United States v. David Mark ( 2015 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 13-10579
Plaintiff-Appellee,
D.C. No.
v. 2:11-cr-00453-
PMP-CWH-1
DAVID M. MARK,
Defendant-Appellant. OPINION
Appeal from the United States District Court
for the District of Nevada
Philip M. Pro, Senior District Judge, Presiding
Argued and Submitted
March 9, 2015—San Francisco, California
Filed July 31, 2015
Before: M. Margaret McKeown, Mary H. Murguia, and
Michelle T. Friedland, Circuit Judges.
Opinion by Judge Friedland;
Concurrence by Judge McKeown
2 UNITED STATES V. MARK
SUMMARY *
Criminal Law
The panel reversed the district court’s denial of the
defendant’s motion to reconsider its denial of the
defendant’s motion to dismiss the indictment, and
remanded with instructions to dismiss the indictment, in a
case in which the parties agreed that the defendant was
given immunity in exchange for his cooperation in a
mortgage-fraud investigation.
The panel held that in light of the scant record
supporting the government’s claim that the defendant
breached the immunity agreement (and was therefore
amenable to prosecution) and clear evidence that key
details of the government’s story were inaccurate, the
district court abused its discretion when it failed to either
grant the defendant’s motion for reconsideration or order an
evidentiary hearing.
Concurring, Judge McKeown wrote separately to
emphasize that this case is a textbook lesson in the
importance of documentation with regard to immunity
deals.
*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
UNITED STATES V. MARK 3
COUNSEL
Michael S. Fawer (argued), Smith & Fawer, Covington,
Louisiana, for Defendant-Appellant.
Peter S. Levitt (argued), Assistant United States Attorney,
Daniel G. Bogden, United States Attorney, Elizabeth O.
White, Appellate Chief, United States Attorney’s Office,
Las Vegas, Nevada, for Plaintiff-Appellee.
OPINION
FRIEDLAND, Circuit Judge:
When the government promises not to prosecute a
witness in exchange for his cooperation, it cannot then
indict the witness unless it proves that he failed to
cooperate. Because the government did not do so here, we
remand with instructions to dismiss the indictment.
I.
From 2006 to 2007, Defendant David Mark and his
then-girlfriend Kimberly Brown were employed by
Distinctive Real Estate and Investments, a company run by
Eve Mazzarella in Las Vegas. During Mark’s tenure, the
FBI began investigating Distinctive Real Estate,
Mazzarella, and her husband Steven Grimm in connection
with a large-scale mortgage-fraud scheme.
In November 2007, Brown and Mark voluntarily
reached out to the FBI and provided information to assist in
its investigation. A few months later, in March 2008,
Assistant U.S. Attorney Brian Pugh interviewed Brown and
Mark to determine whether they would be good witnesses
in a potential trial against Grimm and Mazzarella. At the
4 UNITED STATES V. MARK
end of this interview, Mark expressed concern about what
was going to happen to him. Pugh assured Mark and
Brown that, as long as they cooperated with the
government, they would not be prosecuted. Pugh later
acknowledged that his statement created informal immunity
agreements with both witnesses. 1
In February 2011, Pugh called Mark to go over his
testimony in preparation for the upcoming Mazzarella-
Grimm trial. Assistant U.S. Attorney Sarah Griswold and
an FBI agent also participated in the call, which was made
to Mark’s cell phone and lasted approximately an hour.
The FBI agent produced a report memorializing the
discussion. For reasons unrelated to Mark, the trial was
later postponed, so he was not called to testify.
In August 2011, Mark received a target letter informing
him that he faced the possibility of indictment in
connection with the mortgage-fraud scheme. In response to
the letter, Mark hired an attorney who immediately
contacted the prosecutors to set up a meeting. After
unsuccessful plea negotiations during which Mark’s
immunity deal was never mentioned, Mark was charged
with five counts of bank fraud; one count of mail fraud; and
one count of conspiracy to commit bank fraud, mail fraud,
and wire fraud.
