United States v. Sine ( 2007 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA,  No. 05-10575
Plaintiff-Appellee, D.C. No.
v.
 CR-02-00079-FCD
WESLEY SINE, ORDER AND
Defendant-Appellant. AMENDED
 OPINION
Appeal from the United States District Court
for the Eastern District of California
Frank C. Damrell, District Judge, Presiding
Argued and Submitted
September 11, 2006—San Francisco, California
Filed May 1, 2007
Amended July 17, 2007
Before: Betty B. Fletcher and Marsha S. Berzon,
Circuit Judges, and David G. Trager,* District Judge.
Opinion by Judge Berzon
*The Honorable David G. Trager, Senior United States District Judge
for the Eastern District of New York, sitting by designation.
8527
UNITED STATES v. SINE 8531
COUNSEL
Russell A. Cline, Crippen & Cline, Salt Lake City, Utah, for
the defendant-appellant.
John K. Vincent, Assistant United States Attorney, Sacra-
mento, California, for the plaintiff-appellee.
ORDER
The government’s Motion to Change Wording of Opinion
is GRANTED. The opinion filed on May 1, 2007 is hereby
amended as follows:
1) On slip op. 4792, the final two sentences of the para-
graph beginning “This appeal arises . . .” are replaced with:
“Such use of the judge’s statements both created far too great
a danger of unfairly prejudicing Sine and introduced imper-
missible hearsay into the trial.”
2) On slip op. 4795, the sentence beginning “Also, Sine
sued . . .” is replaced with: “Also, Sine sued Meddles and Del-
marva in Utah again in 2001, this time in both state and fed-
eral court, along with two entities, Polly & Co. and Hare &
Co., that were the true owners of the Ginnie Mae securities
referenced in the transfer forms.”
3) On slip op. 4811, the sentence beginning “Sine argues
. . .” is replaced with: “Sine argues that bringing the adverse,
8532 UNITED STATES v. SINE
derogatory factual findings and comments in Judge Carr’s
opinion before the jury created too great of a danger of unfair
prejudice and thus violated Rule 403 of the Federal Rules of
Evidence.”
***
The panel has unanimously voted to deny defendant’s peti-
tion for rehearing. Judge Berzon has voted to deny the peti-
tion for rehearing en banc. Judge B. Fletcher and Judge
Trager have recommended denial of the petition for rehearing
en banc.
The full court has been advised of the petition for rehearing
en banc, and no judge has requested a vote on whether to
rehear the matter en banc. Fed. R. App. P. 35.
The defendant’s petition for rehearing or rehearing en banc
is DENIED. No further petitions for rehearing or rehearing en
banc will be accepted.
OPINION
BERZON, Circuit Judge:
Defendant Wesley Sine, a Utah lawyer, helped run a pyra-
mid scheme that defrauded victims of more than two million
dollars. Sine’s role in the scheme was to reassure individuals
that they were lending money to a legitimate real estate inves-
tor and that millions of dollars in legitimate collateral pro-
tected them in case of default. Once the scheme started to
unravel and it became clear that the collateral was worthless,
Sine began to weave a “good faith” defense to his actions,
claiming that it was as much of a surprise to him as to any-
body else that the collateral was illusory. To give credence to
this story, Sine filed a number of lawsuits that purported to be
UNITED STATES v. SINE 8533
seeking recovery of the value of the collateral. Ultimately,
however, these lawsuits just added to Sine’s troubles: An
Ohio federal district court rejected his factual claims, enjoined
his recovery efforts, held him in contempt, and denounced on
the record his “chicanery, mendacity, deceit, and pretense.”
This appeal arises from the criminal prosecution of Sine
and his co-defendant Darra Panthaky, the mastermind of the
fraud scheme, commenced in a California federal district
court after the scheme unraveled.1 During cross-examination
of various defense witnesses — including Sine, who testified
in his own defense — the government repeatedly referred to
the factfinding and derogatory character assessments of the
Ohio court. By doing so, the government created a substantial
risk that the jury would pay undue and unwarranted attention
to the strongly adverse assessment of a figure, the Ohio judge,
who never appeared in the courtroom but who the jury likely
assumed had both authority and expertise with regard to
determining the true course of events and to making credibil-
ity determinations. Such use of the judge’s statements both
created far too great a danger of unfairly prejudicing Sine and
introduced impermissible hearsay into the trial.
Sine did not, however, object during the trial to the use of
the judge’s observations. The government presented such
strong admissible evidence of his guilt that, even without con-
sidering the Ohio court’s decision, we cannot find plain error
warranting reversal. We therefore affirm.
I.
Panthaky masterminded a wildly imaginative, bizarrely
complex pyramid scheme in the late 1990s and early 2000s:
First, he convinced victims that they were lending money to
1
We deal with Sine’s non-evidentiary claims, as well as the claims of
Panthaky, in a memorandum disposition filed concurrently with this opin-
ion.
8534 UNITED STATES v. SINE
fund various real estate projects conducted by Alpha Funding
Group, Inc. (“Alpha”), of which Panthaky was president. In
making his pitch, Panthaky represented himself as a wealthy
international financier and humanitarian who had led Alpha to
great success, and promised potential “lenders” between
twenty and one hundred percent interest on short-term loans.
Using this persona and promise, Panthaky successfully solic-
ited over five million dollars in loans. “Lenders” would
receive a promissory note prepared by Sine as Alpha’s lawyer
and signed by Panthaky. In fact, the money provided by these
“lenders” funded no legitimate projects. Instead, some of the
money went to repay earlier “lenders” so that the pyramid
scheme could continue, and some ended up in the personal
coffers of Panthaky and his cohorts.
To reassure the victims, Panthaky promised them that in
case anything went wrong with Alpha’s projects, they would
be protected by assets held in the Alpha Funding Group Trust
(“Alpha Trust”). Sine was the trustee of Alpha Trust. In that
capacity, he prepared and signed security letters to victims
explaining that he would liquidate the trust if Alpha defaulted
on loans. Both Sine and Panthaky stated on numerous occa-
sions, including in the security letters, that the trust held $54
million in Ginnie Mae securities.2
Almost always, the “lenders” were not repaid as promised
and then experienced increasing difficultly in contacting Pan-
thaky. Even after receiving complaints that the loans were not
repaid on time, Sine continued to tell the victims that Alpha
was a legitimate investment opportunity and had a track
record of successful repayment of loans. When such excuses
ran out and a “lender” continued to press for repayment, Sine
would then play hardball — by, for example, insisting that the
promissory note did not allow the “lender” to demand liquida-
2
Ginnie Mae securities are pools of mortgages aggregated and guaran-
teed by the federally chartered Government National Mortgage Associa-
tion (“Ginnie Mae”) and resold to investors.
