United States v. Carpenter ( 2013 )

United States Court of Appeals
For the First Circuit
No. 11-2131
UNITED STATES,
Appellant,
v.
DANIEL E. CARPENTER,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. George A. O'Toole, Jr., U.S. District Judge]
Before
Lynch, Chief Judge,
Stahl and Howard, Circuit Judges.
Kelly Begg Lawrence, Assistant U.S. Attorney, with whom Carmen
Ortiz, United States Attorney, was on brief, for appellant.
Martin G. Weinberg, with whom Robert M. Goldstein was on
brief, for appellee.
November 25, 2013
LYNCH, Chief Judge. The question in this case is whether
comments in the government's closing argument at a second criminal
trial were improper and whether they accordingly warranted a new
trial, as the district court held. See United States v. Carpenter,
808 F. Supp. 2d 366, 380-85 (D. Mass. 2011).
Defendant Daniel Carpenter has now been tried twice on
charges of wire fraud and mail fraud. Both times, the jury
returned a conviction. After the first trial in 2005, the district
court upset the conviction and ordered a new trial on the grounds
that the government's closing argument was improper and may have
tainted the jury's verdict. See United States v. Carpenter, 405 F.
Supp. 2d 85, 101-03 (D. Mass. 2005). We upheld that decision by a
divided panel. See United States v. Carpenter, 494 F.3d 13, 29
(1st Cir. 2007).
The case was retried in 2008 and the government made a
different closing argument. The jury again convicted. The
district court again granted a new trial, finding that the
different closing argument led the jury to convict on an improper
basis. See Carpenter, 808 F. Supp. 2d at 385-86. Because the
government's comments in its closing argument at the second trial
were not improper, we reverse, reinstate the jury's verdict of
conviction, and remand for sentencing.
-2-
I.
A. Background
During the late 1990s, Carpenter ran a business,
Benistar,1 which specialized in conducting "§ 1031 exchanges" for
investment property owners. Section 1031 exchanges take their name
from a provision of the federal tax code, 26 U.S.C. § 1031, which
allows an owner of investment property to defer paying capital
gains taxes upon the sale of the property if the property is
"exchanged" for property "of like kind." The funds from the
initial sale may be held temporarily in cash form with no tax
penalty as long as they are used to purchase new property within
180 days and as long as the investor designates the replacement
property within 45 days. See 26 U.S.C. § 1031(a)(3). Under
federal regulations, the exchangor may not take possession of the
funds before purchasing the new property. See 26 C.F.R.
§ 1.1031(k)-1(a). As a result, exchangors typically rely on
"qualified intermediaries" to hold and invest the funds until the
exchange is completed.
B. Benistar's Marketing Materials
Benistar offered its services as a qualified
intermediary, managing the proceeds from an exchangor's initial
1
There were two related corporate entities -- collectively,
"Benistar" -- involved in Carpenter's business: Benistar, Ltd., the
primary corporation, and Benistar Property Exchange Trust Company,
Inc., a later-formed subsidiary. The distinction between the
corporate identities is not relevant.
-3-
sale until the § 1031 exchange was completed. In advertising
itself to potential exchangors, Benistar provided a set of
marketing materials, including a PowerPoint slide show, a set of
"Frequently Asked Questions about 1031 Property Exchange," an
article on § 1031 exchanges authored by Benistar's principal
marketer and published in the New England Real Estate Journal, and
other information. When exchangors decided to work with Benistar,
they would also receive a set of forms setting out the terms of the
accounts they would hold with Benistar.
Carpenter did not directly solicit exchangors, nor did he
create the marketing materials. However, he did review all of the
marketing materials and approved their use.2 He also executed for
Benistar many of the contracts the exchangors entered with the
company.
On the government's theory of prosecution, the marketing
materials effectively promised at multiple points that exchangors'
funds would be kept safe and secure. One of the PowerPoint slides,
for example, was entitled "Choosing an Intermediary" and listed
several factors that clients should consider. The fourth factor
2
Benistar affiliates other than Carpenter may have made oral
representations to prospective exchangors, which Carpenter argued
were unauthorized and therefore unattributable to him. We need not
evaluate that evidence, however, because the jury's guilty verdict
for all nineteen charges, some of which related to exchangors who
received no oral representations, indicates that it found the
written materials alone to be sufficient. We consider only the
written marketing materials.
