United States v. Charles Naselsky , 561 F. App'x 155 ( 2014 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 12-4404
_____________
UNITED STATES OF AMERICA
v.
CHARLES M. NASELSKY,
Appellant
__________________________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Criminal No. 2-10-cr-00577-001)
District Judge: Honorable Paul S. Diamond
__________________________
Submitted Under Third Circuit L.A.R. 34.1(a)
December 20, 2013
Before: JORDAN, VANASKIE, and GREENBERG, Circuit Judges
(Filed: March 21, 2014)
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OPINION OF THE COURT
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VANASKIE, Circuit Judge.
In 2012, defendant Charles Naselsky was convicted after trial of tax evasion, filing
a false tax return, wire fraud, and attempt to obstruct justice, as well as aiding and
abetting those last two offenses. The United States District Court for the Eastern District
of Pennsylvania sentenced him to 70 months’ imprisonment, a three-year term of
supervised release, restitution of $423,345, and a special assessment of $900. Naselsky
now challenges his convictions for wire fraud and certain aspects of his sentence. For the
reasons that follow, we will affirm the conviction and sentence.
I.
We write primarily for the parties to the action. Accordingly, we set forth only
those facts necessary to our analysis.
In 2002, Naselsky, an experienced real-estate transactional lawyer, joined the
Philadelphia-based law firm of Cozen O’Connor as a “senior member,” a position
considered by the firm’s management to be “equivalent of what you would have today as
a shareholder or as a partner or senior partner . . . in a partnership kind of law firm.”
(App. 70.) Naselsky was paid an annual base salary with the opportunity for cash
bonuses. At the time of hiring, the firm provided Naselsky with a manual of employment
policies, and he signed a form agreeing to read the manual. Included in that manual was
a provision (“the 2001 Cozen policy”) entitled “Professional Fees for Outside Activities,”
which, as of May 2001, stated as follows:
[U]nless approval is secured from the Executive Committee
in advance, all professional fees including legal fees of any
kind, special counsel or solicitor fees, prosecutor salaries,
executor fees, trustee fees, director fees, consulting fees and
teaching salaries or stipends . . . which are generated directly
or indirectly by lawyers employed by the firm shall be
considered to be income to and the property of the firm.
(App. 663.)1
1
At trial, the jury also saw a somewhat revised version of the Cozen policy which
is said to date from November 20, 2010. The parties agree that the exact date of the
2
Among Naselsky’s longstanding clients and social acquaintances were Ravinder
and Hardeep Chawla, brothers who, through their companies, Sant Properties and World
Acquisitions Partners, purchased and re-sold real estate in the Philadelphia market. In
2005, Naselsky contacted David Grasso, a real-estate developer, to see if he was
interested in selling a valuable property located at 1500 Walnut Street in Philadelphia to
the Chawlas. Grasso offered to sell the building for $35 million, which the Chawlas
accepted. Naselsky represented Grasso throughout the transaction. The Chawlas,
however, also regarded Naselsky as having “facilitate[d]” the transaction on their behalf,
(App. 193), insofar as Naselsky was able to broker a crucial pre-closing extension from
Grasso in return for a $600,000 investment by the Chawlas in Grasso’s film production
business, Tycoon Entertainment, a company in which Naselsky himself also had an
equitable interest.
Shortly thereafter, Naselsky approached Grasso to see if he would also sell a
second property to the Chawlas. Grasso agreed to sell the building, located at 1401 Arch
Street, for $22.5 million. Naselsky again represented Grasso during negotiation of the
revisions, and therefore the verbatim text of the provision in Naselsky’s particular
manual, is unascertainable. The revised version of the Cozen policy reads as follows:
Unless approval is secured from the CEO of the firm, or
his/her designee, in advance, all professional fees of any kind
including legal fees of any kind, special counsel or solicitor
fees, prosecutor salaries, executor fees, trustee fees, director
fees, consulting fees and teaching salaries or stipends . . .
which are generated directly or indirectly by lawyers
employed by the firm, shall be considered to be income to
and the property of the firm.
