,000 in

HAWS funds used to buy Lansing Ridge and Pitt’s honest services.

The   honest-services     theory,      however,       should    not     have     been

submitted to the jury because there were no allegations in the

indictment or evidence at trial of bribes or kickbacks.                          And

because the jury returned a general verdict, we cannot determine

whether the verdict rested on the (now) invalid honest-services

theory or on the (still) valid pecuniary fraud theory.

      Constitutional error arises when a jury is instructed on

alternative theories of criminal liability and returns a general

verdict of guilty that might have rested on a theory that was

invalid as matter of law.        See Yates v. United States, 354 U.S.

298, 311-12 (1957).        While Pitt’s convictions are “flawed” by



                                            29
the Yates error, “errors of the Yates variety are subject to

harmless-error analysis.”           Skilling, 130 S. Ct. at 2934.

      To determine whether a Yates alternative-theory error is

harmless, “the relevant appellate inquiry is whether the error

was   harmless    beyond    a    reasonable          doubt.”         United       States     v.

Jefferson, 674 F.3d 332, 361 (4th Cir. 2012).                          “Accordingly, a

reviewing court is not entitled to reverse a conviction that

could rest on either a valid or invalid legal theory if the

court can conclude ‘beyond a reasonable doubt that a rational

jury would have found the defendant guilty absent the error.’”

Id. (quoting Neder v. United States, 527 U.S. 1, 18 (1999)).

      Because     Pitt     did     not     argue       below        that    §     1346      was

unconstitutionally         vague         or     object         to     the         mail-fraud

instructions      when    given,    his        Skilling     claim      must       be    viewed

through   the     prism    of    plain-error           review,       as     the    majority

concludes.      The primary difference between harmless-error review

and   plain-error    review,       of    course,       is   the     allocation         of   the

burden    of     persuasion.            Under        harmless-error         review,         the

government bears the burden of establishing that the error was

not prejudicial; under plain-error review, the defendant bears

the   burden      establishing          that     he     was       prejudiced           by   the

complained-of error.        See United States v. Olano, 507 U.S. 725,

734 (1993).



                                                30
       This court has held that to prevail on a Yates claim under

plain-error      review,     the   defendant       “must   demonstrate    that   the

erroneous      instruction     given    resulted      in   his   conviction,     not

merely that it was impossible to tell under which [theory] the

jury convicted.”           United States v. Robinson, 627 F.3d 941, 954

(4th    Cir.    2010)      (internal    quotation      marks     and    alterations

omitted).       Because I believe that Pitt’s claim fails even under

the more generous (to Pitt) standards of harmless-error review,

I will analyze Pitt’s claims under the harmless-error standard

rather than the much stricter plain-error standard set out in

Robinson.



                                        II.

       Determining whether a Yates or other instructional error

was harmless requires an examination of the evidence presented

at   trial     and   the   district    court’s      instructions   to    the   jury.

See, e.g., United States v. Hornsby, 666 F.3d 296, 305-06 (4th

Cir. 2011).          Accordingly, I will first set out the relevant

facts (in a bit more detail than is contained in the majority

opinion) before explaining why I believe the error was harmless

beyond a reasonable doubt.

                                         A.

       Pitt was appointed to the HAWS Board of Commissioners in

1998, and he served as Board chairman during the time period

                                              31
relevant to this appeal.                Board commissioners, as fiduciaries,

are obligated to serve the interests of HAWS, and they may not

use   their    positions         to    serve     their        own    interests.              North

Carolina      law        specifically          prohibits             housing           authority

commissioners        from     acquiring        an        interest       in       any      housing

authority     project       or    property       to      be    included          in    any    such

project,     see    N.C.    Gen.      Stat.    §    157-7,       and       it    requires     any

commissioner       who     already      has    an       interest      in     property        being

considered for a housing project to immediately disclose his

interest to the authority in writing, see id.

      HAWS receives almost all of its funding from the Department

of Housing and Urban Development (“HUD”), and its use of those

funds are governed by “Annual Contribution Contracts” between

HAWS and HUD.        The annual contracts -- which were signed by Pitt

during his tenure as chairman -- contain a conflict-of-interest

clause that prohibited HAWS from entering into contracts for

projects in which former or current HAWS Board members had a

direct or indirect interest.