-4-
was labeled "Security of Funds" and stated that exchangors should
"[a]sk about the security of your funds, and find out what
guarantees are offered." The next slide went on to state: "Merrill
Lynch Private Bank is used for all our escrow accounts. This
provides a 3% - 6% interest on the escrow."
Likewise, the "Frequently Asked Questions" document
included a question asking "What will the intermediary do with my
money?" The answer provided:
[Benistar] has a long-standing reputation for
trustworthiness, and is . . . the largest 419
trust plan administrator in the nation.
Benistar has accounts with major banking and
investment firms, such as Merrill Lynch. . . .
Escrow accounts are restricted to paying out
funds only for a subsequent closing, or to
return funds to the original property owner.
A similar set of "IRC § 1031 Property Exchanges: Frequently Asked
Questions" on Benistar's website listed the question, "Can I Trust
[Benistar] with My Money?" The answer explained:
[W]e protect your assets:
• We have accounts with major banking and
investment firms -- accounts under our sole
control, as required for these
exchanges. . . .
• Our accounts are restricted to paying out
funds only for a subsequent closing, or to
return funds to the original property owner.
• We distribute funds only at your written
request.
Several other components of the promotional materials bore out
similar themes.
-5-
Exchangors using Benistar as an intermediary were given
the choice to have their money invested during the pendency of
their exchanges for either a 3% or 6% annualized return. After
sending in their funds from the initial sale, exchangors received
a confirmation letter stating: "We have received $____ of sales
proceeds, which we are holding for your benefit. These funds are
accruing interest at %___." The second blank would be filled in
with either 3% or 6%. The 3% choice, which was selected for the
majority of the funds in the case, was called a "Merrill Lynch
Ready Asset Money Market Account" in several of the documents,
including the account selection form and the Escrow Agreement that
the exchangors signed.
The government alleges that these materials, taken
together, led exchangors to believe that their funds would be
invested in "safe," interest-bearing "escrow" accounts guaranteeing
a 3% or 6% return, when in fact their funds were not kept in safe
investments.
C. Carpenter's Trading Strategy and Losses
In reality, Carpenter used the exchangors' funds to trade
in risky assets, including stock options. Carpenter primarily sold
"put" options, which allow the optionholder to sell shares of stock
to the option seller in the future at an agreed-upon price within
an agreed-upon timeframe. Generally, the holder of a put option
will make money when the price of the underlying stock decreases
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during the option period, while the seller of the option will make
money when the price of the underlying stock increases during the
option period. Many of Carpenter's trades were "naked" or
"uncovered," meaning that Carpenter did not own the underlying
shares or take an offsetting position. Naked or uncovered option
trading increases a trader's risk of loss.
Carpenter's trading strategy succeeded at first, from
1998 to 2000, and the additional gains beyond the promised 3% or 6%
annualized return increased the company's, and his own, profit.
During that time, Benistar's clients were paid the amounts promised
to them. But Carpenter's investments began to turn in the spring
of 2000. From late March to late May 2000, Carpenter lost
approximately one million dollars from Benistar's Merrill Lynch
trading account as various stocks fell significantly during the
option periods. Carpenter's strategy ultimately failed completely
when the NASDAQ stock market crashed in late 2000. By the end of
September 2000, Carpenter had lost about four million dollars.
The period covered by the indictment started to run after
Carpenter had already suffered significant losses. Even as
Carpenter's losses mounted, Benistar continued soliciting business
using the same marketing materials with the same language about
safety, escrow accounts, and promised rates of return, even though
Carpenter continued to employ the same trading strategy. By the
beginning of 2001, Carpenter had lost approximately nine million
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dollars belonging to seven exchangors who had contracted with
Benistar between August and December 2000. Those exchangors were
never paid the promised 3% or 6% interest and lost the vast
majority of their principal.
