United States v. Solomon ( 2001 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_______________
m 00-11210
Summary Calendar
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UNITED STATES OF AMERICA,
Plaintiff-Appellee,
VERSUS
TEDDY WAYNE SOLOMON,
Defendant-Appellant.
_________________________
Appeal from the United States District Court
for the Northern District of Texas
(3:98-CR-299-1-X)
_________________________
September 21, 2001
Before JONES, SMITH, and Teddy Solomon appeals his convictions of
EMILIO M. GARZA, Circuit Judges. mail and wire fraud under 18 U.S.C. §§ 1341
and 1343 (2001). Finding no error, we affirm.
PER CURIAM:*
I.
Based on complaints concerning Solomon’s
investment program, the FBI, the Securities
*
and Exchange Commission (“SEC”), and the
Pursuant to 5TH CIR. R. 47.5, the court has
Texas State Securities Board conducted an
determined that this opinion should not be
investigation of Quantum Group, which listed
published and is not precedent except under the
limited circumstances set forth in 5TH CIR. R. Solomon as its president and CEO. After
47.5.4. being questioned by undercover agents about
his investment program, Solomon represented III.
that investments with Quantum would yield a Solomon argues that the court erred in al-
900% return over three months. lowing the government to include his prior
conviction in the indictment,2 because that
The agents then revealed their identities and conviction was not a necessary element of the
questioned Solomon about his investment offense as charged. We review only for abuse
scheme. He admitted that he had made false of discretion the decision whether to strike
representations and that he falsely had told allegations from an indictment. United States
investors that Quantum had made profits v. Hernandez-Guevara, 162 F.3d 863, 869
through its trading programs. The agents told (5th Cir. 1998); United States v. Graves, 5
Solomon that the trading programs he had ad- F.3d 1546, 1550 (5th Cir. 1993).
vertised did not exist, that he was not author-
ized to offer securities, and that he needed to Rule 7(d), FED R. CRIM P., provides that
cease operations. Solomon, however, contin- “[t]he Court on motion of the defendant may
ued to do business at Quantum, even after the strike surplusage from indictment or infor-
federal district court had issued a temporary mation.” To strike surplusage, the language in
restraining order to cease operations. the indictment must be “irrelevant, inflamma-
tory, and prejudicial.” Graves, 5 F.3d at 1550
At trial, one of Solomon’s employees tes- (citing United States v. Bullock, 451 F.2d 884,
tified as a government witness concerning false 888 (5th Cir. 1971)). Because this standard is
representations Solomon had made during the strict, a court rarely grants such a motion. See
course of his scheme. Several investors Bullock, 451 F.2d at 888; United States v.
testified about the money they lost. FBI agent Oakar, 111 F.3d 146, 157 (D.C. Cir. 1997);
Brian Hurst testified that some investors had see also 1 CHARLES A. WRIGHT, FEDERAL
received money back as part of a Ponzi PRACTICE AND PROCEDURE § 127, at 639 (3d
scheme and that Solomon had used the in- ed. 1999).
vestor deposits for personal expenditures, in-
cluding purchases of luxury automobiles and Where information in an indictment is suf-
had used none of the disbursements for ficiently relevant to the charged offense, the
legitimate trading programs. Phil Offil of the
SEC testified about the fraudulent nature of
2
Solomon’s trading program and described the The indictment alleged as follows:
operation as a Ponzi scheme. Investors depos-
ited approximately $4 million in Quantum’s Also, as part of the scheme and artifice
bank accounts between May and October to defraud Defendant Solomon and Stevens
1997. failed to notify investors that Defendant
Solomon was convicted in 1994 on federal
charges of mail fraud and possession of a
II. forged security, and that he had been
A jury found Soloman guilty. The court sentenced to twenty-four (24) months in
departed upward from the sentencing guide- prison followed by three years of supervised
lines and assessed 293 months’ imprisonment, release. The defendants were required to
five years’ supervised release, $2,357,701.94 make these disclosures to potential investors
in restitution, and a fine of $150,000. as a condition of offering and selling
securities to the public.