UNITED STATES v. SINE 8535
tion of the collateral or by instigating litigation against the
“lender.”
By 2000, under pressure from a growing number of unpaid
victims, Sine purported to attempt as trustee of Alpha Trust
to liquidate the collateral, only to find out — for the first time,
he maintained — that the forms establishing the trust’s own-
ership of the securities were worthless. That the forms were
worthless was quite true: Such forms could only transfer own-
ership of securities issued in paper format, but the Ginnie Mae
securities referenced by Alpha Trust’s forms existed only in
an electronic format. Moreover, Ginnie Mae had no record
that Alpha Trust, Alpha, Sine, Panthaky, or the Delmarva
Timber Trust (“Delmarva”) — the entity the defendants
claimed had transferred the securities to Alpha3 — ever
owned any of the securities referred to in the documents.
The main factual dispute at trial was whether Sine realized
from the outset, rather than only after the victims demanded
access to the collateral, that the supposed collateral was
worthless. Sine testified during trial that he had a good faith
belief that the trust legitimately owned the Ginnie Mae securi-
ties and made efforts to verify their ownership at the time the
trust was established. One such effort, he represented, was a
1992 conversation with Jeffrey Franklin, a Maryland banker
whose signature appears on the transfer forms. Sine also told
the jury that when he learned in 2000 that the forms could not
have transferred the securities, he entered into negotiations
with Don Meddles, the current trustee of Delmarva, to obtain
ownership of the securities. Sine ultimately filed several law-
suits in Utah, naming Meddles and Delmarva as defendants
and supposedly seeking to recover the value of the securities.
3
The defendants claimed that Delmarva had conveyed the securities to
Alpha in 1991. The defendants never explained why Delmarva transferred
securities worth $54 million to Alpha. Instead, they presented a Byzantine
tale about the extraordinary wealth of Delmarva’s owner, his clandestine
career as a CIA agent, the secretive handling of his finances, and the dis-
appearance of his supposedly huge assets after his death.
8536 UNITED STATES v. SINE
The government set out at trial to portray all these pur-
ported indices of good faith as just further steps in Sine’s
fraudulent scheme. Several witnesses — including Franklin
— refuted Sine’s story that he received assurances in 1992
that Alpha Trust did own the Ginnie Mae securities. The gov-
ernment presented evidence that Sine’s efforts to liquidate the
securities began only after several years of complaints by vic-
tims about Alpha’s defaults and became most active after fed-
eral prosecutors began showing interest in the defendants’
activities. And the government’s witnesses highlighted Sine’s
inconsistent stories about these efforts.
As part of its effort to disprove Sine’s good faith, the gov-
ernment decided — a decision that is at the core of this appeal
— to highlight the shady nature of the legal tactics Sine used
in trying to recover on behalf of Alpha Trust. Jurors heard tes-
timony, for example, that Sine did not serve Meddles and Del-
marva with the complaint in the Utah state court suit he filed
against them in late 2000, so it was dismissed for a lack of
prosecution. Also, Sine sued Meddles and Delmarva in Utah
again in 2001, this time in both state and federal court, along
with two entities, Polly & Co. and Hare & Co., that were the
true owners of the Ginnie Mae securities referenced in the
transfer forms. In response to this second suit, Meddles — in
March 2003, over a year after the indictment in this case —
settled the two suits for $18 million. But, according to the
government’s evidence, the settlement was a sham: Although
Meddles said he was acting on behalf of Polly and Hare, the
two entities were never served with the complaint, and were
in fact subsidiaries of the Bank of New York, with no connec-
tion to Meddles. Sine nonetheless used his supposed status as
a judgment creditor of the two entities to request that compa-
nies who owed money to Polly and Hare redirect repayments
of those debts to him, as trustee of Alpha Trust. When these
requests were in several instances successful, Sine, inexplica-
bly, gave the money he received to Meddles — even though
the settlement of the Utah case obligated Meddles to pay $18
million to Alpha Trust.
UNITED STATES v. SINE 8537
Eventually, the Bank of New York learned what was hap-
pening and took steps to stop the seizures of Polly’s and
Hare’s assets. So Sine went to court again, this time filing a
declaratory judgment action against the Bank of New York.
That action was removed to the United States District Court
for the Northern District of Ohio and assigned to Judge James
Carr. In December 2003, Judge Carr entered a temporary
restraining order against Sine to prevent his diversion of
money owed to Polly and Hare. In March 2004, Judge Carr
issued a preliminary injunction to the same effect and held
Sine guilty of criminal contempt for violating the restraining
order and continuing to redirect money from Polly and Hare.4
Well before the Ohio District Court proceedings, in Febru-
ary 2002, the government indicted Sine in the Eastern District
of California for mail fraud, pursuant to 18 U.S.C. § 1341. A
superseding indictment was filed in September 2004. That
indictment alleged as the mail fraud a series of four letters
sent in April and May 1999 between Clarence Trausch, a pro-
spective “lender,” and Renata Lee, an individual who was
already a “lender” and whom the defendants had induced to
seek out additional participants. In February 2005, a jury con-
victed Sine and his co-defendant Panthaky after one hour of
deliberations. The judge sentenced Sine to seventy months in
prison, which included an enhancement for lying during his
trial testimony, and ordered him to pay $2.29 million in resti-
tution. Sine timely appealed his conviction and sentence.
II.
Sine’s primary complaint on appeal is that the government
repeatedly used factual findings contained in Judge Carr’s
March 2004 order during its cross-examination of Sine and
4
The Sixth Circuit upheld the criminal contempt judgment in an unpub-
lished disposition. Sine v. Bank of N.Y., 174 F. App’x 930 (6th Cir.), cert.
denied, 127 S. Ct. 592 (2006).
8538 UNITED STATES v. SINE
other defense witnesses, quoting large portions of the findings
in doing so.5
In the Ohio case involving the Bank of New York, Judge
Carr entered findings that, to put it mildly, were likely to lead
the reader to distrust everything Sine said or did. For instance,
one portion of Judge Carr’s order states:
When equity looks for a reason to favor Sine and
Meddles it finds none. The record presently before
the court is rife with chicanery, mendacity, deceit,
and pretense. The versions each has given about his
activities, whether in court or out, ring false.
Sine purports to be a trustee — a fiduciary — act-
ing on behalf of unidentified creditors. Yet he has
taken none of the conventional steps to enforce the
Utah judgment against Delmarva. He has not issued
subpoenas duces tecum, demanded an accounting, or
conducted a debtor’s examination.