      Pitt    and    co-defendant         Thomas         Trollinger,            through      their

limited-liability          company       known      as        East     Pointe         Developers

(“EPD”),     owned    Lansing         Ridge,   a        41-lot      subdivision         in   east

Winston-Salem.           EPD had built low-income housing on 18 lots,

leaving 23 undeveloped lots.              In April 2002, when he was serving

as Chairman of HAWS, Pitt met with Jeff Corbett, owner of Wolfe

                                                   32
Investments, to discuss a sale of Lansing Ridge.                                According to

Corbett,     Pitt     told    him     that       because      of    an    unexplained         (to

Corbett)     “relationship”          with        HAWS,      Pitt    had   a     conflict-of-

interest that prevented him from developing the remaining lots

at a profit.         J.A. 207.         Pitt, however, claimed that he could

provide Corbett with buyers who had been pre-qualified through a

HAWS program, a promise that made Lansing Ridge attractive to

Corbett.          Wolfe   agreed      to       buy   the    23     undeveloped        lots    for

$358,000.     To finance the purchase, Wolfe borrowed $249,000 from

a   trust    fund,    which    held        a    first-priority        deed      of    trust    to

secure      the    loan.        EPD        provided        seller-financing           for     the

remaining portion of the purchase price and also made a separate

$75,000 loan, securing both by a second-priority deed of trust

in the amount of $183,000.

      Pitt    did     not    refer     buyers         as    promised,      and       Wolfe    was

unsuccessful in developing the Lansing Ridge property.                                       When

Corbett     told     Pitt    that     he       was   having      difficulty      making       the

mortgage payments and needed to sell the property, Pitt told

Corbett not to sell to a third party and that HAWS might be

interested in purchasing Lansing Ridge.

      At an October 2002 meeting of the Board, Pitt introduced a

resolution        authorizing       the        executive     director      to    enter       into

negotiations to buy the Lansing Ridge lots for development under

HUD’s “Hope VI” housing program.                           Pitt did not disclose his

                                                     33
interest in Lansing Ridge or his role as a partner in EPD at

that   meeting,   and   the   Board   approved     the   resolution.       The

resolution authorized negotiations only; the property could not

be purchased without further authorization from the Board.

       Reid Lawrence, HAWS’ executive director and one of Pitt’s

co-defendants, began negotiating with Corbett for the purchase

of Lansing Ridge.       In May 2003, Corbett and HAWS entered into a

contract giving HAWS a 120-day exclusive option to purchase the

Lansing Ridge lots for $414,000.             The option contract was not

presented to the Board for approval, nor was the Board otherwise

given an opportunity to consider the proposed purchase.

       Before HAWS acted on the option, a foreclosure proceeding

was commenced by the trust fund holding the first deed of trust

on the Lansing Ridge lots.           Because foreclosure on the senior

deed of trust would extinguish all junior liens, EPD’s attorney

advised   Pitt    and   Trollinger    to     bid   for   the   lots   at   the

foreclosure sale to protect EPD’s $183,000 interest in Lansing

Ridge.

       Shortly thereafter, Pitt, Trollinger, and Lawrence agreed

that Trollinger would purchase the Lansing Ridge lots at the

foreclosure sale and that HAWS would then buy the lots from

Trollinger for $414,000.        The parties agreed that Trollinger

would buy the property in his own name rather than in EPD’s name



                                        34
so as to conceal Pitt’s interest in the property.                                Trollinger

understood that HAWS would not bid on the property at the sale.

       The foreclosure sale was held on July 30, 2003.                           Trollinger

and Lawrence were both present at the sale, but Trollinger was

the only bidder at the sale.                His successful bid was $285,100 --

$100   over     the    amount      owed    on   the   first      deed    of    trust.      To

finance       the     purchase,      EPD    obtained        a    short-term       loan     of

$220,000, and Pitt and Trollinger individually contributed the

balance of the purchase price.

       Trollinger’s $285,100 bid became final on August 12, 2003,

after expiration of the ten-day “upset bid” period.                            Less than a

week later, HAWS was under contract to buy the property for

$414,000.       The foreclosure sale of Lansing Ridge to Trollinger

was finalized on August 27, 2003; the next day, Trollinger sold

Lansing Ridge to Forsyth Economic Venture (“FEV”), a wholly-

owned subsidiary of HAWS.                 As chairman of the HAWS Board, Pitt

also       served    as    FEV’s    president;        Lawrence,         HAWS’     executive

director, also served as FEV’s vice-president.