(App. 663.)
3
sale agreement and at the closing. For each of these two transactions, Grasso received a
bill for services from Cozen O’Connor and paid the law firm directly.
Thereafter, Naselsky met with Grasso and asked for $100,000 in cash to “take care
of [him]” for going “above and beyond the call of duty.” (App. 134.) Grasso initially
responded that Naselsky had already been paid for his legal work. After considering the
issue further, however, Grasso inquired whether Naselsky “had gotten this approved
through his law firm,” to which Naselsky “indicated that he had and . . . not to worry
about it, that he had taken care of that.” (App. 135.) Grasso ultimately agreed to pay
Naselsky the additional funds, but requested an invoice for tax purposes. Naselsky sent
him an invoice for $100,000 bearing the caption “Consulting services.” (App. 139.)
Grasso then wrote a check in that amount to Naselsky, dated January 19, 2006, which
Naselsky deposited in his personal bank account.
Naselsky also received compensation from the Chawlas stemming from these
transactions. In late 2005, the Chawlas wrote checks of $150,000 and $40,000 to
Naselsky for his involvement in the sale of 1500 Walnut Street. Naselsky assured
Hardeep Chawla that Cozen O’Connor “allows [him] to do that,” meaning that it
permitted him to receive such payments directly. (App. 186–87.) In July 2006, Naselsky
left Cozen O’Connor and joined the law firm of Blank Rome. At that time the Chawlas,
through Sant Properties, owed approximately $469,000 to Cozen O’Connor in unpaid
4
legal bills stemming from work for which Naselsky had been the billing attorney. (App.
79–80.)2
In early 2009, Naselsky learned that he was under investigation by federal
authorities for failure to report on his tax returns the $190,000 he received from the
Chawlas and the $100,000 he received from Grasso.3 Through a series of email ruses,
Naselsky unsuccessfully attempted to convince both the management at Blank Rome,
where he remained employed, and the United States Attorney’s Office that the $190,000
he had received from the Chawlas in 2005 was in fact a personal loan from a business
acquaintance rather than unreported income.
On September 7, 2010, Naselsky was indicted by a federal grand jury for tax
evasion, in violation of 26 U.S.C. § 7201 (Counts One and Two); filing a false tax return,
in violation of 26 U.S.C. § 7206(l) (Counts Three and Four); wire fraud, and aiding and
abetting wire fraud, in violation of 18 U.S.C. §§ 1343 and 2 (Counts Five, Six, and
Seven); and attempting to obstruct justice, and aiding and abetting an attempt to obstruct
justice, in violation of 18 U.S.C. §§ 1505 and 2 (Counts Eight and Nine).
At trial, the founder and chairperson of Cozen O’Connor, Stephen Cozen, testified
that Naselsky had not sought prior approval from the firm regarding his personal
2
The Government also offered evidence that between September 2006 and
January 2007, after Naselsky had left Cozen O’Connor, he received six checks for
$15,000 each from the Chawlas for his involvement in a 2005 purchase of property which
did not involve Grasso. Because those payments are not central to any of Naselsky’s
claims on appeal, we will not address them.
3
An agent for the Internal Revenue Service testified at trial that based on these
unreported transactions and others, Naselsky had incurred an unpaid tax bill of roughly
$115,000.
5
acceptance of funds from Grasso or the Chawlas, nor did he disclose those sums to the
firm after receiving them. Cozen stated that he and the firm “[a]bsolutely” would have
considered the payments received by Naselsky to be property of the firm. (App. 84.) He
further opined that any senior member of the firm, or in fact any “average intelligent
human being” would have understood that “finder’s fees” and “commissions” were
among the types of payments covered by the 2001 Cozen Policy. (App. 90–91.)