Mark’s trial began in March 2013. During Kim
Brown’s testimony, she explained that in 2008 Pugh had
promised her and Mark immunity from prosecution as long
1
Brown’s immunity agreement was at issue in United States v.
Mazzarella, 784 F.3d 532, 538 (9th Cir. 2015).
UNITED STATES V. MARK 5
as they cooperated with the government. According to
Mark’s attorney, this was the first time he had heard about
Pugh’s promise. Three days later, Mark filed a motion to
dismiss the indictment based on the informal immunity
agreement.
The district court suspended the trial and held a hearing
to determine whether Mark was immune from prosecution.
Pugh and Griswold both testified that they called Mark in
July 2011 to go over his testimony in preparation for the
rescheduled Mazzarella-Grimm trial. The prosecutors
recounted that, unlike when they spoke to Mark in February
2011, Mark was suddenly uncooperative and pretended not
to remember anything. Pugh explained that they initiated
the July 2011 call “us[ing] a speakerphone” in a conference
room in the U.S. Attorney’s Office, and reached Mark “at
his telephone number that [they] had from prior
interviews,” an account with which Griswold agreed. Pugh
further testified that an FBI agent was present during the
call, and that, although he could not specifically remember
which agent it was, he “believe[d] it was Sean Jones,
because [Jones] was the case agent at the time.” Agent
Jones testified, however, that he could not recall being part
of a July 2011 phone call. Pugh acknowledged that the
U.S. Attorney’s Office had no notes or other records of the
call, but he testified that he sent the August 2011 target
letter in response to the call. Mark, on the other hand,
testified that the July call never occurred, and that he had
no calls with Pugh between February and his receipt of the
target letter in August.
Ruling from the bench, the district court denied Mark’s
motion to dismiss. The judge credited the testimony of
Pugh and Griswold and found that the July call happened as
they described.
6 UNITED STATES V. MARK
Mark’s trial continued. At the conclusion of the trial,
the jury convicted Mark on multiple counts.
Shortly thereafter, Mark sought reconsideration of his
motion to dismiss the indictment based on new evidence.
After hearing the prosecutors’ testimony about the alleged
July call, Mark had subpoenaed phone records between the
U.S. Attorney’s Office and Mark’s cell phone, and had now
received those records. Although the records confirmed the
February call, there were no entries showing a call to Mark
in July. Mark argued that the new evidence undermined
the prosecutors’ testimony and that the district court
therefore should reconsider its denial of the motion to
dismiss.
The district court denied Mark’s motion to reconsider,
holding that there were “no sufficient grounds presented to
warrant [a] further evidentiary hearing or reconsideration of
[the] Court’s previous Order denying Defendant’s motion
to dismiss.”
II.
A. Standard of Review
We review rulings on reconsideration motions for abuse
of discretion. See United States v. Tapia-Marquez,
361 F.3d 535, 537 (9th Cir. 2004). A district court abuses
its discretion if it does not apply the correct legal standard
or if it rests its decision on a clearly erroneous finding of
fact. See United States v. Hinkson, 585 F.3d 1247, 1261-62
(9th Cir. 2009) (en banc).
B. Analysis
The parties agree that Mark was given immunity in
exchange for his cooperation. The dispute here is whether
UNITED STATES V. MARK 7
Mark breached the immunity agreement and thus made
himself amenable to prosecution.
In order to deny the motion to dismiss the indictment,
the district court had to find that Mark breached the
immunity agreement. See United States v. Carrillo,
709 F.2d 35, 37 (9th Cir. 1983) (“[B]ecause [the defendant]
fulfilled all . . . obligations under the agreement, under
settled notions of fundamental fairness the government was
bound to uphold its end of the bargain.”). As the
government conceded at oral argument, it had the burden of
proving that Mark breached. See United States v. Fitch,
964 F.2d 571, 574 (6th Cir. 1992) (“If [an immunity]
agreement has been entered into, the government bears the
burden of proving that the defendant failed to satisfy his
part of the deal.”); see also United States v. Packwood,
848 F.2d 1009, 1011 (9th Cir. 1988) (holding that the
government has the burden of proof to show breach of a
plea agreement). The government must prove a breach of
an immunity agreement by a preponderance of evidence.
