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USCA1 Opinion
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________
No. 96-1396
No. 96-1397
UNITED STATES OF AMERICA,
Appellee,
v.
GEORGE R. JORDAN, JR.,
Defendant, Appellant.
____________________
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. D. Brock Hornby, U.S. District Judge] ___________________
____________________
Before
Selya, Circuit Judge, _____________
Aldrich and Cyr, Senior Circuit Judges. _____________________
____________________
Jane Elizabeth Lee for appellant. __________________
George R. Jordan, Jr. on supplemental brief pro se. _____________________ ___ __
F. Mark Terison, Assistant United States Attorney, with whom John _______________ ____
S. Gleason III, Assistant United States Attorney, and Jay P. ________________ _______
McCloskey, United States Attorney, were on brief for appellee. _________
____________________
April 29, 1997
____________________
ALDRICH, Senior Circuit Judge. This case arises _____________________
from the conviction of defendant George Jordan, Jr.
("Jordan") after two trials, on various charges of fraud,
money laundering, tax evasion, and filing false tax returns.
He appeals his convictions and sentences. We affirm in part
and reverse in part.
I. Background __________
Jordan was employed as a risk manager by the
Pioneer Plastics Corporation ("Pioneer") from 1989 to April
1993. His primary responsibility was the investigation and
resolution of claims filed by Pioneer employees under its
self-insured workers compensation program. The investigation
phase included ongoing, surreptitious "activity" checks on
disabled employees to verify that they were, in fact, not
able to work. Toward this end, in 1990, he formed his own
investigation company, PineTree Insurance Services
("PineTree"), and began submitting invoices to Pioneer for
investigations and activity checks. Jordan submitted
invoices on behalf of PineTree, approved them, mailed checks
on behalf of Pioneer to PineTree's P.O. Box, and ultimately
endorsed and deposited these checks into his personal
checking account. The relationship between Jordan and
PineTree violated Pioneer's prohibition against undisclosed
outside business interests with the potential to influence an
employee's judgment in the performance of his duties.
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In early 1993, a manager at Pioneer became
concerned about the high level of PineTree expenses. An
internal investigation ensued. When another manager
attempted to contact PineTree he could find no telephone
number or street address. Jordan's secretary, when
questioned, revealed that Jordan hand-delivered the invoices
which contained only a P.O. box address. Upon further
investigation, the box was discovered to be registered to
Jordan. On the day following this discovery, Jordan resigned
from Pioneer. After his departure, a Pioneer officer
searched Jordan's office and discovered PineTree
investigative reports printed in "one big long document."
Six months later, Jordan was indicted on five
counts of mail fraud, 18 U.S.C. 1341, 1342, 1346, four
counts of wire fraud, 18 U.S.C. 1343, and a single count of
money laundering, 18 U.S.C. 1956(a)(1)(B)(ii). After a
three day jury trial he was acquitted of the wire fraud
charges. A mistrial was declared when the jury was unable to
reach a verdict on the remaining counts.
In August 1995, while awaiting retrial, Jordan was
indicted on four counts of income tax evasion, 26 U.S.C.
7201, and two counts of filing a false income tax return,
26 U.S.C. 7206(1), stemming from the PineTree scheme. Over
his objection, the court allowed the government to join for
trial the tax indictments and the remaining mail fraud and
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money laundering charges. This time Jordan was convicted on
all counts and sentenced to 72 months imprisonment, three
years supervised release, special assessments of $600 and
restitution to Pioneer of $158,603.10.
II. Joinder and Prejudice _____________________
Jordan renews here his earlier objection to the
court's decision to allow the government to join the
outstanding charges from the first trial with the tax evasion
counts. We note at the outset that instead of responding to
the government's motion for joinder under Fed. R. Crim. P.
13, defendant used his response to argue prejudice under Fed.
R. Crim. P. 14, most often utilized in a separate motion to
sever. Although these may involve different standards of
review, see United States v. Edgar, 82 F.3d 499, 503 (1st ___ ______________ _____
Cir.), cert. denied, ___ U.S. ___, 117 S. Ct. 184, 65 _____________
U.S.L.W. 3237 (U.S. Oct. 7, 1996) (No. 96-178), and United ______
States v. Alosa, 14 F.3d 693, 695 (1st Cir. 1994), basically ______ _____
our issue is abuse of discretion with respect to prejudice.