At the conclusion of the presentation of the evidence, Naselsky moved for a
judgment of acquittal under Federal Rule of Criminal Procedure 29 on Counts Five, Six,
and Seven of the indictment on the theory that the evidence was insufficient to support a
finding of intent to commit wire fraud. The District Court denied the motion. On
September 24, 2012, a jury found Naselsky guilty on all counts.
At sentencing on November 20, 2012, the parties agreed that Naselsky’s base
offense level was 21 and his criminal history category was I. Over Naselsky’s objections,
the District Court imposed a two-level enhancement for use of a special skill under
U.S.S.G. § 3B1.3, and a two-level enhancement for abuse of trust under the same section,
resulting in a Guideline range of 57 to 71 months. The Court then sentenced Naselsky to
70 months of incarceration, near the top of the Guideline range. Naselsky filed a timely
notice of appeal on November 30, 2012.
II.
The District Court had jurisdiction over this case pursuant to 18 U.S.C. § 3231.
We have jurisdiction pursuant to 28 U.S.C. § 1291 and 18 U.S.C. § 3742(a).
6
We exercise plenary review over a defendant’s sufficiency-of-the-evidence claims.
See United States v. Miller, 527 F.3d 54, 60 (3d Cir. 1999). We also give plenary review
to legal questions regarding the applicability of the Sentencing Guidelines, including with
respect to whether a defendant occupied a position of trust. See United States v. DeMuro,
677 F.3d 550, 567 (3d Cir. 2012) (citing United States v. Hart, 273 F.3d 363, 376 (3d Cir.
2001)). Factual findings, such as whether the defendant abused that position of trust to
commit the offense, are reviewed for clear error. Id.
III.
Naselsky argues that the Government failed to establish specific intent to defraud
with respect to Counts Five, Six, and Seven of the indictment, which charged wire fraud.
A defendant challenging the sufficiency of the evidence on appeal “bears a heavy
burden.” United States v. Casper, 956 F.2d 416, 421 (3d Cir. 1992). Sitting en banc, we
have recently described that standard as follows:
We “review the record in the light most favorable to the
prosecution to determine whether any rational trier of fact
could have found proof of guilt[ ] beyond a reasonable
doubt.” [United States v. Brodie, 403 F.3d 123, 133 (3d Cir.
2005)]. Under this particularly deferential standard, we
“must be ever vigilant . . . not to usurp the role of the jury by
weighing credibility and assigning weight to the evidence, or
by substituting [our] judgment for that of the jury.” Id.
Furthermore, “we review the evidence as a whole, not in
isolation, and ask whether it is strong enough for a rational
trier of fact to find guilt beyond a reasonable doubt.” [United
States v. Boria, 592 F.3d 476, 480 (3d Cir. 2010)]. We must
sustain the jury’s verdict “if there is substantial evidence,
viewed in the light most favorable to the government, to
uphold the jury's decision.” United States v. Gambone, 314
F.3d 163, 170 (3d Cir. 2003).
7
United States v. Caraballo-Rodriguez, 726 F.3d 418, 430 (3d Cir. 2013) (en banc). We
also recognized the Supreme Court’s admonition that “the verdict must be upheld as long
as it does not ‘fall below the threshold of bare rationality.’” Id. (quoting Coleman v.
Johnson, --- U.S. ---, 132 S. Ct. 2060, 2065 (2012)).
To prove wire fraud, the Government must establish the following three elements:
“(1) the defendant's knowing and willful participation in a scheme or artifice to defraud,
(2) with the specific intent to defraud, and (3) the use of . . . interstate wire
communications in furtherance of the scheme.” United States v. Antico, 275 F.3d 245,
261 (3d Cir. 2001), abrogated on other grounds by Skilling v. United States, 561 U.S.