D. Procedural History
1. First Trial
On February 4, 2004, Carpenter was indicted with nineteen
counts of wire fraud and mail fraud in violation of 18 U.S.C.
§§ 1343 and 1341, respectively. The government alleged that
Carpenter had fraudulently induced the exchangors to use his
company to perform their exchanges in part through false promises
that their money would be kept in safe, interest-bearing accounts.
Each of the counts charged in the indictment relates only
to those exchangors who engaged Benistar's services in the period
after Carpenter began incurring losses in spring of 2000. The
earliest deposit charged in the indictment occurred in August 2000,
and the majority occurred in November or December 2000. The
charges were based in part on the theory that Carpenter intended to
deceive the exchangors as shown by his continuing to make the same
representations to them about the handling of their money even
after he knew of his investment strategy's failures.
Carpenter's defense centered on the arguments that the
marketing materials never promised that the funds would be kept in
"safe" accounts, that these were sophisticated investors, and that
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while Carpenter did want to make money, there was nothing wrong
with his motives and he never had the requisite intent to defraud
at the time any representations were made. Carpenter noted in
particular that the contracts the exchangors signed clearly and
explicitly granted Benistar unlimited discretion to invest their
funds.
The case went to its first trial in July 2005. After a
thirteen-day trial, a jury found Carpenter guilty on all nineteen
counts after about six hours of deliberation. The next week, on
August 5, 2005, Carpenter filed motions for acquittal and for a new
trial. On December 15, 2005, the district court denied the motion
for acquittal but granted the motion for a new trial on the grounds
that the government's closing argument had improperly made use of
an extended metaphor portraying Carpenter's actions as gambling.
The court explained that evidence of the losses Carpenter had
actually sustained had been admitted for the limited purpose of
proving intent, but the government had repeatedly conjured it
improperly in its closing argument's references to gambling. The
district court found that in light of the overall strength of the
case, which was not overwhelming and would have allowed a rational
jury to acquit, it was possible that the government's improper
closing arguments had tainted the jury's verdict. However, the
court also noted that the evidence was still sufficient to sustain
-9-
a conviction and ordered a new trial. See Carpenter, 405 F. Supp.
2d at 102-03.
The government appealed the new trial order from that
first trial, and Carpenter cross-appealed the denial of his motion
for acquittal. In July 2007, a divided panel of this court upheld
the district court's orders, explaining that the district court had
not abused its discretion in determining that the government's
comments could have tainted the verdict and that the appellate
court lacked jurisdiction to review the denial of the motion for
acquittal where the underlying conviction had been vacated.
Carpenter, 494 F.3d at 24-26. Carpenter petitioned for certiorari
as to the conclusion that the court lacked jurisdiction to review
the denial of the motion for acquittal; the petition was denied.
See Carpenter v. United States, 552 U.S. 1230 (2008).
2. Second Trial
The second trial began in June 2008. After another
thirteen-day trial at which he declined to testify in his defense,
Carpenter was again found guilty by a jury on all nineteen counts.
Again, Carpenter challenged the result, filing a motion for
acquittal or, in the alternative, for a new trial on July 3, 2008.
In his new trial motion, Carpenter argued that the trial was flawed
on several grounds; most significantly, he argued that the
government had knowingly used perjured testimony and improperly
presented evidence of Carpenter's actual losses, and that its
-10-
closing argument was flawed in a variety of ways, including (1) its
focus on Carpenter's losses and the riskiness of his investments,
(2) its characterization of certain evidence against him as
definitively proven rather than left to inference, and (3) its use
of the prosecutor's personal opinion.
After a lengthy delay, on September 1, 2011, the district
court denied the motion for acquittal, again observing that the
government's proof had been strong enough to sustain a conviction.
Carpenter, 808 F. Supp. 2d at 386. But it also granted the motion
for a new trial. In granting the new trial, the district court
rejected the grounds Carpenter asserted in his motion. See id. at
380 n.6. Nonetheless, the district court explained that the
government had erred in three ways while delivering its closing
argument: (1) it improperly stated that Carpenter had promised to
keep the exchangors' money in safe accounts (rather than explicitly
arguing that this promise could be inferred from the marketing
documents); (2) it improperly discussed "parking" the exchangors'
money in "escrow" accounts as a general matter rather than dealing
with the specific transactions in the case; and (3) it improperly
referred repeatedly to what the district court called Carpenter's
"greed," that is, his profit-seeking actions. See id. at 380-85.