2
court should not strike it, no matter how 177, 191 (5th Cir.), cert. denied, 531 U.S. 826
prejudicial it may be. United States v. Scarpa, (2000).
913 F.2d 993, 1013 (2d Cir. 1990); United
States v. Edwards, 72 F. Supp. 2d 664, 667 A mail or wire fraud indictment must allege
(M.D. La. 1999), appeal dismissed, 206 F.3d that the defendant made false representations
461 (5th Cir. 2000). The mere fact that infor- that were material. Neder, 527 U.S. at 25. A
mation in an indictment does not constitute an matter is material if
element of the charged offense does not re-
quire that it be stricken. Id. (citation omitted). (a) a reasonable man would attach im-
portance to its existence or nonexistence
Solomon’s prior conviction was sufficiently in determining his choice of action in the
relevant to the mail and wire fraud indict- transaction in question; or (b) the maker
ments.3 Thus, the court did not abuse its of the representation knows or has
discretion. reason to know that its recipient regards
or is likely to regard the matter as
IV. important in determining his choice of
Solomon contends that the indictment was action, although a reasonable man
defective because it failed to allege the mate- would not so regard it.
riality element required for establishing mail
and wire fraud. He reasons that the indictment Id. at 22 n.5 (quoting RESTATEMENT
failed to “tie a particular mailing or wire (SECOND) OF TORTS § 538 (1977)).
transfer to any specified false represen-
tation(s).” Normally, we review the sufficien- In determining the sufficiency of an in-
cy of an indictment de novo. United States v. dictment, the law does not compel “a ritual of
Fitzgerald, 89 F.3d 218, 221 (5th Cir. 1996). words.” Richards, 204 F.3d at 191. Though
Because Solomon did not raise this objection the indictment did not contain the word “mate-
in the district court, however, we review this riality,” it did allege many specific material
issue giving “maximum liberality” to the in- omissions and misrepresentations made by
dictment. United States v. Richards, 204 F.3d Solomon. In a mail fraud indictment that does
not specifically allege materiality, allegations
of specific facts may be sufficient to warrant
3
Materiality of falsehood is an element of the the inference of materiality. Richards, 204
mail and wire fraud offenses. Neder v. United F.3d at 192; United States v. McGough, 510
States, 527 U.S. 1, 25 (1999). One can demon- F.2d 598, 603 (5th Cir. 1975). Solomon’s
strate fraud by a material misrepresentation or indictment alleged specific facts by plainly stat-
omission. United States v. Finney, 714 F.2d 420, ing that the investment scheme relied on
423 (5th Cir. 1983). The government contends
misrepresentations and that “as a result of the
that Solomon was required to disclose his prior
conviction as an SEC licensing requirement. Be-
aforementioned scheme and artifice to defraud,
cause we conclude that Solomon’s convictions investors . . . lost in excess of $1 million.”
were sufficiently relevant to be included in the
indictment, we express no view on the issue of V.
whether Solomon’s failure to disclose his prior Solomon avers that the district court erred
conviction to investors constituted a material by allowing him to go to trial with the lawyers
omission for the offenses of wire and mail fraud.
3
he chose. The court allowed him to substitute spective juror for cause.
counsel on the eve of trial; he does not aver
that the court erred in denying a continuance. A court may excuse for cause any juror
Instead, he contends that the court should who is incapable, by reason of mental or
have advised him of the risks of proceeding physical infirmity, to render satisfactory ser-
with substitute, unprepared counsel. Because vice. 28 U.S.C. § 1865(b)(4) (2001). A court
Solomon did not challenge these matters in the has broad discretion to determine whether to
district court, we review for plain error. See excuse a juror for cause. United States v.