       Trollinger and Lawrence both attended the closing of the

sale   to     FEV.        Trollinger      informed    the       attorney      handling    the

closing      that     he    had    assigned     his   foreclosure          bid    to    EPD. 1


       1
        Trollinger testified that he assigned his winning
foreclosure bid to EPD without Pitt’s knowledge, so as to avoid
capital gains taxes after the resale of the property to HAWS.
(Continued)
                                                 35
Although     Pitt    was        an    equal      partner      with     Trollinger      in    EPD,

Trollinger     told       the    closing         attorney      that    he    was    EPD’s    sole

member.       The     attorney          made       the    necessary         changes    in     the

documents     and    proceeded          to       close   the    sale.         She   testified,

however, that she would not have continued with the closing if

she had known about Pitt’s interest in the lots.                                      Pitt and

Trollinger used the proceeds from the sale to satisfy the short-

term loan taken out by EPD and then distributed the remainder to

themselves,        with    each       one    writing      a    check    to    the    other    for

$84,000.

       The funds used to buy Lansing Ridge had been loaned to FEV

by   HAWS    and    were    wired,          at   Lawrence’s      direction,         from    HAWS’

general account to the closing attorney.                              At the time of the

wire transfer, the general account contained primarily federal

funds.      A few months after closing, Pitt obtained a commercial

loan on FEV’s behalf and used the proceeds of that loan to repay

HAWS   for    the     funds          advanced      at    closing.           The    Board    never

authorized the purchase of the Lansing Ridge lots, nor did the

Board authorize the various loan transactions used to structure

the purchase.




Trollinger testified that Pitt was not happy when he learned of
the assignment.



                                                    36
       The   government’s       evidence      established       that     Lansing   Ridge

property was not well-suited for use as an affordable-housing

development.           Among    other    things,         the   property    was     poorly

graded, and extensive remediation of low-lying, poorly draining

land would be required for some of the lots to be “buildable.”

J.A. 835.       As of the time of Pitt’s trial, HAWS had made five

unsuccessful attempts to sell the property.

       Pitt’s interest in Lansing Ridge came to light in December

2004, after Lawrence sought HUD approval to use the property in

the Hope VI program.           HUD discovered Pitt’s conflict of interest

while reviewing the request, and HUD thereafter refused to waive

the conflict of interest and denied approval for the property.

The effect of HUD’s denial was to preclude HAWS from using any

federal      housing    funds    to     develop     or    maintain     Lansing     Ridge.

Pitt    resigned       from    the    Board    in    January      2005    after    being

questioned about his conflict of interest by a HAWS attorney.

       The government charged Pitt, Trollinger, and Lawrence in a

ten-count     indictment;       Trollinger      and      Lawrence    pleaded      guilty,

and Pitt proceeded to trial.               The indictment charged Pitt with

one count of wire fraud, four counts of money laundering, and

two counts of mail fraud.                The jury found Pitt guilty of the

mail-fraud charges but was unable to reach a verdict on the

other charges.



                                               37
                                          B.

       Both     mail-fraud     counts    (counts          six    and     seven)     alleged

pecuniary fraud under § 1341 and honest-services fraud under §

1346,    and     the    district      court    instructed          the    jury      on    the

alternative       theories     of    pecuniary       fraud       and     honest-services

fraud.        Although    it   was    error    under      Skilling       to    submit     the

honest-services theory to the jury, the question is whether “the

jury [would] have still convicted [Pitt] had it not been told

that in addition to the valid money/property fraud allegations,

an allegation of honest services fraud could also be taken into

consideration.”         United States v. Segal, 644 F.3d 364, 366 (7th

Cir. 2011), cert. denied, 132 S. Ct. 1739 (2012).                             My review of

the record convinces me beyond a reasonable doubt that the jury

would    have    convicted       Pitt   of    pecuniary         mail     fraud      had   the

honest-services theory not been submitted to it.

       The government’s theory of the case was, in essence, that

Pitt     committed       honest-services         fraud      as     part       of    and   in

furtherance of his overarching plan to commit pecuniary fraud.