358 (2010). The Government may prove intent to defraud by way of circumstantial
evidence. See United States v. Riley, 621 F.3d 312, 333 (3d Cir. 2010). The scheme at
issue may involve an “affirmative misrepresentation,” but can also be predicated upon
“omissions reasonably calculated to deceive persons of ordinary prudence and
comprehension.” Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1415 (3d Cir.
1991) (quoting United States v. Pearlstein, 576 F.2d 531, 535 (3d Cir. 1978)).
The only element at issue here is whether the Government proved that Naselsky
had a specific intent to defraud Cozen O’Connor.4 Naselsky submits that he could not
4
The District Court’s instruction on that element, which is not challenged by
Naselsky, is as follows:
The second element that the government must prove beyond a
reasonable doubt is that Charles Naselsky acted with specific
intent to defraud. To act with specific intent to defraud
means to act knowingly and with the intention or the purpose
to deceive or to cheat.
8
have committed fraud by withholding the funds at issue because the 2001 Cozen policy
“was at best ambiguous” regarding the types of income accruing to the firm rather than
the employee. Appellant’s Br. at 25. Stated differently, Naselsky urges that “no rational
fact finder could have found that [he] intended to violate a policy that did not apply to
him on its face.” Id. at 17. This position depends on Naselsky’s characterization of the
sums he received from Grasso and the Chawlas as “finder’s fees” which were purely “a
reward” for his limited role in introducing those parties to one another. Id. at 16. He
suggests that because this act of introduction “was completed in a virtual instant,”
Appellant’s Reply Br. at 11, he did not draw upon the time or resources of Cozen
O’Connor such that the firm would be entitled to the proceeds.
Assuming that Naselsky’s position is a plausible view of the facts presented at
trial, it does not follow that the evidence was insufficient to support the view apparently
adopted by the jury, i.e., that the funds were due to Cozen O’Connor under the 2001
Cozen policy because they stemmed from deal-making inseparable from Naselsky’s
operations as a practiced real-estate attorney. Stated otherwise, the jury finding of intent
to defraud Cozen O’Connor does not “fall below the threshold of bare rationality.”
Coleman, 132 S. Ct. at 2065. On this record, the jury was capable of finding that
Naselsky, using precisely the same relationships and legal expertise for which he was
paid by Cozen O’Connor, brokered two substantial real-estate transactions and then
obtained additional compensation for his professional work in those very matters. Even
(App. 431.)
9
without relying on the interpretation of the 2001 Cozen policy supplied by the firm’s
chairperson, we conclude that a rational trier of fact could find that the payments
obtained by Naselsky from Grasso and the Chawlas constituted “professional fees” due to
Cozen O’Connor, (App. 666), and that Naselsky possessed a specific intent to defraud the
firm with respect to those fees.
Naselsky also claims that a scheme to defraud cannot be predicated upon mere
omissions where the duty to disclose stems solely from a contract. See Appellant’s Reply
Br. at 5–7 (citing United States v. Steffen, 687 F.3d 1104, 1116 (8th Cir. 2012); United
States v. Colton, 231 F.3d 890, 899–901 (4th Cir. 2000)). In other words, because he was
under no fiduciary or other legal obligation in addition to his contractual duty to report
the payments at issue to his law firm, Naselsky suggests he cannot be held liable in fraud
for passively failing to comply with a contractual condition of employment. At most, he
contends, this would amount to a breach of contract.
The cases cited by Naselsky clarify, however, that conduct involving affirmative
concealment, such as “deceptive acts or contrivances intended to hide information,
mislead, avoid suspicion, or prevent further inquiry into a material matter” is, like an
affirmative misrepresentation, sufficient to establish fraud. Steffen, 687 F.3d at 1115
(quoting Colton, 231 F.3d at 899). Here, viewing the evidence in the light most favorable
to the Government, the record shows that Naselsky assured both Grasso and the Chawlas
that Cozen O’Connor permitted him to accept the payments at issue. These
representations not only induced the remittances, but also reduced the likelihood that
Grasso and the Chawlas might attempt to confirm the propriety of Naselsky’s request
10
with other lawyers at Cozen O’Connor. Later, Naselsky crafted a string of misleading
emails to create the perception that the payments from the Chawlas were personal loans
rather than income that might be due, in part or in whole, to Cozen O’Connor or Blank
Rome. Because these actions had the effect of minimizing the defrauded party’s
likelihood of discovering the wrong, we conclude that the Government’s proof was
sufficient to sustain the verdict. Accordingly, we will affirm the District Court’s
judgment of conviction on the wire fraud counts.