See United States v. Castaneda, 162 F.3d 832, 836 (5th Cir.
1998); United States v. Meyer, 157 F.3d 1067, 1078 (7th
Cir. 1998); United States v. Gerant, 995 F.2d 505, 508 (4th
Cir. 1993); see also Packwood, 848 F.2d at 1011 (requiring
that the government show the defendant breached a plea
agreement by a preponderance of evidence).
Initially, the district court accepted the prosecutors’
account that Mark suddenly became uncooperative during a
July call—an account that did, when credited, support the
finding that Mark had breached the immunity agreement.
In his motion to reconsider, however, Mark presented
phone records that contradicted the prosecutors’ testimony
about the July call. The district court did not explain why,
despite the new phone records, it chose not to hold a further
evidentiary hearing or otherwise reconsider its earlier order
8 UNITED STATES V. MARK
denying the motion to dismiss. In light of the scant record
supporting the government’s claim of a breach and clear
evidence that key details of the government’s story were
inaccurate, the district court abused its discretion when it
failed to either grant Mark’s motion for reconsideration or
order an additional evidentiary hearing.
The government’s only evidence of breach was
testimony by Pugh and Griswold that Mark became
uncooperative during a July 2011 phone call. The
prosecutors testified that they and an FBI agent made the
call to Mark’s cell phone from a speakerphone in a
conference room at the U.S. Attorney’s Office. That
account, however, is directly contradicted by the phone
records that Mark presented in his motion to reconsider.
The records show that there were no calls between the U.S.
Attorney’s Office and Mark’s cell phone during the month
of July.
The absence of phone records corroborating the July
call stands in stark contrast with the February call. Both
sides agree that Pugh, Griswold, and an FBI agent
interviewed Mark over the phone in February 2011 in
preparation for the Mazzarella-Grimm trial. The phone
records show a call on February 1 from the U.S. Attorney’s
Office to Mark’s cell phone that lasted approximately an
hour, as well as several shorter calls the day before.
The February conversation was also memorialized in a
report prepared by the FBI agent who participated in that
call. The July call, on the other hand, which purportedly
had the same trial-preparation purpose, was not
memorialized by the prosecutors or by any FBI agent. The
government did not dispute at oral argument that the usual
practice in the U.S. Attorney’s Office was to keep notes
during any such interview. Here, however, there are no
UNITED STATES V. MARK 9
notes from a July call, and the FBI case agent at the time
testified that he had no recollection of such a call. The
government has failed to supply an explanation for either of
these gaps in the record.
The government also did not dispute at oral argument
that a target letter to a witness who previously had an
immunity deal would ordinarily describe the defendant’s
breach. But the target letter Mark received does not
mention a July call, or any other instance of a breach, to
explain why the government suddenly considered Mark a
target rather than a cooperating witness.
Perhaps at a further evidentiary hearing the prosecutors
could have reconciled their recollections that a call
happened with all of the apparent evidence to the contrary.
But the government has urged us not to remand for an
evidentiary hearing and instead has expressed a desire to
stand on the existing record. When asked whether
remanding the case for a further evidentiary hearing would
be appropriate, the government attorney stated: “I can’t
imagine that at a further evidentiary hearing . . . that
anything else is going to get unearthed.” When pressed
further on whether the government would “stake its claim”
on the existing record, he answered “correct.” We
therefore evaluate whether, on the current record, the
government met its burden of proving that Mark breached.