See J.A. 1259-60 (arguing in closing that “Pitt violated his

duty of honest services . . . and personally benefited from his

position as chairman of the board.                  And that benefit was in the

amount of $84,000 . . . . that the evidence shows went to Mr.

Pitt and not the lower-income people of the city of Winston-

Salem.”);      J.A.    1268-69      (“[F]ollow      the    money       from   HUD    to   the

                                               38
Housing      Authority       to    the       $413,000      check     to    [EPD]    that    Mr.

Trollinger testified he gave to Mr. Pitt to this check which

goes directly to Mr. Pitt’s bank.                        Follow the money.”).           As is

apparent from the allegations in the indictment and the facts

outlined above, the pecuniary fraud and honest-services fraud

charges arose from and were premised on the same underlying set

of    facts    --    Pitt’s       efforts      to       orchestrate        the   purchase    of

Lansing Ridge by HAWS for his own direct financial benefit.                                 The

government’s evidence of fraud, therefore, was as applicable to

the   pecuniary       fraud       theory      as   it    was    to   the    honest-services

theory.       For example, evidence of the plan to have Trollinger,

in    his   own     name,    buy       Lansing      Ridge      at    the   foreclosure      and

immediately         resell        it    to     HAWS       at    a     pre-determined        and

substantially higher price establishes a scheme to defraud under

either      theory,    and    Pitt’s         repeated      failures        to    disclose   his

interest in Lansing Ridge to the Board and Trollinger’s lies to

the closing attorney about the ownership of EPD are material

misrepresentations or concealments under either theory. 2                              And as



       2
       Although the Court in Skilling held that honest-services
fraud does not encompass undisclosed conflict-of-interest cases,
see 130 S. Ct. at 2932, Skilling does not preclude the
prosecution under § 1341 of a conflict-burdened defendant who
commits pecuniary fraud, nor does it somehow render evidence of
an undisclosed conflict irrelevant or inadmissible in a § 1341
pecuniary fraud case.   See, e.g., United States v. Joshua, 648
F.3d 547, 554 (7th Cir. 2011) (finding “nothing objectionable”
(Continued)
                                                    39
to specific intent, which “may be inferred from the totality of

the circumstances and need not be proven by direct evidence,”

United States v. Ham, 998 F.2d 1247, 1254 (4th Cir. 1993), the

record is replete with supporting evidence relevant to either

theory,   not   the   least   of    which      is    Trollinger’s    unequivocal

testimony that the purpose of buying the property in his name

was “[t]o conceal Mr. Pitt’s interest in the property.” J.A.

720.    Moreover, the critical evidence supporting the mail-fraud

charges was effectively uncontroverted.               Pitt did not testify or

present    other   evidence    directly         contradicting       the   factual

substance of the government’s evidence.                 Although counsel for

Pitt attempted to show through cross-examination that Pitt did

not conceal his interest in the property and had no intent to

defraud because his involvement with EPD was already known to

the Board, the guilty verdicts show that the jury necessarily

rejected that claim.

       Accordingly,   I   believe    that      the    largely   uncontroverted

evidence establishing honest-services fraud likewise established

pecuniary fraud.       I see nothing in that evidence, or in the

government’s    arguments,    or    in   the    court’s    instructions,     that

could rationally lead to a conviction for honest-services fraud



about the use of the same evidence to support allegations of
monetary fraud and honest-services fraud).



                                          40
but    an   acquittal     on   pecuniary   fraud.    See     United    States    v.

Skilling, 638 F.3d 480, 482 (5th Cir. 2011) (finding Yates error

harmless after remand from Supreme Court and explaining that

relevant inquiry is “whether the record contains evidence that

could rationally lead to an acquittal with respect to the valid

theory      of   guilt”    (internal     quotation   marks    and     alterations

omitted)), cert. denied,          ___ S. Ct. ___, 80 U.S.L.W. 3358 (U.S.

April 16, 2012); United States v. Black, 625 F.3d 386, 393 (7th

Cir. 2010) (after remand from Supreme Court, finding Yates error

harmless as to one count because “[n]o reasonable jury could

have acquitted the defendants of pecuniary fraud on this count

but convicted them of honest-services fraud”), cert. denied, 131

S. Ct. 2932 (2011).             Because the pecuniary fraud and honest-

services fraud claims were so closely related and were premised

on    the   same   set    of   largely   uncontroverted    facts,     I   have   no

difficulty concluding that the error in submitting the honest-

services theory to the jury was harmless beyond a reasonable

doubt.       See Jefferson, 674 F.3d at 364 (finding Yates error

harmless because the “alternative theories of liability were co-

extensive”).