United States v. Richardson, 168 F.3d 836, Gonzalez-Balderas, 11 F.3d 1218, 1222 (5th
839 n.9 (5th Cir.), cert. denied, 526 U.S. 1145 Cir. 1994). Thus, we reverse only for abuse of
(1999). discretion. Id. The court properly exercised
its discretion in concluding that the prospec-
Solomon cites no authoritySSand we know tive juror’s mental condition prevented him
of noneSSrequiring a court to advise a criminal from rendering satisfactory service. This
defendant of the perils of proceeding with determination finds substantial support in the
substitute counsel after the court has granted record.
a motion for substitution of counsel. Having
made the motion for substitution, Solomon VII.
should have realized the risks inherent in Solomon contends that the court violated
substituting counsel.4 the Sixth Amendment by unduly restricting his
lawyer’s cross-examination of Lisa Stevens,
VI. Solomon’s co-defendant. We review restric-
Solomon argues that the court abused its tions on cross-examination for abuse of discre-
discretion by granting the government’s chal- tion. United States v. Freeman, 164 F.3d 243,
lenge of a juror for cause. The prospective 249 (5th Cir.), cert denied, 526 U.S. 1105
juror suffered from an obsessive compulsive (1999). If we find abuse, we employ the
disorder that he said affected him adversely harmless error doctrine. United States v.
from time to time. To alleviate this condition, Townsend, 31 F.3d 262, 268 (5th Cir. 1994).
the juror took medication and received treat- To obtain relief for an unduly limited cross-
ment from a psychiatrist. The court asked the examination, “a defendant must show that the
juror whether he would be able to focus suf- restrictions were [plainly] prejudicial, based on
ficiently on the case. He responded that the overall strength of the prosecution’s case,
“[t]here’s no way to know. Most of the time, the circumstances surrounding the challenged
yes, I’d be able to focus on the case.” The testimony, the importance of that testimony,
government successfully challenged that pro- and its corroboration or contradiction
elsewhere at trial.” United States v. Gray, 105
F.3d 956, 965 (5th Cir. 1997) (quotation
4
Cf. United States v. Kizzee, 150 F.3d 497,
marks omitted).
500 (5th Cir. 1998) (concluding that there was a
fair trial after the court let defendant assume his During cross-examination, Solomon’s law-
own defense); United States v. Jackson, 50 F.3d yer asked Stevens why her sentencing had
1335, 1340 n.6 (5th Cir. 1995) (declining to find a been postponed. Counsel intimated that the
Fifth Amendment due process violation where government had postponed sentencing because
lawyer had seven days to prepare for trial).
4
it did not trust her until she had testified. She mit fraud.”5 Specific intent concerns willful
responded that her pregnancy had caused the and knowing engagement in criminal behavior,
delay. At that point, the court stated that the while general intent concerns willful and
question was wholly conjectural and told knowing acts. United States v. Berrios-Cen-
counsel to ask a question for which Stevens teno, 250 F.3d 294, 298-99 (5th Cir. 2001).
would know the answer. In another instance, Because its instruction made plain that a find-
Solomon’s lawyer attempted to question ing of guilt required the conclusion that Solo-
Stevens regarding her involvement in a mon intended to commit the criminal act of
separate business entity. The government ob- fraud, the court did not commit plain error in
jected on relevance grounds, but the court formulating the jury instruction.
allowed Solomon to proceed “for a little bit”
before ending that inquiry. IX.
Solomon contends that the upward depar-
We are hard-pressed to find abuse of dis- ture from the sentencing guidelines was un-
cretion in limiting the cross-examination. Both reasonable. We review an upward departure
lines of questions constituted nothing more for abuse of discretion. Koon v. United States,
than “fishing expeditions.” The court allowed 518 U.S. 81, 98 (1996); United States v.