The government’s only affirmative evidence of a
breach is the testimony of Pugh and Griswold, which was
directly contradicted by the phone records. This is
insufficient to prove that Mark stopped cooperating during
a July call, particularly in light of the lack of any notes
memorializing a call or any mention of a call in the target
letter. This is troubling because the government made clear
at oral argument that it is the typical practice of the office
10 UNITED STATES V. MARK
to keep such records. 2 Cf. Fed. R. Evid. 803(7) (providing
that the “Absence of a Record of a Regularly Conducted
Activity” may be evidence that “the matter did not occur or
exist”). In light of the gaps and contradictions in the
record, the district court’s failure to either grant Mark’s
motion for reconsideration or order an additional
evidentiary hearing was an abuse of discretion. 3
III.
For the foregoing reasons, we reverse the district
court’s denial of Mark’s motion to reconsider and remand
with directions to dismiss the indictment.
REVERSED and REMANDED.
McKEOWN, Circuit Judge, concurring:
The opinion, which I join in full, aptly describes why
the government failed to meet its burden of proving that
Mark breached his informal immunity agreement with
federal prosecutors. I write separately to emphasize that
2
At oral argument, the government also acknowledged that it had
searched the phone records for calls between the U.S. Attorney’s Office
and any number in Louisiana, which is where Mark’s cell phone was
registered and where he had lived after leaving Las Vegas, but had
found nothing.
3
Mark raised two other issues on appeal. Because we are remanding
with instructions to the district court to dismiss the indictment, we need
not reach those additional issues.
UNITED STATES V. MARK 11
this case is a textbook lesson in the importance of
documentation with regard to immunity deals. When it
comes to proving breach of an immunity agreement, the
government should do better than “he said, she said.”
The government routinely enters into agreements in
which it promises leniency in exchange for cooperation
with an investigation or prosecution. The threshold
question of whether a deal was made in the first place is
often the subject of dispute. See, e.g., United States v.
Aleman, 286 F.3d 86, 90 (2d Cir. 2002) (noting the parties’
“failure to agree on the existence” of an agreement); United
States v. Thompson, 25 F.3d 1558, 1562 (11th Cir. 1994)
(evaluating an “alleged oral grant of immunity”). Here, the
government candidly acknowledges it made such an
agreement directly with Mark, though it inexplicably failed
to disclose the existence of the agreement to his counsel,
who learned about it by happenstance while questioning
another witness at Mark’s trial.
Granting immunity is a big deal. Claiming that a
defendant breached the agreed-upon terms is an equally big
deal. Prosecuting someone who was previously granted
immunity implicates “more . . . than just the liberty of [a]
defendant. At stake is the honor of the government[,]
public confidence in the fair administration of justice, and
the efficient administration of justice in a federal scheme of
government.” United States v. Carter, 454 F.2d 426, 428
(4th Cir. 1972) (en banc). Failure to document the breach,
even with something as simple as a file note, a memo, or a
reference in the target letter is dumbfounding. See United
States v. Harvey, 869 F.2d 1439, 1443 (11th Cir. 1989) (en
banc) (“[T]his appeal would not be necessary had the
United States Attorneys . . . reduced their agreement . . . to
writing.”).
12 UNITED STATES V. MARK
When the government alleges breach stemming from
the failure to cooperate sufficiently, a typical response is
that the defendant complied with the literal terms of the
deal. See, e.g., Ricketts v. Adamson, 483 U.S. 1, 11 (1987)
(noting that the defendant’s argument that his plea
agreement did not require him to testify was “an
interpretation of the agreement that proved erroneous”);
United States v. Floyd, 1 F.3d 867, 868-70 (9th Cir. 1993)
(highlighting the difference between an agreement that
requires a defendant to “testify fully and truthfully” and an
agreement that requires her to “cooperate”); United States
v. Irvine, 756 F.2d 708, 710-11 (9th Cir. 1985) (per curiam)
(holding that defendant’s malfeasance constituted a breach
notwithstanding his accurate “testimony” because the
agreement proscribed any and all “deception”). This case
tracks that pattern in the broadest sense: Mark claims that
he complied with the terms of his immunity agreement by
cooperating with the government’s investigation, while the
prosecutors maintain that he breached by giving evasive
and contradictory answers to their questions.