Jordan, correctly, does not dispute that, substantively, all
offenses could have been joined in a single indictment under
Fed. R. Crim. P. 8(a). See United States v. Clayton, 450 ___ ______________ _______
F.2d 16, 18 (1st Cir. 1971). This said, we turn to the
question whether the grant of joinder unduly prejudiced.
In order to prevail on this claim, Jordan must make
"a strong showing of prejudice." United States v. Gray, 958 _____________ ____
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F.2d 9, 14 (1st Cir. 1992). In United States v. Scivola, 766 _____________ _______
F.2d 37 (1st Cir. 1985), we observed that there are three
types of prejudice that can emerge from this type of
situation:
(1) the defendant may become embarrassed
or confounded in presenting separate
defenses; (2) proof that defendant is
guilty of one offense may be used to
convict him of a second offense, even
though such proof would be inadmissible
in a separate trial for the second
offense; and (3) a defendant may wish to
testify in his own behalf on one of the
offenses but not another, forcing him to
choose the unwanted alternative of
testifying as to both or testifying as to
neither.
Id. at 41-42 (internal citations omitted). Jordan argues ___
here that joinder subjected him to the latter two types of
prejudice.
Jordan did not testify in either trial, and
contends that by allowing the joinder of the fraud, money
laundering and tax counts, he was deprived of his Fifth
Amendment right to testify as to certain counts but not as to
others. In support, he relies on our opinion in Alosa, ante, _____ ____
where we remarked that "a defendant may deserve a severance
of counts where [he] makes a convincing showing that he has
both important testimony to give concerning one count and
strong need to refrain from testifying on the other." 14
F.3d at 695 (internal citations omitted). To make this
showing, a defendant must timely offer enough information to
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the court to allow it to weigh the needs of judicial economy
versus "'the defendant's freedom to choose whether to
testify' as to a particular charge." Id. (quoting Scivola, ___ _______
766 F.2d at 43).
In his objection to the government's motion to join
indictments, Jordan argued his need to testify in order to
produce a "good faith" defense to the tax charges. See Cheek ___ _____
v. United States, 498 U.S. 192, 203-04 (1991) (holding that a _____________
defendant is entitled to present his subjective belief that
he did not violate the law, even if such belief is
objectively unreasonable). To bolster this assertion, he
included an offer of proof reciting the testimony that would
constitute his defense.1
____________________
1. Jordan's offer of proof contained the following
assertions:
3) It is anticipated that in the tax
prosecution the Defendant would testify
that he has in the past handled his own
tax filings. He has read various
instructions provided by the Internal
Revenue Service and has done some
independent research regarding tax laws.
George Jordan was of the opinion that
funds paid to him from the Pioneer
Plastics Workers' Compensation Trust were
not taxable pursuant to Internal Revenue
Code Section 501(c)(9).
4) Jordan would testify that upon
filing for a Chapter 13 bankruptcy,
Jordan, upon advice of bankruptcy counsel
filed certain forms 1040-X.
5) Jordan filed form 1040 for 1992
and receive (sic) a refund check of
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It is difficult to dismiss these grounds. The
unique circumstances of this case distinguish it from Alosa _____
where the defendant sought to sever a gun count from drug
trafficking and conspiracy charges. There, the defendant
wanted to testify on the gun charge simply to deny that he
had used the guns for drug trafficking and that he owned the
guns "for fun." 14 F.3d at 695. We upheld the denial of
Alosa's severance motion because that testimony was "some
distance from . . . a credible alibi that only the defendant
can supply showing him to have been elsewhere at the time of
the crime." Id. Here, we believe that Jordan's subjective ___
testimony on the tax charges is analogous to the "credible
alibi" we found lacking in Alosa. Only he can supply _____
testimony of his subjective belief as permitted by Cheek, _____
forthrightly subjecting himself to cross-examination. We do
not accept the government's contention that this belief was
adequately before the jury in the form of Jordan's statement
on his amended tax form that the income was not taxable.