IV.
Naselsky also challenges the District Court’s application of sentencing
enhancements to his wire fraud convictions for use of a special skill and abuse of trust.
Both enhancements arise under § 3B1.3 of the Sentencing Guidelines, which directs a
two-level increase where “the defendant abused a position of public or private trust, or
used a special skill, in a manner that significantly facilitated the commission or
concealment of the offense[.]” U.S.S.G. § 3B1.3.
A position of “public or private trust” is “characterized by professional or
managerial discretion (i.e., substantial discretionary judgment that is ordinarily given
considerable deference).” Id. at cmt. n.1. We apply a three-part test to determine
whether someone occupies a position of trust: “(1) whether the position allows the
defendant to commit a difficult-to-detect wrong; (2) the degree of authority which the
position vests in defendant vis-a-vis the object of the wrongful act; and (3) whether there
has been a reliance on the integrity of the person occupying the position.” United States
11
v. Hart, 273 F.3d 364, 376 (3d Cir. 2001) (quoting United States v. Pardo, 25 F.3d 1187,
1192 (3d Cir. 1994)).
Here, the theory of the Government’s case was that Naselsky abused his trusted
position as a senior member of Cozen O’Connor to deprive the firm of professional fees
derived from his practice of law. The Government adduced evidence that Naselsky alone
was in an authoritative position to seek the additional payments at issue from his clients
and business partners, and to convince them that he had permission from the firm to do
so. Further, Naselsky concedes that the firm did not monitor his tax filings, which in any
event would not have disclosed the challenged payments, and instead relied on his
integrity to self-report payments possibly implicating the 2001 Cozen policy. On these
facts, we conclude that (1) Naselsky was in a position of trust for purposes of the
sentencing enhancement, and (2) the District Court’s factual finding that Naselsky abused
his position of trust to commit the offense of wire fraud against his employer was not
error. The two-level enhancement for abuse of trust was thus properly applied.
Next, we consider the District Court’s application of an enhancement for use of a
special skill. “Special skill” is defined as “a skill not possessed by members of the
general public and usually requiring substantial education, training or licensing.”
U.S.S.G. § 3B1.1, cmt. n.4; United States v. Maurello, 76 F.3d 1304, 1314 (3d Cir.
1996). Naselsky does not dispute that as an attorney he possessed special professional
skills. Instead, in accord with his argument that the fees at issue would have been paid to
any person who brought Grasso and the Chawlas together for business, he contends that
his actions here amounted to little more than introducing two acquaintances and
12
depositing checks into his personal bank account, neither of which requires special skill.
As explained by the District Court, however, the Government introduced evidence that
Naselsky “used his skill to set up [the transactions between Grasso and the Chawlas] so
that he was in a position to ask for these commission finder’s fees, and that did require
special skill.” (App. 456.) Indeed, the record reveals that the wrongdoing at issue was
enabled predominantly, if not exclusively, by Naselsky’s application of his abilities as an
experienced real-estate lawyer. Accordingly, we conclude that the District Court did not
commit plain error in applying the “special skill” enhancement on these facts.
V.
In sum, we reject Naselsky’s challenge to the sufficiency of the evidence as to his
convictions on Counts Five, Six, and Seven of the indictment, and conclude that the
District Court committed no error in applying sentencing enhancements for abuse of trust
and use of a special skill. We will affirm the conviction and sentence.
13