In its details, however, this case is far from typical.
Specifically, the government claims that Mark breached the
immunity agreement during a July 2011 phone call with
two Assistant United States Attorneys and an FBI agent.
Unlike a defendant who attempts to characterize his less-
than-complete cooperation as compliance with the literal
terms of an agreement, Mark disputes the very event—the
phone call—that prosecutors assert is the genesis of the
breach. Mark says that this phone call never took place at
all.
The government bears the burden of proving the
breach. Slip Op. 7. When confronted with contradictory
evidence about whether a breach occurred, the district court
must make factual findings about the defendant’s
UNITED STATES V. MARK 13
compliance. See Floyd, 1 F.3d at 871. As a threshold
matter, the government needed to prove that a call between
prosecutors and Mark took place in July 2011. Absent a
phone call, the claim of breach collapses. Two prosecutors
testified that they and an FBI agent called Mark. Mark
denied that the call took place, and the FBI agent testified
that he had no recollection of the call. While the district
court is generally entitled to base its rulings on the
credibility of witnesses, this case takes on a different patina
due to the absence of any documentary evidence about the
call itself, let alone the content of the supposed breach.
It is undisputed that the prosecutors spoke with Mark in
February 2011 as part of their preparation for the
Mazzarella-Grimm trial. Fast forward only five months
and the prosecutors were in the throes of preparing for the
trial that had been continued. In contrast to the well-
documented February call, which was memorialized in
phone records and a follow-up memo by an FBI agent, the
purported July call yielded no records. It is difficult to
conceive that a trial preparation call involving two
attorneys, one FBI agent, and a key witness in a multi-
million dollar fraud case would not trigger a substantial
paper trail or at least a scrap of documentary evidence. But
here, neither the prosecutors nor the FBI could find any
notes, correspondence, or other documents verifying that a
call had taken place, let alone the results of the call. See
Harvey, 869 F.2d at 1443 (describing the government’s
failure to take notes during witness interviews as
“astonishing”). The only near-contemporaneous document
the government produced—the target letter sent to Mark in
August 2011—contains no reference to a July call. The
absence of any notes or documentation coupled with
complete silence in the target letter is nothing short of
remarkable.
14 UNITED STATES V. MARK
In light of this abysmal record, the district court was
forced to base its ruling on little more than a swearing
contest. Interestingly, the swearing contest pitted the
prosecutors against not just Mark but also an FBI agent
who had no recollection of the call. Significantly, the court
did not make an adverse credibility finding regarding Mark.
Following the district court’s initial ruling, Mark requested
that the government produce phone records to corroborate
that the call took place. In response, the government for
the first time attempted to reconstruct evidence of the call.
The government’s belated search for phone records,
however, demonstrated that the central details of the
prosecutors’ testimony were inaccurate: no call was placed
from the United States Attorneys’ office to Mark’s cell
phone in July 2011. At that point, the district court should
have dismissed the indictment or granted a new evidentiary
hearing. Notably the government has now eschewed any
suggestion of another evidentiary hearing.
Whenever a defendant is prosecuted after having been
given immunity, it is eminently foreseeable that he will
advance every legitimate argument that his immunity
should have remained intact. Cases involving oral grants of
immunity and undocumented breaches “create confusion
for the government and for the courts.” Harvey, 869 F.2d
at 1443. Contemporaneous documentation is thus critical
to detail the scope and terms of the agreement and equally
critical to establish whether a breach occurred. Setting up a
claim of breach without any documentation puts the court
and counsel in the unenviable position of reconstructing a
breach solely through a swearing contest and a hypothetical
reimagining of events. To be sure, the government holds
the cards in such a situation. But when the defendant’s
liberty rests on those cards, common sense, fairness, and
confidence in the system demand more. I therefore concur
UNITED STATES V. MARK 15
in the opinion remanding with instructions to dismiss the
indictment.