The district court further noted that the jury had spent a
relatively short time -- approximately two hours -- in
deliberations, which it took as evidence that the jury may have
-11-
been led to convict on an improper basis. Id. at 385. Concluding
that the government had "poisoned the well" through its comments,
the district court granted a new trial. Id. at 386.
The parties again cross-appealed.3 The government's
appeal remains before us. The government argues that its closing
argument was not improper, and that even if it were, the district
court was required to apply plain error review, given the court's
reliance on factors the government said had not been the subject of
Carpenter's objections; that the district court erroneously
considered the brevity of the jury deliberations in ordering the
new trial; and that, in any event, the district court abused its
discretion in granting the new trial.
II.
The ultimate grant of a new trial is reviewed for abuse
of discretion; however, we decide de novo whether the underlying
comments in the closing argument were improper. See United States
v. Hernández, 218 F.3d 58, 68 (1st Cir. 2000). The de novo review
standard is the standard we apply here. A district court
necessarily abuses its discretion when it commits a material error
of law or relies upon an improper factor. United States ex rel.
Jones v. Brigham & Women's Hosp., 678 F.3d 72, 83 (1st Cir. 2012).
3
This court, in an order dated May 3, 2013, dismissed
Carpenter's cross-appeal for lack of jurisdiction based on law of
the case doctrine and our opinion in the 2007 appeal. Carpenter
has petitioned for certiorari as to that order.
-12-
A conclusion that there was misconduct is an issue of law. See
United States v. Cartagena-Carrasquillo, 70 F.3d 706, 713 (1st Cir.
1995) (describing analysis to use in the event that prosecutor's
comments are improper).
A. Government's Closing Argument
The district court held that the government's closing
argument was improper in three respects: (1) it overstated the
degree to which Carpenter promised "safety and security" in
investments; (2) it overly generalized the nature of "parking" the
exchangors' money in "escrow" accounts; and (3) it repeatedly
referred to Carpenter's profit motive. Carpenter, 808 F. Supp. 2d
at 380-85. Carpenter had not explicitly raised any of these three
issues as possible errors in his briefing or arguments in the
district court.4 Rather, the court's focus on these three issues
was sua sponte, after the briefing and argument were completed.
Carpenter did make other arguments, which we find, as did the
district court, were insufficient to warrant a new trial.
In context, none of these three features of the
government's closing was improper. We turn to the district court's
reasons and explain our conclusions to the contrary.
4
The government makes an alternative argument that the
district court should have applied plain error review because
Carpenter failed to identify these possible errors in the district
court. See United States v. Olano, 507 U.S. 725, 736 (1993). We
need not reach this issue in light of our holding here.
-13-
1. "Safety" and "Security"
The district court cites three references in the
prosecution's closing to "safety" or "security" of the exchangors'
funds as improper. In fact, all three are permissible arguments.
The first statement that the district court lists as
wrongful is the government's assertion that, in full, Carpenter
"took in millions of dollars in real estate exchangors' money based
on false and fraudulent pretenses that Benistar would protect the
security and safety of the exchangors' money and that the money
would be held for the exchangors' benefit to buy replacement
property." The argument, within a few sentences, went on to say
that Carpenter knew not a single document advised exchangors that
he was taking the risks he did with their money and knew that if
the exchangors had been so advised, they never would have
contracted with Benistar.
The government acknowledged that there was no dispute as
to what the documents provided or the losses suffered, then said:
"[W]hat is in dispute here is how this evidence fits into what you
must decide . . . which is whether Mr. Carpenter committed mail and
wire fraud by his conduct." The government argued that the
exchangors, all in the real estate business, needed to identify an
exchange property within 45 days and under no circumstances could
take longer than 180 days to complete their exchanges, and that
Benistar knew its use of the exchangors' money was so limited. As
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the prosecution phrased it, "[r]isking all of the funds to be held
short term for real estate purposes is simply inconsistent with the
business Carpenter represented [Benistar] to be." The prosecution
then turned to what the marketing documents said, such as "[a]sk
about the security of your funds and find out what guaranties are
offered," and "[Benistar] has a longstanding reputation for
trustworthiness." The argument then continued with references to
express language in the other documents given to exchangors.