It is not just what he has failed to do — it is what
he has done that also compels a finding that Sine is
not acting as a bona fide judgment creditor. Instead
of keeping the funds coming to Meddles in the name
of fake Polly and fake Hare, Sine sends them on to
Meddles. When he does so, he has no idea what
Meddles will do with them. He claims that he keeps
the cash flowing in a one-way direction to keep
Meddles “cooperative.” This means, apparently, that
5
We emphasize that nothing in this opinion is intended in any way as
a criticism of Judge Carr or his order. The question before us is not
whether Judge Carr’s evaluation was a fair assessment of the evidence
before him — which we have absolutely no basis to doubt. Rather, the
issue is whether the government may shortcut its way to a criminal convic-
tion by failing to put before the jury the same sort of evidence Judge Carr
reviewed, while at the same time relying on the strong language of the
Ohio order.
UNITED STATES v. SINE 8539
Sine expects Meddles will “cooperate” if encouraged
to pump more cash from wells belonging to others.
But there is no indication of when, if ever, payments
on the Utah judgment will be made.
Indeed, the inference is fair, and can fairly be
drawn, that no payments on that judgment ever will
be made. There is no incentive to do so — why stop
feeding a goose when it gives the promise of laying
golden eggs forever? Once the judgment is satisfied,
it cannot be a pretext for using fake Polly and fake
Hare as putative judgment debtors to recover addi-
tional funds.
Sine holds in his hands a bottomless bucket, has
done absolutely nothing to see that it gets filled, and
is unlikely ever to do so.
In doing so, Sine appears to be breaching his
duties as a trustee. In Utah, as elsewhere, a trustee’s
paramount duty is always to act for the best interest
of the trust. To that end, “a trustee has a duty to use
reasonable prudence and diligence in conserving and
protecting all assets of the estate and to realize on
claims in its favor if possible; and if he fails to do so
he is subject to charge for any resulting loss.”
I find, on the basis of the record presently before
me, that Sine has failed to fulfill his fiduciary obliga-
tions to the judgment creditors he purports to repre-
sent. He has not acted with diligence or prudence to
secure and protect the assets that he claims to be
seeking. Indeed, his conduct has been entirely incon-
sistent with his obligations as trustee: even if his
explanation for letting Meddles have funds were
plausible, which it is not, he has not protected the
creditors’ interests by conditioning such receipt on
performance of reciprocal, and, for the “trust,” bene-
8540 UNITED STATES v. SINE
ficial obligations by Meddles. While Sine may hold
himself out as a trustee de jure, he is not functioning
as one de facto.
Sine v. Bank of N.Y., No. 3:03CV7662, slip op. at 17-18 (N.D.
Ohio Mar. 29, 2004) (quoting Acott v. Tomlinson, 337 P.2d
720, 725 (Utah 1959)) (citations omitted).
Although the full text of Judge Carr’s order was not admit-
ted as evidence, the jury heard many of his findings. Explain-
ing that it did not want to surprise the court, the government
informed the court at the opening of the defense’s case that
it believed the Ohio litigation would become relevant and that
it “intend[ed] to ask witnesses about [it].” Sine’s lawyer
acknowledged the prosecutor’s statement and voiced no
objection. And, as promised, the government asked more than
two hundred questions of various defense witnesses about
both the findings and the pervasively negative flavor of Judge
Carr’s order, providing in the course of doing so a thorough
account of the order for the jury.
Many of these questions informed the jury about the sordid
details of Sine’s litigation against Polly and Hare. For exam-
ple, during the cross-examination of Christopher Stappas, a
lawyer who testified on the defendants’ behalf, the following
exchange took place between the prosecutor and the witness:
Q. Are you aware that the district judge in Toledo
had concluded or written that Sine and Meddles
stole the names of those partnerships, Polly and
Co and Hare and Co, from the Bank of New
York?
A. Yes.
Q. Are aware [sic] that the Court in Toldeo has
written that Sine and Meddles acquired and
sought to acquire securities registered in the
UNITED STATES v. SINE 8541
names of the real Polly and Co and the real
Hare and Co?
A. Yes, I’m aware of that.
Q. Are you aware that the district judge in Toledo
has written that Sine and Meddles diverted
money that should have gone to the real Polly
and Co and the real Hare and Co but instead
went to Meddles?
A. Yes, I’m aware of that.
Q. Are you aware that the district judge in Toledo
has written that the judgments that Sine and
Meddles entered into in Utah were collusive?
A. I was not aware of that.
Q. That the judgments were fraudulent?
A. I was not aware of that.
Q. That they used these Utah judgments to give
their efforts to take money from Polly and Co
and Hare and Co to give it an air of legitimacy?
A. I was not aware of that.
Q. Are you aware that the district judge has written
that Sine and Meddles, that the collusive judg-
ments are not supported by any legitimate or
legally cognizable claims?
A. I recall reading that, I believe.
Q. Are you aware that the district judge has written
that Meddles stole the names Polly and Co and
Hare and Co from the Bank of New York?
8542 UNITED STATES v. SINE
A. I recall that.
Q. Are you aware that the district judge has also
written that Meddles and Sine have used the
names to acquire without lawful authority assets
held in the names of the real Polly and Co and
the real Hare and Co?
A. Yes, I’m aware of that.
Q. Are you aware that the district judge has written
that it appears that Meddles aided and abetted
by Sine has been engaged in an effort to obtain
assets belonging to the Bank of New York and
other financial institutions through a series of
fraudulent schemes?
A. I recall that.
Q. That the scheme is perpetrated with fraud and to
have [sic] operated exclusively with fraudulent
intent?
A. I recall that.
Q. Are you aware that the district judge in Toledo
has concluded that Sine’s claims of ignorance
and confusion are not plausible?
A. I don’t recall that.
Q. His conduct is rife with chicanery, mendacity,
deceit and pretense?
A. I don’t recall that.
Q. That’s [sic] Sine is not acting as a bona fide
judgment creditor?
UNITED STATES v. SINE 8543
A. I do recall that someplace.
....
Q. And the district judge in Toldeo has concluded
that Sine has failed to fulfill his fiduciary obli-
gations; correct?
A. I believe so, yes.
Q. That Sine has not acted with diligence and pru-
dence to secure and protect the assets that he
claims to be seeking; correct?
A. Yes. I remember reading this. I can’t remember
word-for-word what was in that order.
Q. And that Sine has acted in the detriment of the
judgment creditors by letting money flow
through his hands and into the hands of his
alleged adversary, Don Meddles; correct?
A. Yes.
Other questions asked by the government went beyond the
details of Sine’s conduct vis-a-vis Polly and Hare, and instead
focused on Judge Carr’s overall assessment of Sine. Such use
of the order comes across most clearly in the closing set of
questions the government asked Sine himself during cross-
examination:
Q. The Court also said that you testified at a hear-
ing on the order to show cause, did you not?
A. On the contempt charge I was able to testify
limitedly.
8544 UNITED STATES v. SINE
Q. And the Court concluded that your testimony
was often inconsistent and thoroughly implausi-
ble; isn’t that correct?