Nor do we accept its contention that Jordan could
have proffered the testimony of his bankruptcy attorney, from
whom Jordan received legal advice, as an effective substitute
____________________
approximately $1000, and in addition, a
form 1040-X regarding the Pine Tree
income and exemptions under 501(c)(9)
were filed.
6) Forms 1040-X were filed for the
years 1990, 1991, 1992, and 1993.
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for Jordan's own testimony. While it is likely that the
attorney's testimony also would have been helpful in
establishing a Cheek defense, Jordan contends in his proffer _____
that he previously handled his own tax affairs and also
relied on his own independent legal research. See supra note ___ _____
1. On balance, therefore, we conclude that joinder likely
had the effect of eviscerating Jordan's planned defense to
the tax charges.2
The surrender of this privilege was capped by the
government's maneuvering that got before the mail fraud jury
the allegedly fraudulent tax returns. The government had
made substantial efforts at the original trial seeking to
introduce the tax returns as proof of intent. The court
twice ruled that possible prejudice from these forms
outweighed their relevance under Fed. R. Evid. 403. We have
here the type of prejudice outlined in Scivola, 766 F.2d at _______
41-42, that of evidence presented that would not have been
admissible at a separate trial. By the joinder the
government has circumvented the court's ruling. Jury-wise it
could be thought better off with evidence that would point in
____________________
2. We emphasize, however, that we do not hold that a
defendant's mere assertion of a Cheek defense invariably _____
requires severance of an indictment charging tax and non-tax
offenses. Rather, the court must undertake, on a case-by-
case basis, to weigh "'the considerations of judicial
economy' against the defendant's 'freedom to choose whether
to testify.'" Alosa, 14 F.3d at 695 (citations omitted). _____
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an improper direction tied to an instruction not to so
consider it, than not to have it at all.
We have an unusual situation. With the Fifth
Amendment involved should either, both, or neither of the
mail fraud, etc. convictions, and tax evasion convictions, be
set aside? There are recognized benefits (to all, except,
usually, the defendant) in having joint trials.
Traditionally, defendants may, to an extent, have to stand
the cost, the extent to be determined by the court's
discretion. In the second mail fraud trial, by choosing not
to take the stand defendant felt only one prejudice, the
jury's knowledge of the tax cases. At the original trial the
court, in excluding evidence of those charges, had described
it as of minimum value to the government. While we agree
with Jordan that it would have been happier for him not to
have had that evidence now get in through the back door by
the joinder, we believe it was within the court's discretion,
in the absence of a Fifth Amendment problem (such as infected
the tax counts), to subject him to the ordinary consequences
of joinder of indictments.
This is not to say that Jordan did not endure some
loss. There should be some limit to the harm the government
should impose to meet the court's Rule 403 finding in the
original action. By bringing the tax indictment, and joining
it with the tax charges to get the tax forms before a mail
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fraud jury, it put Jordan in the proverbial bind -- testify,
to your loss in the mail fraud case, or do not testify, to
your loss in the tax case. Jordan had valid Fifth Amendment
reasons for disliking both alternatives, and we do not think
the government should have it both ways. We allow one, but
it should not complain that we hold it to its original
decision of non-joinder. The convictions and sentences on
the tax counts are vacated.
III. Requirements of a Scheme to Defraud ___________________________________
Continuing with the mail fraud case, Jordan next
argues that the government failed to allege and prove that
Pioneer suffered actual harm or that he was unjustly enriched
as a result of the fraud as required under the 42 U.S.C.
1341.3 The government contends that defendant
affirmatively waived this ground by requesting a jury
instruction on the mail fraud count that did not include any
____________________
3. 18 U.S.C. 1341 reads in relevant part:
Whoever, having devised or intending to
devise any scheme or artifice to defraud,
or for obtaining money or property by
means of false or fraudulent pretenses,
representations, or promises . . . for
the purpose of executing such scheme or
artifice or attempting to do so, places
in any post office or authorized
depository for mail matter, any matter or
thing whatever to be sent to delivered by
the Postal Service . . . or takes or
receives therefrom . . . shall be fined
under this title or imprisoned not more
than five years or both.