This first statement is the very first sentence of the
prosecution's closing and simply states the government's theory of
the case. While the government may not make unfair statements in
its closing, see Carpenter, 494 F.3d at 23, it is not barred from
stating its theory of the case. Cf. Fowler v. Warden, N.H. State
Prison, No. 93-1668, 1994 WL 44833, at *2 (1st Cir. Feb. 15, 1994)
(per curiam) (finding seemingly improper statement not improper
when taken in context as first sentence of closing argument
responding to defense's theory of the case). While the government
did not say explicitly that it was asking the jury to draw an
inference from the documents and facts, that was the structure of
the argument as a whole. The statement was not impermissible.
The second statement that the district court faults is
the government's assertion that "the marketing documents . . .
emphasized the safety and security of the money." This statement
-15-
was not impermissible.5 Like the first statement, it also served
as an introduction and was followed by direct quotations from
admitted documents that could easily be read as emphasizing
precisely that safety and security. Cf. United States v. Robinson,
473 F.3d 387, 397 (1st Cir. 2007). For example, the government
went on to reference marketing materials that told potential
exchangors comparing potential intermediaries to "ask about the
security of your funds" and to consider Benistar's "longstanding
reputation for trustworthiness" and the reliance on the stated role
of Benistar as a fiduciary.
The final statement that the district court found
improper on this subject was the government's assertion that "the
representations that the money is going to be held for the
exchangors' benefit and that it will be held safe and secure [are]
false because [Carpenter] can't meet the obligations that he owes
to other exchangors." The district court's objection was that this
statement asserts as a fact what is available only inferentially,
that Carpenter promised that the money would be kept safe. This
statement builds off of the prosecution's earlier argument about
the representations that were made and uses the conclusion from
that argument as the starting point for a new one. Cf. United
States v. Martínez-Medina, 279 F.3d 105, 119 (1st Cir. 2002)
5
In his own closing, Carpenter stressed the language of the
same documents and disputed whether they could be read as promising
security at all.
-16-
(finding statements in closing argument not improper when they
"appear reasonably supported by the record or are within the
prerogative of the prosecution to characterize the evidence
presented at trial and argue certain inferences to the jury."). In
the context of the closing argument as a whole, we see nothing
improper about this assertion.6
2. Statements About "Parking" Money in "Escrows"
The district court also found fault with the government's
characterization of Benistar's representations of its business as
involving "parking" money in "escrows." This issue was not even
adverted to in the defendant's objections. The court thought this
characterization contravened its jury instruction that neither the
contracts nor governing laws limited how a qualified intermediary
could handle an exchangor's funds and improperly led the jury to
believe that Carpenter had breached some agreement. Without
restrictions either in statutes or in the contract, the court
concluded, the government's argument was improper because "no such
representation [of having a limit to Benistar's ability to 'invest'
funds] could be implied." We disagree and do not credit that
conclusion of impropriety.
6
Carpenter argues that we should not limit our analysis to
the three particular statements listed by the district court
because, he argues, those instances were merely examples of a
general theme of wrongdoing. We have considered the entire closing
argument in context and disagree.
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The government did not seek to have the jury convict on
the basis that Carpenter was in breach of contract or transgressing
a law regulating qualified intermediaries qua intermediaries.
Rather, it sought to show that Carpenter had misrepresented his
approach by pursuing a riskier investment strategy than exchangors
would have expected from the representations made and the nature of
their purposes in entering exchange contracts. And he knew his
strategy differed from their expectations and he deliberately
failed to correct or prevent those expectations.