A. That’s what the Court said.
Q. Now, you testified yesterday on direct that you
do not lie?
A. That’s correct.
Q. Is it not a fact, sir, that the Judge has written
that your conduct is rife with chicanery; cor-
rect?
A. I still don’t lie. He said that, but I still don’t lie.
Q. Mendacity; that’s what he wrote, right?
A. That’s what he did.
Q. That’s lying, isn’t it?
A. I don’t know. I don’t know what “mendacity”
means. “Chicanery” is certainly doing some-
thing different than what you look like you’re
doing.
Q. Your conduct was rife with deceit; correct?
A. That’s what he said.
Q. And that your conduct was rife with pretense;
correct?
A. That’s what he said.
UNITED STATES v. SINE 8545
Likewise, during its closing argument, the government juxta-
posed Sine’s criminal trial testimony with Judge Carr’s evalu-
ation of his testimony in the Ohio civil case:
The judge also wrote that Sine’s and Meddles is [sic]
guilty of “chicanery and lying and deceit and pre-
tense. It has been entirely inconsistent with his obli-
gations as a trustee.” Now, Sine’s response to that
when he was on the stand, basically all along is, “I
haven’t gotten a fair shake. I haven’t gotten to testify
for very long.” Well, he testified for Judge Carr and
it didn’t take him long to conclude he was a liar.
Not only did the government place Judge Carr’s findings
before the jury in this fashion, but it stressed that a judge had
already found those facts to be true in refuting Sine’s efforts
to disagree with Judge Carr’s findings. Such use is apparent
in the following portion of the cross-examination of Sine:
Q. The District Judge who was hearing this case in
Ohio is James Carr; correct?
A. Correct.
Q. He has written that what you and Meddles have
done has been to create a scheme where you
purloined or stole the name of partnerships
owned by the Bank of New York; isn’t that cor-
rect?
A. That’s what he said, but of course we don’t
agree with that.
Q. The names that you stole were Polly and Com-
pany and Hare and Company; isn’t that correct?
A. We did not steal anything.
8546 UNITED STATES v. SINE
Q. That’s what the judgment has concluded?
A. The Judge has said that based on the evidence
he had and he says in his judgment that’s based
on what he had heard on the contempt charge.
....
Q. The Court has also said that you diverted the
flow of payments so that instead of going to the
real Polly and the real Hare, they went to Don
Meddles; correct?
A. Well, that’s correct, but only after the security
houses had been notified that we were a judg-
ment creditor; that we were looking for assets
of Owen Meddles, now deceased, and Don
Meddles had taken over his area and that Del-
marva Timber Trust was involved, and we
requested to try to find out if these assets which
we found by tracing backwards escheated
funds.
In other words, from these particular
accounts, funds had been escheated to the state
of New York and other states. We traced it back
to them, asked then if this belonged to them.
They said what we needed to do was have Med-
dles file a change of address and change of offi-
cers and that they would then research it. If the
research concluded he was the proper party,
they would transfer it to him.
Q. My question was that the Judge has written that
the scheme . . . . Is that correct?
A. Don Meddles signed the documentation. We
allowed it to go through our address in Salt
Lake City. We helped him fill out the forms.
UNITED STATES v. SINE 8547
The Court: Answer the question. . . .
A. That’s correct.
The defense also referred to Judge Carr’s order: During
direct examination, Sine acknowledged that Judge Carr
“wrote up some bad things about me” and found him in con-
tempt.6 After the government had asked Sine over one hun-
dred questions about the order, he more extensively addressed
the order during re-direct examination. Sine explained on re-
direct that the judge had found him in contempt as a result of
Sine having taken actions — actions he believed at the time
were legitimate — to recover on behalf of the lenders, and
that Judge Carr’s order was preventing him from going for-
ward with efforts to recover for the lenders. In his closing
argument, Sine’s lawyer used Judge Carr’s statements to por-
tray Sine as an unsung hero in the effort to recover the lend-
ers’ money:
Judge Carr said some shocking things about Wesley
Sine. There is no doubt about it. Well, why was
Wesley Sine in Ohio? Why would you travel from
Salt Lake City on [sic] Ohio to throw yourself in
front of a judicial bus and take the kind of abuse that
he has taken at the hands of Judge Carr. It can’t be
for fun. He was there trying to find and protect
money that he believed belonged to Delmarva Tim-
ber Trust and could be used to pay the investors. . . .
...
. . . [T]o this day, Wesley Sine and the small
group of investors or lenders are the only people still
trying to make good on Mr. Panthaky’s loans. If by
6
Sine also mentioned that a subsequent order filed by Judge Carr
vacated parts of the original order. The government has never disputed the
accuracy of that statement.
8548 UNITED STATES v. SINE
doing so, it makes you think better of him, we are
glad for that. But what is driving him to put himself
at risk before judges across the land is the interest of
these borrowers or lenders, the people who are out
their money, and in the end, it’s clear a lot of people
lost a lot of money, and Mr. Sine feels very sorry for
those people, but he is not responsible for their
losses. Wesley Sine, more than anyone, has
remained steadfast in his resolve to try to help these
people get their money. The government doesn’t
think he can do it. But Mr. Sine, even as we sit here,
still believes he can.
During the course of Sine’s cross-examination, his attorney
successfully objected when the government asked to admit a
copy of the order into evidence.7 Sine’s attorney nonetheless
allowed the questions about the order to continue without
objection. Because no objection was raised, we review the
questioning concerning Judge Carr’s order for plain error.
United States v. Tisor, 96 F.3d 370, 376 (9th Cir. 1996); see
FED. R. EVID. 103(d); FED. R. CRIM. P. 52(b). Ultimately,
although we agree that the many references to Judge Carr’s
adverse findings and comments should not have been
allowed, the plain error standard of review proves fatal to
Sine’s contention that the conviction should be reversed
because of those references.
III.
By presenting the thrust of Judge Carr’s order to the jury
through its cross-examination technique, the government used
a tactic that had the potential unfairly to prejudice Sine. It also
impermissibly placed hearsay evidence before the jury.
Although many of the facts found in the order were quite rele-
7
At the end of that day of testimony, the government renewed its motion
to admit the order. The district court then agreed with Sine’s argument that
its admission would violate Rule 403.
UNITED STATES v. SINE 8549
vant to the issues before the jury, the government could not
properly use the suggestive short cut that it did to bring those
facts before the jury.
[1] We note preliminarily that although the order was never
admitted into evidence, a line of questioning that repeatedly
incorporates inadmissible evidence can be just as improper as
the direct admission of such evidence. We agree with the
Fourth Circuit that such “speaking” questions can violate the
Federal Rules of Evidence. See United States v. Hall, 989
F.2d 711, 716-17 (4th Cir. 1993) (noting that by “proceed[-
ing] to read the [inadmissible hearsay] statement to the jury
under the guise of cross-examining . . . [t]he government’s
use of [the] unauthenticated statement violated Fed.R.Evid.