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mention of actual harm or unjust enrichment.4 We agree. See ___
United States v. Mitchell, 85 F.3d 800, 808 (1st Cir. 1996) _____________ ________
(citing United States v. Marder, 48 F.3d 564, 571 (1st Cir.), _____________ ______
cert. denied, ___U.S.___, 115 S. Ct. 1441, 63 U.S.L.W. 3721 ____________
(U.S. Apr. 3, 1995) (No. 94-8296)). For the mail fraud case
we add only the following.
Prior to the enactment of 18 U.S.C. 1346 in 1988,
the Supreme Court had held in McNally v. United States, 483 _______ ______________
U.S. 350, 360 (1987), that schemes to defraud under the mail
and wire fraud statutes did not encompass the intangible
right to honest government but were limited to schemes to
defraud a victim of money or property. Congress responded by
enacting section 1346, expanding the definition of fraud to
include "a scheme or artifice to deprive another of the
intangible right of honest services."
In light of the advent of 1346, in order to prove
mail fraud under 1341 the government must show "that the
defendant used the mails for the purpose of executing or
attempting to execute a scheme to defraud," United States v. _____________
____________________
4. The jury instruction Jordan requested reads as follows:
Intent to Defraud - Defined:
To act with an "intent to defraud"
means to act knowingly and with the
intention or purpose to deceive or cheat.
An intent to defraud is accompanied,
ordinarily by a desire or purpose to
bring about some gain or benefit to one's
self.
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Allard, 926 F.2d 1237, 1242 (1st Cir. 1991), and such scheme ______
may include one to deprive another of the intangible right to
honest services, United States v. Sawyer, 85 F.3d 713, 732 _____________ ______
(1st Cir. 1996). What is required is that "an articulable
harm befall [the victim] as a result of the defendant's
activities, or some gainful use must be intended by the
[defendant], whether or not this use is profitable in the
economic sense." United States v. Czubinski, 106 F.3d 1069, _____________ _________
1074-75 (1st Cir. 1997). Actual monetary harm or unjust
enrichment is therefore not required. A defendant need not
even successfully carry out the scheme to defraud in order to
be found guilty. Id.; Allard, 926 F.2d at 1242. ___ ______
Even if we had not found Jordan's argument waived,
we agree that the government presented sufficient evidence
that the jury could have found that Jordan deprived Pioneer
of his services and/or its money through a scheme to defraud.
IV. Double Jeopardy _______________
Finally, Jordan contends that the district court's
decision to sentence him on the tax evasion counts and the
false filing counts violated the double jeopardy clause,
because the latter counts charge lesser included offenses.5
____________________
5. Other circuits have endorsed Jordan's contention. See, ___
e.g., United States v. Kaiser, 893 F.2d 1300, 1305 (11th Cir. ____ _____________ ______
1990). Since the panel is not in agreement as to whether
this contention raises an issue of first impression in this
circuit, or whether it is foreclosed by Gaunt v. United _____ ______
States, 184 F.2d 284, 288 (1st Cir. 1950), we leave that ______
matter for another day.
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See Rutledge v. United States, ___ U.S. ___, 116 S. Ct. 1241, ___ ________ _____________
1247-50 (1996). Since we are vacating the tax convictions,
we need express no view on this contention at the present
time.
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V. Conclusion __________
Defendant has also filed a pro se brief. We do not
discuss it here as we find his arguments to be without
merit.6 His convictions and sentences on Counts I through X
of the first indictment are affirmed. The convictions and
sentences on all counts of the second indictment are vacated
and this case remanded for further proceedings in accordance
with this opinion.
____________________
6. Nor do we address Jordan's claim that the court
improperly excluded his correspondence with the Internal
Revenue Service as hearsay. At his next trial, Jordan will
be free to present the arguments he failed to make below.
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Document Info
Docket Number： 96-1396
Filed Date： 4/29/1997
Precedential Status： Precedential
Modified Date： 9/21/2015