As the government argued, a § 1031 exchange is commonly
viewed as a conservative transaction: it is generally pursued by
someone who has chosen to invest in real estate and is primarily
seeking to avoid capital gains liability rather than to obtain
large, quick returns. Under the government's theory, this sort of
investor would have expected the funds in the escrow accounts to be
"invested" in safe assets like money market accounts or treasury
bills. Such an investing strategy could fairly be described as
"parking" money, particularly when exchangors were promised returns
of 3% or 6% when much higher rates were available in riskier
investment vehicles.7 By leading exchangors to believe
7
The district court took issue with the specific terms "park"
and "escrow account" based on a theory, articulated in its order
but not the subject of discussion at trial, of how banks operate.
In fact, each exchangor signed a contract with Benistar entitled
"ESCROW AGREEMENT," and those documents themselves were before the
jury. The court explained that an "account" is not a separate
"deposit box" of money but merely an amount a bank promises to pay,
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that Carpenter would take that approach but instead knowing that he
would invest in riskier stocks or options, the government argued,
Carpenter committed fraud. We see nothing wrongful in the manner
in which the government presented that argument to the jury in this
case.
3. References to Carpenter's Profit Motive
The district court's third assignment of error was in the
government's references to Carpenter's desire to profit off the
exchangors, which the district court recharacterized as "greed,"
although the government never used that term. The government did
refer to Carpenter's desire to trade in riskier instruments that
could bring in a greater profit for himself and his business
partner. The government also highlighted the fact that Carpenter
sought to earn that profit using other people's money. The
district court, in its new trial order, held that these comments
improperly drove the jury toward a guilty verdict based on moral
and that banks are able to pay interest rates in the first place by
putting money to other uses. Money that is "parked," the court
continued, is not invested at all under a literal understanding of
the economic theory and therefore could not have earned interest.
The district court concluded that "[t]he exchangors, all relatively
sophisticated in business, must all have expected" that their
so-called "parked" funds would somehow be invested. But the jury
was free to decide that the exchangors, sophisticated though they
may be, understood "account" and "park" in the ordinary sense. The
court's order also does not deal at all with the evidence actually
presented to the jury, and Carpenter has not identified any point
in the trial where he developed that strict theory. If Carpenter
wanted the factfinder to use a different meaning of "park" and
"escrow account" than an ordinary person would use, Carpenter could
have presented his alternative to the jury.
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chastisement of Carpenter rather than the elements of the fraud
crimes charged. We disagree for several reasons.
The argument was a legitimate one directly related to the
government's burden of showing intent. To have committed fraud
against the exchangors, Carpenter must have had the specific intent
to mislead them at the time he solicited their business. The
government's argument went to why Carpenter had a motive to commit
fraud. This fraud would increase the amount of money he would make
off of the exchangors' investments. Had there been full
disclosure, especially after Carpenter knew his risky investment
strategy had failed, the exchangors would never have made the
investments to begin with or maintained them with Benistar.
In addition, we do not think such argument could have
distracted the jury from the task before it or distracted it from
its evaluation of the evidence of Carpenter's intent.
B. New Trial Order
None of the comments that the district court relied upon
as the basis for ordering a new trial were actually improper.
Because the district court committed an error of law in determining
that the closing argument was improper, it necessarily abused its
discretion in granting the new trial, and we reverse. Cf. United
States v. Conley, 249 F.3d 38, 47 (1st Cir. 2001) (reversing
district court's new trial order when district court applied
incorrect legal standard). We need not reach the government's
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other arguments for reversal, including its alternative argument
that the district court erred in failing to apply plain error
review, because we have found that there was no impropriety in the
government's closing argument. However, we do consider Carpenter's
argument that the district court order should be affirmed for other
reasons.
C. Carpenter's Alternative Arguments
Recognizing that this court on appeal is free to affirm
the district court's decision on any independently sufficient
ground, see United States v. Robles, 45 F.3d 1, 5 (1st Cir. 1995),
Carpenter argues that the trial contained several other errors that
support affirmance of the new trial order. He identifies four
errors within the government's closing: (1) the government unduly
emphasized Carpenter's losses; (2) the government unduly emphasized
the riskiness of Carpenter's investing strategy; (3) the government
mischaracterized parts of the evidence; and (4) the government
improperly gave a personal opinion ("that's fraud"). He also
points to an error during the government's principal case at the
trial, contending that the government knowingly relied on false
testimony. The district court properly did not find that any of
Carpenter's arguments on these points justified a new trial when it
considered them in its new trial order.