Rule 802 . . . .”); see also FED. R. EVID. 103(c) (“In jury cases,
proceedings shall be conducted, to the extent practicable, so
as to prevent inadmissible evidence from being suggested to
the jury by any means, such as . . . asking questions in the
hearing of the jury.”); 21 CHARLES ALAN WRIGHT & KENNETH
W. GRAHAM, JR, FEDERAL PRACTICE AND PROCEDURE: EVIDENCE
§ 5042, at 954, 963 (2d ed. 2005) (noting that Rule 103(c)
seeks to ensure the jury “goes into deliberations with their
minds void of everything except evidence that has been prop-
erly validated by trial procedures” and that the rule should
apply to leading questions to witnesses “that counsel should
have known contained inadmissible evidence”); cf. Douglas v.
Alabama, 380 U.S. 415, 419 (1965) (holding that “[a]lthough
the Solicitor’s reading of [the witness’s] alleged statement,
and [the witness’s] refusals to answer, were not technically
testimony, the Solicitor’s reading may well have been the
equivalent in the jury’s mind of testimony that [the witness]
in fact made the statement,” and therefore was the basis for
a Confrontation Clause violation).8
8
We have previously held that incorporating inadmissible evidence into
questioning can constitute prosecutorial misconduct. See United States v.
Sanchez, 176 F.3d 1214, 1222 (9th Cir. 1999) (holding prosecutorial mis-
conduct existed because “[i]t is improper under the guise of ‘artful cross-
examination,’ to tell the jury the substance of inadmissible evidence”
(quoting Hall, 989 F.2d at 716) (internal quotation marks omitted)). Sine,
however, frames his challenge in evidentiary terms and does not raise a
prosecutorial misconduct claim.
8550 UNITED STATES v. SINE
Here, the district court recognized that the government’s
strategy was little different in its impact from introducing the
evidence when it observed — in response to the government’s
request to admit the entire order — that “it’s been read into
the record, much of it.” In fact, the government premised its
argument for admitting the order into evidence on the fact that
“we have talked at great length about [the order], but it has
come in in dribs and drabs,” and reminded the jury during
closing argument that “[w]e went through [the order] quite a
bit during trial.”
We have previously observed that “while prosecutors are
not required to describe sinners as saints, they are required to
establish the state of sin by admissible evidence unaided by
aspersions that rest on inadmissible evidence, hunch, or
spite.” United States v. Schindler, 614 F.2d 227, 228 (9th Cir.
1980). That observation applies as readily to questioning that
incorporates inadmissible evidence as it does to the direct
introduction of such evidence. We therefore turn to the deter-
mination of whether the portions of Judge Carr’s order read
to the jury in the guise of cross-examination were properly
admitted.
A.
We begin by recounting why it was central to Sine’s
defense strategy to prove that the legal efforts to recover from
Meddles, Polly, and Hare were legitimate. At the core of
Sine’s defense was the assertion that he held a good faith
belief all along that Alpha Trust legitimately owned the Gin-
nie Mae securities, and therefore a good faith belief that the
“lenders” would be repaid from those securities if not other-
wise. Because he had such a good faith belief, Sine argued to
the jury, he lacked the specific intent required for conviction
under the mail fraud statute. See United States v. Shipsey, 363
F.3d 962, 967 (9th Cir. 2004) (noting a good faith defense is
covered by jury instructions specifying that mail fraud
requires specific intent). To demonstrate his good faith to the
UNITED STATES v. SINE 8551
jury, Sine presented evidence of the steps he had taken to ver-
ify Alpha Trust’s legitimate ownership of the collateral and to
recover the value of the Ginnie Mae securities once he discov-
ered that the transfer documents were worthless. A critical
piece of this lack-of-fraudulent-intent evidence was the litiga-
tion Sine instituted, namely the lawsuits involving Meddles,
Polly, and Hare.
[2] Given this defense, the government was entitled, to the
extent consistent with the Federal Rules of Evidence, to intro-
duce evidence calculated to prove the litigation efforts a
sham. See FED. R. EVID. 402 (“All relevant evidence is admis-
sible, except as otherwise provided . . . by these rules . . . .”).
Facts that raised doubts as to whether Sine had a realistic
legal basis for expecting a successful result when he brought
suit would satisfy this relevance standard, as such facts would
support the inference that the litigation was not filed with a
good faith belief of recovery. The facts reviewed in Judge
Carr’s order, particularly the facts indicating that Sine failed
to fulfill his fiduciary obligations as trustee of Alpha Trust,
were therefore relevant evidence.9 In addition, the adverse
result in the Ohio district court litigation was itself pertinent
to the jury’s consideration of the good faith defense, because
9
Judge Carr’s findings did not collaterally estop Sine from arguing that
the litigation against Polly and Hare proceeded in good faith and fulfilled
his fiduciary responsibilities. Judge Carr made the bulk of his findings in
the course of granting a preliminary injunction in a civil suit that pre-
vented Sine from seizing Polly’s and Hare’s assets. Because these findings
were made in a preliminary proceeding and pursuant to the burden of
proof in civil cases, they cannot prevent Sine from relitigating the same
issues in his criminal trial. See Dias v. Elique, 436 F.3d 1125, 1129 (9th
Cir. 2006); Starbuck v. City & County of S.F., 556 F.2d 450, 457 n.13 (9th
Cir. 1977). The government therefore could not justify its use of Judge
Carr’s findings as an offensive use of collateral estoppel. Although Judge
Carr’s order also made some findings in the course of holding Sine guilty
of criminal contempt, the government did not limit its references to those
criminal contempt findings, which addressed only the narrow issue of
whether Sine wrongly retained particular funds belonging to Polly after a
temporary restraining order had been granted.
8552 UNITED STATES v. SINE
a successful suit would support the notion that the litigation
efforts were good faith attempts to recover funds for the
“lenders,” while an unsuccessful suit might not. Our determi-
nation that these facts were relevant, however, does not
resolve whether the government could introduce them by
reading portions of Judge Carr’s order. We now turn to that
question.
B.
Sine argues that bringing the adverse, derogatory factual
findings and comments in Judge Carr’s opinion before the
jury created too great of a danger of unfair prejudice and thus
violated Rule 403 of the Federal Rules of Evidence. We
agree.