Solomon’s lawyer to cross-examine Stevens in Nevels, 160 F.3d 226, 229 (5th Cir. 1998).
a manner consistent with the Sixth Federal sentencing guidelines establish ranges
Amendment. Pursuant to its discretion, how- of criminal sentences. Koon, 518 U.S. at 85.
ever, the court placed limitations on cross- A court must impose a sentence within the
examination to prevent irrelevant discussion. applicable guideline range if it finds the case to
See, e.g., United States v. Perez, 217 F.3d be typical of the sort envisioned by the
323, 330 (5th Cir.), cert. denied, 531 U.S. 973 guidelines. Id. Should the court find the case
(2000). Solomon does not show how the to be atypical because of “aggravating or miti-
court’s instruction to his lawyer to conduct a gating circumstance[s] of a kind, or to a de-
relevant and timely cross-examination done gree, not adequately taken into consideration
was “[plainly] prejudicial.” Gray, 105 F.3d at by the Sentencing Commission in formulating
965. the guidelines,” the court may depart from the
guidelines and impose a sentence that is great-
VIII. er than what the guidelines prescribe. 18
Solomon argues that the court erred by not U.S.C. § 3553(b) (2001).
giving a definition of the term “specific intent”
as part of the jury instruction. Because In Koon, the Court outlined the questions a
Solomon did not object, we review for plain
error. Richardson, 168 F.3d at 839 n.9.
Though it did not present a definition of “spe- 5
The court defined “knowingly” as an act
cific intent,” the court instructed the jury that, “done voluntarily and intentionally, not because of
to find Solomon guilty, it would have to find mistake or accident.” The court defined “inten-
that he acted with “the specific intent to com- tionally” to mean “that the act was committed vol-
untarily and purposefully” and that it is “rea-
sonable to draw the inference and find that a person
intends the natural and probable consequences of
acts done or knowingly omitted.”
5
court should address in considering a de- X.
parture: Solomon avers that the district court imper-
missibly “double counted” when it assessed an
1) what features of this case take upward departure and sentencing enhance-
it outside of the guidelines’ ments for mass marketing, use of sophisticated
“heartland” and make of it a means, more than minimal planning, and abuse
special or unusual case? of a position of trust. We note, initially, that
the court did not apply the mass marketing and
2) has the sentencing commission abuse-of-position-of-trust-enhancements.
forbidden departures based on Thus, these two enhancements did not
those features? constitute double counting. We normally
review a court’s interpretation of sentencing
3) if not, has the commission en- guidelines de novo. United States v. Loe, 248
couraged departures based on F.3d 449, 463 (5th Cir.), clarified, 255 F.3d
those features? 228 (5th Cir. 2001). Solomon did not object
to the mo re-than-minimal-planning
4) if not has the commission dis- enhancement or the use-of-sophisticated-
couraged departures based on means enhancement. Accordingly, we review
those features? the application of these enhancements for plain
error. Richardson, 168 F.3d at 839 n.9.
Koon, 518 U.S at 95. Should the court depart
from the guidelines, it must state “the specific Double counting is permissible where
reason for the imposition of a sentence outside “[e]ach enhancement targets different aspects
the guideline range.” § 3553(c)(2). of a defendant’s behavior.” United States v.
Scurlock, 52 F.3d 531, 540 (5th Cir. 1995).
The court elaborated on the features that Solomon’s conduct involved more than mini-
took this case outside the guidelines’ “heart- mal planning, because it entailed repeated acts
land,” noting that Solomon’s prior convictions over a period of time and numerous victims.
were similar to the current conviction, which Solomon’s conduct involved sophisticated
indicated a great likelihood of recidivism. meansSSshell companies, offshore bank ac-
Solomon’s conduct involved violating the trust counts, supposed international securities trad-
of numerous victims and swindling them of ers, Ponzi transactions, and professionally de-
millions of dollars. He violated a court order signed offering documents. The challenged
to cease and desist from engaging in fraud, enhancements and departures may overlap in
continued to operate his scheme even after his some regards. When one compares the ex-
arrest and conviction, and made veiled threats planations given for each application, however,
to the prosecutor after his conviction. The it is apparent that they measure different
court did not abuse its discretion in granting an aspects of Solomon’s behavior. Accordingly,
upward departure.6 the court did not commit plain error.
AFFIRMED.
6
See Nevels, 160 F.3d at 229-30; United States
v. Rosogie, 21 F.3d 632 (5th Cir. 1994).
6