Carpenter did not preserve the personal opinion argument
because he failed to object contemporaneously or to include it in
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his objections immediately after the closing argument. See, e.g.,
United States v. Goodhue, 486 F.3d 52, 55 (1st Cir. 2007) ("An
issue is preserved for appeal when the appellant adequately
preserved the issue through a timely and contemporaneous objection
to the district court."). However, he preserved each of the other
four arguments by objecting to them at the closing (or during the
trial as to the false testimony, which was not at issue in the
closing) and highlighting them in his briefs on the new trial
motion in the district court and on appeal.
We review preserved objections of this sort for harmless
error. See United States v. Sasso, 695 F.3d 25, 29 (1st Cir.
2012). That is because Carpenter's assertions of error "are not of
constitutional dimension," and so the conviction will stand despite
any error "as long as it can be said 'with fair assurance, after
pondering all that happened without stripping the erroneous action
from the whole, that the judgment was not substantially swayed by
the error.'" Id. (quoting Kotteakos v. United States, 328 U.S.
750, 765 (1946)). We review the unpreserved objection for plain
error. See United States v. Andújar-Basco, 488 F.3d 549, 561 (1st
Cir. 2007). Applying these standards, we conclude that none of
Carpenter's alternative grounds is sufficient to affirm the new
trial order.
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1. Government's Focus on Actual Losses and Riskiness
Carpenter attacks the government's focus on Carpenter's
actual losses and on the riskiness of his investments within its
closing argument. But the government's arguments properly went to
its theory of Carpenter's fraud: as to risk, misrepresentations of
how the money would be invested, and as to the losses,
misrepresentations of the financial state of his company and the
likelihood that exchangors would actually be paid back their
principal with the promised interest.
2. Government's Knowing Use of False Testimony
Within his complaint about the government's focus on the
riskiness of his investments, Carpenter also argues that the
government knowingly introduced false testimony from one of its
witnesses. That claim asserts an error under Napue v. People of
the State of Ill., 360 U.S. 264 (1959). Under Napue, a new trial
is required "if the false testimony could in any reasonable
likelihood have affected the judgment of the jury." United States
v. Mangual-Garcia, 505 F.3d 1, 10 (1st Cir. 2007) (quoting Giglio
v. United States, 405 U.S. 150, 154 (1972)) (internal quotation
mark omitted). However, we have recognized that this rule is not
absolute; for example, we have declined to require a new trial when
the defendant has knowledge of the false testimony and fails to
raise the issue. See Mangual-Garcia, 505 F.3d at 10-11.
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The district court, in a separate order denying
Carpenter's motion for a mistrial on these grounds, explicitly
considered Carpenter's claims regarding the lying witness and
concluded that the witness was in fact lying and that the
government knew the testimony was false. However, it also
explained that the government made all necessary disclosures and
that Carpenter consequently was able to and did cross-examine the
lying witness "vigorously." The district court therefore
determined that a mistrial was not warranted on this basis. On
appeal, Carpenter has not identified any reasonable likelihood that
the jury's verdict in this case was impacted by the false testimony
in light of his vigorous cross-examination.8 That ends this
attack.
8
Carpenter's sole contention on this point is that the false
testimony "arguably" raised doubt as to whether Carpenter "was
forthright" with Merrill Lynch, and that this doubt could have
permitted the jury to believe that he was less than forthright with
his clients as well. Though he neither refers to Federal Rule of
Evidence 404(b) nor invokes its language, he essentially argues
that the testimony could have been improperly used as propensity
evidence in violation of that rule. See Fed. R. Evid. 404(b)(1)
(prohibiting use of evidence of crimes, wrongs, or bad acts to
prove action in accordance with that character). But Carpenter's
Rule 404(b)(1) argument falls far short of the requisite
"reasonable likelihood" showing. For one thing, Carpenter claims
that the testimony only "arguably" raised doubts about his
forthrightness with Merrill Lynch; he does not show that the
testimony "likely" raised such doubt. For another thing, even if
doubt were raised, Carpenter asserts merely that it could have
permitted the jury to believe that he was dishonest with his
clients as well. He does not show that such an inference was
"reasonably likely."