       Judge Gregory, however, seems to believe that the close

relationship between the fraud counsels against a finding of

harmlessness.       According to Judge Gregory, the government’s case

was always and only an honest-services-fraud case that focused

                                            41
on   Pitt’s     failure    to    disclose     his   interest     in   Lansing    Ridge

rather than on the money from the sale of the property.                          Judge

Gregory    minimizes       the      significance    of    the    pecuniary      fraud,

asserting       that    the     evidence      showing     that    Pitt    personally

profited from the sale was offered “primarily as a motive to

engage in honest-services fraud rather than as an independent

theory of guilt.”             Opinion of Judge Gregory, slip op. at 13.

While I agree that money from the sale of Lansing Ridge provided

the motive for Pitt’s fraud, I am puzzled by the view that

Pitt’s obvious pecuniary motive somehow makes it less likely

that the jury would have convicted Pitt of pecuniary fraud.

       Judge Gregory does not explain, nor is it apparent to me,

why the interrelatedness of the theories makes the error harmful

rather than harmless.             The very formulation of the harmlessness

inquiry    --    whether      the    record    contains       evidence   that   could

rationally lead to an acquittal with respect to the valid theory

of guilt -- suggests that a close connection between the valid

and invalid theories would make it more likely, not less likely,

that    the     error     would     be   harmless,       as    courts    have    often

concluded.      See, e.g., United States v. Rodrigues, ___ F.3d ___,

2012 WL 1001349 at *8-9 (9th Cir. Mar. 27, 2012) (agreeing with

district court’s analysis that Yates error was harmless because

the same facts establishing the invalid honest-services theory

likewise      established         that     defendant      received       kickbacks);

                                              42
Jefferson,       674   F.3d      at    364        (Yates    error        harmless       because

alternative      theories      “were       co-extensive”);               United    States      v.

Coppolla, 671 F.3d 220, 238 n.12 (2d Cir. 2012) (Yates error

“harmless under any conceivable standard” where proof of the

invalid theory “necessarily establishes the facts required to

show” the valid theory).

      I recognize,        of   course,        that      there      are    cases       where   the

intertwining of the alternate theories might preclude a finding

of   harmlessness        --   for     example,       where      the      jury   instructions

jumbled the theories in ways that the jury could not have sorted

out, see United States v. Riley, 621 F.3d 312, 324 (3d Cir.

2010), or where the evidence supporting the invalid legal theory

was strong but the evidence of the valid theory was weaker, see

Black, 625 F.3d at 392 (Yates error not harmless as to one count

where the evidence of pecuniary fraud was “not conclusive” but

the evidence of honest-services fraud was “irrefutable”).                                      In

this case, however, the jury instructions did not mix concepts

of   pecuniary     and    honest-services            fraud,      and      the     evidence     of

pecuniary fraud was extremely strong.                      And in my view, it is the

strength of that evidence and its relationship to the honest-

services fraud evidence that makes the Yates error harmless.

      At   the    same    time      that     he    finds     the      error     not    harmless

because the fraud theories are too related, Judge Gregory also

contends the error was not harmless because the theories are too

                                                   43
different.         Judge Gregory posits that a conviction for pecuniary

fraud      requires       proof      the   defendant        specifically        intended        to

defraud another of a pecuniary interest, while a conviction for

honest-services fraud requires proof of a specific intent to

defraud      another       of   the     intangible        right    to    honest       services.

Because “an honest-service fraud conviction does not necessitate

a pecuniary fraud conviction,” Opinion of Judge Gregory, slip

op. at 14, the jury’s conclusion that “Pitt intended to defraud

HAWS of its right to his honest services does not compel the

conclusion that he also intended to deprive HAWS of a pecuniary

interest,”         id.,     and      the    Yates        error    therefore         cannot      be

harmless.

       I     am    not     entirely        sure     I     understand         this     analysis.

Alternative        theories       of    guilt     are     “alternative”         because        they

differ from each other in some respect.                                If an alternative-

theory error can be harmless only if the alternate theories have

identical          elements          proved       through         identical           evidence,

alternative-theory errors would never be harmless.