[3] Rule 403 provides that “[a]lthough relevant, evidence
may be excluded if its probative value is substantially out-
weighed by the danger of unfair prejudice, confusion of the
issues, or misleading the jury.” FED. R. EVID. 403. We have
previously observed that factual testimony from a judge
unduly can affect a jury. See Chein v. Shumsky, 373 F.3d 978,
989 n.6 (9th Cir. 2004) (en banc).10 Similarly, jurors are likely
to defer to findings and determinations relevant to credibility
made by an authoritative, professional factfinder rather than
determine those issues for themselves. Cf. FED. R. EVID. 605
10
In Chein, we held that no rational juror could have found that the
record evidence proved that the defendant lied about a material matter, as
required by California’s perjury statute. In discussing why the jury none-
theless returned a guilty verdict, thereby violating the defendant’s due pro-
cess rights, we highlighted testimony by a superior court judge, who
served as an “ ‘expert’ on materiality” and told the jury how the defen-
dant’s statement, in his view, would have been material. Chein, 373 F.3d
at 989. We stated that “the likely impact on the jury of a sitting state court
judge pronouncing the existence of an essential element of a crime, while
vigorously denouncing the defendant and his credentials, is difficult to
ignore. . . . [W]e note that this highly unusual testimony at least explains
why the jury returned a guilty verdict on sparse, constitutionally insuffi-
cient evidence.” Id. at 989 n.6.
UNITED STATES v. SINE 8553
(“The judge presiding at the trial may not testify in that trial
as a witness.”); United States v. Frakenthal, 582 F.2d 1102,
1108 (7th Cir. 1978) (“[T]he possibility that prestige, dignity,
and authority may have somehow been imparted to the prose-
cution’s case by the judge’s appearance on its behalf cannot
lightly be dismissed.”).
[4] Although we have not previously addressed the ques-
tion, other federal circuit courts have held that the use as evi-
dence of facts as found in a judicial opinion can unfairly
prejudice a party. Of particular relevance is the Fourth Cir-
cuit’s review of a civil trial in which “[p]ortions of the find-
ings of fact” from a previous civil lawsuit between the same
parties “were read to the jury by plaintiffs’ counsel during the
direct examination of [a plaintiff]. The portions of [the
judge’s] order that plaintiffs’ counsel read to the jury repeat-
edly referred to factual findings of misrepresentations made
by [the defendant], [his] failure to disclose material informa-
tion, and [his] participation in a civil conspiracy, as well as
findings that [his wife] had knowingly filed false affidavits in
the case.” Nipper v. Snipes, 7 F.3d 415, 416 (4th Cir. 1993).
The Fourth Circuit held the admission of these findings over
the defendant’s objection erroneous and reversed the jury’s
verdict based on the prejudice produced by the evidence. Id.
at 418.
[5] As one of its grounds for reversal, the Fourth Circuit
held that “[i]n circumstances similar to those in this case such
evidence should be excluded under [Rule] 403. This is
because judicial findings of fact ‘present a rare case where, by
virtue of their having been made by a judge, they would likely
be given undue weight by the jury, thus creating a serious
danger of unfair prejudice.’ ” Id. (quoting Zenith Radio Corp.
v. Matsushita Elec. Indus. Co., 505 F. Supp. 1125, 1186 (E.D.
Pa. 1980)). The Eleventh Circuit has ruled similarly. See U.S.
Steel, LLC v. Tieco, Inc., 261 F.3d 1275, 1287-88 (11th Cir.
2001) (“The district court abused its discretion [under Rule
403] in admitting Judge Garrett’s opinion. The jury, not Judge
8554 UNITED STATES v. SINE
Garrett, was charged with making factual findings on Appel-
lees’ allegations in this case.”).
[6] Our determination that reference to facts found in a
judicial opinion can unfairly prejudice a party does not mean
that admission of such facts will always fail the balancing test
of Rule 403. Such a holding would be inconsistent with
courts’ “increasing reluctance to reject in toto the validity of
the law’s factfinding processes outside the confines of res
judicata and collateral estoppel,” which was noted, with
approval, by the drafters of the Federal Rules of Evidence.
FED. R. EVID. 803(22) advisory committee nt. (1972); see also
Hiroshi Motomura, Using Judgments as Evidence, 70 MINN.
L. REV. 979, 1038 (1986) (“[M]ost modern commentators
would not categorically declare juries incompetent to weigh
prior [judicial] determinations.”). But cf. 2 KENNETH S. BROUN
ET AL., MCCORMICK ON EVIDENCE § 298, at 337 (6th ed. 2006)
(“Admitting civil judgments rendered against the defendant
directly raises constitutional issues . . . .”). In this case, how-
ever, the nature of the facts found and comments made by
Judge Carr — directly opining on Sine’s motivations and
truthfulness, thereby implicating Sine’s overall credibility as
a witness — heavily weighs on the unfair prejudice side of the
balance. Cf. FED. R. EVID. 701 (limiting the use of opinion tes-
timony by lay witnesses); United States v. Binder, 769 F.2d
595, 602 (9th Cir. 1985) (holding that expert witness testi-
mony was impermissible when it “in effect . . . impermissibly
. . . asked [the jury] to accept an expert’s determination that
these particular witnesses were truthful” because “[i]t is the
jurors’ responsibility to determine credibility by assessing the
witnesses and witness testimony in light of their own experi-
ence”), overruled on other grounds by United States v. Mora-
les, 108 F.3d 1031 (9th Cir. 1997) (en banc).
Supporting the conclusion that the use of Judge Carr’s
opinion was violative of Rule 403 as tending to prejudice the
jury is the consideration that the government could have
proved the facts in Judge Carr’s findings through less prejudi-
UNITED STATES v. SINE 8555
cial means. The Supreme Court has held that “what counts as
the Rule 403 ‘probative value’ of an item of evidence . . . may
be calculated by comparing evidentiary alternatives.” Old
Chief v. United States, 519 U.S. 172, 184 (1997); see also id.
at 182-83 (“If an alternative were found to have substantially
the same or greater probative value but a lower danger of
unfair prejudice, sound judicial discretion would discount the
value of the item first offered and exclude it if its discounted
probative value were substantially outweighed by unfairly
prejudicial risk.”). As far as appears, the evidence that the
Bank of New York presented to Judge Carr, which underlay
his findings, was available to the government at the time of
the criminal trial.
The government argues that requiring it to present alternate
evidence about such facts would have created practical diffi-
culties in tracking down witnesses and exhibits for an issue
that only arose during the course of trial because of Sine’s
choice of defense strategy. A party cannot, however, avoid the
dictates of the rules of evidence simply because they create a
burden. Whether, as the government maintains, testimony
about the facts underlying Judge Carr’s order “would have
been a terrible waste of time over a tangential issue of no
moment” is not a pertinent consideration if, as here, the more
efficient mode of proof was also considerably more likely to
sway the jury against the defendant than the more traditional
means.