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3. Government's Alleged Mischaracterization of
Carpenter's Knowledge
Carpenter next complains that the government on rebuttal
characterized him as having direct knowledge of the contents of the
marketing materials and personally deleting certain words from
them. These characterizations are possible inferences but are far
from required by the evidence. Throughout the trial, Carpenter
consistently protested against treating them as required inferences
or proven facts.
The district court took prompt steps to address any error
in precisely the way that Carpenter's counsel requested, granting
a curative instruction. The court's instruction told jurors
explicitly that "[t]here is no evidence that Mr. Carpenter was
responsible for changing the agreement. You have evidence of two
different agreements, but there's no evidence as to how they came
to be different, and so that would not be an appropriate thing for
you to take into consideration." In light of that clear and prompt
instruction, it is not likely that the outcome swayed. See
Olszewski v. Spencer, 466 F.3d 47, 60 (1st Cir. 2006) (noting that
"where the prosecutor unintentionally misstates the evidence during
closing argument, a jury instruction ordinarily" is sufficient to
cure any error, "particularly where" the instruction "was given
immediately after the statement").
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4. Government's Use of Personal Opinion
Carpenter's final argument is that the government
improperly introduced a personal opinion during its closing by
declaring at multiple points, "that's fraud." Because Carpenter
did not contemporaneously object to this point, our review is for
plain error.9 To prevail on plain error review, Carpenter must
show that the comments "were prejudicial and affected his
substantial rights," and that the error "caused a 'miscarriage of
justice' or seriously undermined the 'integrity or public
reputation of judicial proceedings.'" United States v. Henderson,
320 F.3d 92, 105 (1st Cir. 2003) (quoting United States v. Olano,
507 U.S. 725, 736 (1993)).
Carpenter has not met that burden. Although they may
sound like the prosecutor's opinions in isolation, the comments
9
Carpenter argues that his objection was preserved because
the district court interrupted his attorney while his attorney was
making a set of objections immediately after the government's
closing argument, citing United States v. Wihbey, 75 F.3d 761, 769
(1st Cir. 1996). That argument fails for three reasons. First,
Wihbey did not hold that an objection is preserved in such a
situation, but merely assumed arguendo that it could be. See id.
Second, Wihbey is distinguishable on its facts, as counsel there
moved for a mistrial after the prosecution's rebuttal --
essentially the first opportunity after the earlier attempt to
object was rebuffed -- whereas the new trial motion here was filed
after the jury returned its verdict. See id. Finally, even if
interruptions generally could be sufficient to preserve objections,
there is simply no evidence here that Carpenter's attorney was
attempting to make the objection Carpenter now claims is preserved;
the district court interrupted him only after he had discussed at
length his objections to the government's emphasis on Carpenter's
losses and appeared primed to continue discussing that topic alone.
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that Carpenter cites as improper opinions actually came in the
context of properly encouraging the jury to evaluate the evidence.
For example, one of the two instances of improper opinion-giving
that Carpenter identifies is in the very last sentence of the
government's rebuttal: "This is fraud, ladies and gentlemen, and
this is why you should find him guilty on each and every count."
Taken in context, it is clear that the prosecution's comments were
permissible comments on the evidence in the case rather than the
prosecutor's own opinion. See United States v. Smith, 982 F.2d
681, 684 (1st Cir. 1993); United States v. Cain, 544 F.2d 1113,
1116 (1st Cir. 1976). Because these comments in context were not
prejudicial, and certainly did not cause a miscarriage of justice,
they do not constitute plain error.
III.
For the reasons stated above, the district court's grant
of the new trial is reversed, the conviction is reinstated, and the
case is remanded for prompt sentencing.10
So ordered.
10
We also regret that it took three years for the district
court to rule on the motion for new trial.
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