       In    any    event,      as     previously        discussed,      the    government’s

evidence      established         that     the    whole     point       of    buying      Lansing

Ridge at the foreclosure sale was to immediately turn around and

sell    it    to    HAWS    at     a    price     high     enough      to     protect     Pitt’s

undisclosed        financial         interest      in     the     property,         and   it    is

irrefutable        that     Pitt       pocketed     $84,000       of    the    HAWS-supplied

                                                    44
funds   used    to    buy    Lansing       Ridge.      While         the    instructions

permitted the jury to convict Pitt of honest-services fraud even

if HAWS did not suffer a loss, the instructions also explained

that    a    defendant      acts    with     intent       to    defraud      by   acting

“knowingly     and    with    the   specific        intent     to     deceive     someone

ordinarily for the purpose of causing some financial loss to

another or bringing about some financial gain to oneself.”                           J.A.

1339.       The evidence demonstrated beyond question that HAWS in

fact suffered a financial loss by paying an inflated price for

property      that   is     unsuitable       for    development        as     low-income

housing and for which federal housing funds cannot be used to

make suitable.        In the face of this evidence, any reasonable

jury concluding that Pitt intended to defraud HAWS of his honest

services would also have found that he intended to defraud HAWS

of money.

       Judge Gregory and Judge Wynn in their separate opinions

both distinguish the cases (discussed above) where Yates errors

have been found to be harmless in the same manner.                            They note

that while the jury here could not reach a verdict on the money-

laundering     charges,      the    juries    in    the    above-discussed          cases

convicted     the    defendants      of    “additional         and    related     charges

[that] ameliorated the problem of the infirm honest services

charge.”      Opinion of Judge Gregory, slip op. at 13; Opinion of

Judge Wynn, slip op. at 23.               An instructional error, of course,

                                              45
can be found harmless even if the count affected by the error is

the only count of which the defendant was convicted.                           And while

a jury’s decision to convict a defendant of other charges is

relevant to the harmlessness inquiry, the same cannot be said

about a jury’s inability to reach a verdict.                         As this court

recently explained when declining to consider hung-jury counts

when determining whether a Skilling error was harmless, “[a]

jury’s   ‘failure     to     reach       a    verdict    cannot    --     by    negative

implication     --   yield    a    piece       of    information    that       helps   put

together the trial puzzle.’”                 United States v. Hornsby, 666 F.3d

296,   305-06   n.4    (4th       Cir.       2012)   (quoting     Yeager       v.   United

States, 557 U.S. 110 (2009)).

       Unlike the pleadings, the jury charge, or the evidence
       introduced by the parties, there is no way to decipher
       what a hung count represents. . . . A host of reasons
       -- sharp disagreement, confusion about the issues,
       exhaustion after a long trial, to name but a few --
       could work alone or in tandem to cause a jury to hang.
       To ascribe meaning to a hung count would presume an
       ability to identify which factor was at play in the
       jury room.   But that is not reasoned analysis; it is
       guesswork. Such conjecture about possible reasons for
       a jury’s failure to reach a decision should play no
       part in assessing the legal consequences of a
       unanimous verdict that the jurors did return.

Yeager, 557 U.S. at 121-22 (emphasis added; footnotes omitted).

The harmlessness inquiry here requires us to determine whether a

rational jury would have found Pitt guilty without the improper

honest-services      instruction;            speculation   about    the    meaning      of




                                                46
the jury’s inability to reach a verdict on some counts should

play no part in the analysis, see id. at 122.



                                       III.

       As this court recently explained, “a reviewing court is not

entitled to reverse a conviction that could rest on either a

valid or invalid legal theory if the court can conclude beyond a

reasonable    doubt    that    a    rational    jury   would    have   found    the

defendant guilty absent the error.”               Jefferson, 674 F.3d at 361

(emphasis     added;   internal       quotation    marks   omitted).         After

reviewing the record, I am convinced beyond a reasonable doubt

that   if    the   erroneous       honest-services     theory    had   not     been

submitted to the jury, the jury would have convicted Pitt of

pecuniary fraud.       Because the Yates error was harmless beyond a

reasonable doubt, I respectfully dissent from the reversal of

Pitt’s convictions.




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