Further, the suggestion that the Ohio federal court litigation
concerned “a tangential issue of no moment” to this case bol-
sters our holding that the extensive recitation of Judge Carr’s
extremely critical findings violated Rule 403. Effectively, the
government’s argument is that the underlying facts concern-
ing the Ohio suit were of little probative value, and that it
was, instead, the resoundingly negative assessment of Sine’s
overall credibility contained in Judge Carr’s opinion that the
government wanted the jury to hear. We are unwilling to con-
done such a prejudicial shortcut.
8556 UNITED STATES v. SINE
C.
We also agree with Sine that some of the government’s ref-
erences to Judge Carr’s order constituted the impermissible
use of hearsay evidence. Under the Federal Rules of Evi-
dence, “a statement, other than one made by the declarant
while testifying at the trial or hearing, offered in evidence to
prove the truth of the matter asserted” is not admissible absent
an applicable exception. FED. R. EVID. 801, 802.11
[7] A court judgment is hearsay “to the extent that it is
offered to prove the truth of the matters asserted in the judg-
ment.” United States v. Boulware, 384 F.3d 794, 806 (9th Cir.
2004), cert. denied 126 S. Ct. 337 (2005); see also 2
MCCORMICK ON EVIDENCE, supra, § 298, at 337 (noting the his-
toric treatment of prior judgments as hearsay). It is even more
plain that the introduction of discrete judicial factfindings and
analysis underlying the judgment to prove the truth of those
findings and that analysis constitutes the use of hearsay. The
concern about evidence that is neither based on personal
knowledge nor subject to cross-examination, which explains
an ultimate judgment’s treatment as hearsay, see Motomura,
supra, at 980 n.4, is even more pronounced when dealing with
statements that recapitulate in detail others’ testimony and
declarations. We therefore agree with the Fourth, Tenth, and
Eleventh Circuits that judicial findings of facts are hearsay,
inadmissible to prove the truth of the findings unless a spe-
11
We reject, however, Sine’s terse claim that the use of this hearsay vio-
lated the Confrontation Clause. Only testimonial out-of-court statements
raise Confrontation Clause concerns. Whorton v. Bockting, 127 S. Ct.
1173, 1183 (2007) (citing Crawford v. Washington, 541 U.S. 36 (2004)).
Although he cites Crawford in passing, Sine does not argue that Judge
Carr’s statements were testimony, with good reason: There is no reason to
believe that Judge Carr wrote the order in anticipation of Sine’s prosecu-
tion for fraud, so his order was not testimonial. See United States v.
Ballesteros-Selinger, 454 F.3d 973, 974-75 (9th Cir. 2006) (holding that
an immigration judge’s deportation order was nontestimonial because it
“was not made in anticipation of future litigation”).
UNITED STATES v. SINE 8557
cific hearsay exception exists. Herrick v. Garvey, 298 F.3d
1184, 1191-92 (10th Cir. 2002); United States v. Jones, 29
F.3d 1549, 1554 (11th Cir. 1994); Nipper, 7 F.3d at 417.
[8] By peppering Sine during cross-examination with ques-
tions referring to the fact that a judge had found that Sine
stole the identity of Polly and Hare, failed to act as an appro-
priate fiduciary, and acted with mendacity, the government
used the order to establish the truth of Judge Carr’s findings.12
The government wanted the jury to agree with Judge Carr’s
conclusions that Sine was not acting as a good faith fiduciary
in conducting the Ohio litigation.13 So, unless the order comes
within a hearsay exception recognized by the Federal Rules of
Evidence, the references to the order should not have been
allowed.
[9] The government does not argue that any such excep-
tions apply here, and we hold that none is available.14 Two
12
The government argues that its purpose in asking defense witnesses
about the order was not to establish the truth of the findings in the order.
Rather, posits the government, the reason for cross-examining witnesses
with the order was to establish that they were not fully informed about
Sine’s efforts and were therefore less credible. This rationale does not,
however, explain the questioning of Sine himself. We therefore need not
and do not decide whether the government’s non-hearsay rationale stands
up with regard to the other witnesses.
13
Even as part of Sine’s cross-examination, the government could have
referred to Judge Carr’s order in more limited ways that would not have
constituted the use of hearsay. Because “a prior judgment is not hearsay
. . . to the extent that it is offered as legally operative verbal conduct that
determined the rights and duties of the parties,” Boulware, 384 F.3d at
806, the government could have asked Sine about the fact that Judge
Carr’s order denied recovery against Polly and Hare. The denial of recov-
ery would have helped to prove that Sine’s efforts were illusory and thus
not in good faith.
14
Sine concedes that the Federal Rules of Evidence’s provision on
impeaching a witness based on his commission of a prior crime involving
dishonesty or false statements allowed the government to ask about Judge
Carr’s determination that he had committed criminal contempt. See FED.
8558 UNITED STATES v. SINE
hearsay exceptions in the Federal Rules of Evidence explicitly
allow for the admission of judgments. Those exceptions, how-
ever, are limited to (1) prior judgments involving criminal
convictions subject to more than one year of imprisonment,
FED. R. EVID. 803(22), and (2) judgments used to provide
“proof of matters of personal, family or general history, or
boundaries,” id. 803(23). This case does not involve a judg-
ment covered by those limited exceptions.15 And although the
Rule’s public records hearsay exception allows “factual find-
ings” resulting from “investigations” conducted by “public
offices and agencies,” that exception does not apply against
criminal defendants. Id. 803(8).16
D.
The government argues that Sine’s defense strategy
“opened the door” to the questioning about Judge Carr’s order
even if it was otherwise inadmissible. We disagree.
[10] As we have already recognized, Sine’s arguments
about his good faith efforts to recover money for the Ginnie
Mae securities made Judge Carr’s order relevant to the case.
R. EVID. 609(a)(2). Assuming Rule 609 applies to a criminal contempt
conviction — which we do not decide — “[a]bsent exceptional circum-
stances, evidence of a prior conviction admitted for impeachment purposes
may not include collateral details and circumstances attendant upon the
conviction.” United States v. Rubio, 727 F.2d 786, 797 n.5 (9th Cir. 1983).
The findings presented by the government went far beyond the mere fact
that Judge Carr has found Sine guilty of criminal contempt.
15
It is not apparent whether those exceptions cover judicial factfinding
that accompanies the judgment or just the judgment itself. Because the
exceptions do not apply to this case in any event, we express no opinion
on that question.
16
Even in civil cases, where the exception does apply, several other cir-
cuits have held that it covers only factual findings by executive branch
agencies and officials, not judicial factfinding. Herrick, 298 F.3d at 1192;
Jones, 29 F.3d at 1554; Nipper, 7 F.3d at 417.
UNITED STATES v. SINE 8559
The government’s use of the opened door principle is there-
fore correct to that extent.
[11] But the “opening the door” doctrine is not so capa-
cious as to allow the admission of any evidence made relevant
by the opposing party’s strategy, without regard to the Federal
Rules of Evidence.17 As we have explained, the “opening the
door” principle allows parties “to introduce evidence on the
same issue to rebut any false impression that might have
resulted from the earlier admission.” United States v. Whit-
worth, 856 F.2d 1268, 1285 (9th Cir. 1988) (emphasis added);
see also United States v. Brown, 921 F.2d 1304, 1307-08
(D.C. Cir. 1990) (“Although the government may prevent a
defendant from using rules of evidence to select and enter
pieces of evidence wholly out of context, the government may
not shore up a prosecution by pushing through the open door
evidence not necessary to remove any unfair prejudice created
by defense counsel’s tactics.” (internal quotation marks omit-
ted)).
[12] Sine, in his direct testimony, made only passing refer-
ence to the opinion, accurately stating that Judge Carr “wrote
up some bad things about me.” The limited testimony was
insufficient to open the door to the government’s otherwise
impermissible references to the order, as Sine did not intro-
duce an inaccurate portrait of the order itself. Sine’s limited
and accurate reference to Judge Carr’s opinion did not create
an appeal to the professional authority of the judge that could
have been countered by the government’s use of the order.
17
The Federal Rules of Evidence’s “principle of completeness” also
does not allow the admission of otherwise inadmissible statements. See
United States v. Collicott, 92 F.3d 973, 983 (9th Cir. 1996) (“Because [the
witness’s] out-of-court statements . . . do not fall within an exception to
the hearsay rule, they are inadmissible, regardless of Rule 106.”); see also
FED. R. EVID. 106 (“When a writing or recorded statement or part thereof
is introduced by a party, an adverse party may require the introduction . . .
of any other part or any other writing or recorded statement which ought
in fairness to be considered contemporaneously with it.”).
8560 UNITED STATES v. SINE
The government does not maintain otherwise, but argues
more broadly that “[t]he picture Sine painted . . . of selfless-
ness and hope, that he was on the verge of making substantial
repayments to the victims” opened the door. Presenting a the-
ory of the case that can be effectively rebutted by otherwise-
inadmissible evidence, however, does not by itself open the
door to using such evidence; only partial, misleading use of
the evidence itself can do so.
[13] Our determination that Sine did not open the door to
the government’s use of Judge Carr’s order accords with our
previous holding that a party cannot appeal to the truth of the
matter asserted by hearsay evidence even when its opponent
has opened the door to the use of otherwise inadmissable
hearsay. United States v. Collicott, 92 F.3d 973, 981 n.8, 982
& n.11 (9th Cir. 1996). Instead, the adversary is limited to
using the hearsay evidence for matters not concerning the
truth of the statement, such as explaining or minimizing a wit-
ness’s testimony represented to be inconsistent with a prior
statement. Id. at 980-81. In this case, the government’s use of
Judge Carr’s findings was not so limited. At least in part, the
government referred to the order to assert that the truth of its
conclusions — that the facts asserted in the litigation were not
true, and that Sine did not believe they were — thereby under-
mining Sine’s contrary representations.18 The government’s
use of Judge Carr’s order thus went well beyond the bounds
of the opened door principle.
IV.
[14] Our holding that the government erred in its use of the
order, and that the use was to some degree prejudicial to Sine,
cannot resolve this appeal. Despite its pervasiveness, Sine
never objected during trial to questioning premised on Judge
Carr’s order, or to the prosecutor’s use of the order during
18
No limiting instructions were given to the jury about the purposes for
which it could consider Judge Carr’s order.
UNITED STATES v. SINE 8561
closing argument. So, applying the plain error standard, we
may reverse only if the error is “ ‘plain’ and . . . ‘affect[s]
substantial rights.’ Moreover, [plain error review] leaves the
decision to correct the forfeited error within the sound discre-
tion of the court of appeals, and the court should not exercise
that discretion unless the error seriously affect[s] the fairness,
integrity or public reputation of judicial proceedings.” United
States v. Olano, 507 U.S. 725, 732 (1993) (first and third
alterations in original) (quoting United States v. Young, 470
U.S. 1, 15 (1985)) (internal quotation marks omitted); see also
Tisor, 96 F.3d at 376-77 (applying Olano to plain error review
under Rule 103(d) of the Federal Rules of Evidence).
[15] Under the plain error review standard applicable to the
errors in this case, an individual’s substantial rights are not
affected unless he can show that the error may well have
affected the outcome of the trial. Olano, 507 U.S. at 734; see
also United States v. Dominguez Benitez, 542 U.S. 74, 82
(2004) (holding that a defendant must show “a reasonable
probability that, but for [the error claimed], the result of the
proceeding would have been different” (alteration in original)
(quoting United States v. Bagley, 473 U.S. 667, 682 (1985))
(internal quotation marks omitted)); United States v. Ameline,
409 F.3d 1073, 1078 (9th Cir. 2005) (en banc) (holding a
defendant “must establish ‘that the probability of a different
result is sufficient to undermine confidence in the outcome of
the proceeding’ ” (quoting Dominguez Benitez, 542 U.S. at
83)).
Our plain error analysis in this case must reflect the two
ways that Judge Carr’s order could have affected the jury: It
could have caused jurors to reject Sine’s specific factual
assertions about his litigation activities, based on Judge Carr’s
contrary findings about Sine’s course of conduct. And it could
have caused them generally to disbelieve Sine as a witness,
based on Judge Carr’s firmly negative findings about Sine’s
credibility — such as the determination that he had displayed
“chicanery, mendacity, deceit, and pretense.”
8562 UNITED STATES v. SINE
[16] As to the first potential effect, we readily find that
plain error review does not dictate reversal. Given the over-
whelming evidence presented to the jury in this case refuting
Sine’s good faith defense, Sine cannot show a “reasonable
probability” that a trial conducted without the references to
Judge Carr’s order would have resulted in a different out-
come. Even without the judicial findings refuting Sine’s evi-
dence that the litigation involving Meddles and the Bank of
New York proved his good faith, the jury heard extensive evi-
dence inconsistent with Sine believing that the scheme was
legitimate and that the loans were actually secured by Ginnie
Mae securities.19 That evidence included: denials that various
individuals had assured Sine about Alpha Trust’s legitimate
ownership of the securities; a 1998 meeting during which
Sine offered excuses for his inability to physically produce
the securities; exotic stories he told to excuse Panthaky’s fail-
ure to pay; Sine’s repeated lies about Alpha’s supposedly rosy
record of repayment; suits that Sine filed against several indi-
viduals who pressed Alpha for repayment; and the quick real-
ization of several financial professionals that the collateral
was not legitimate when they conducted due diligence on
Alpha. Taken together, all of this evidence thoroughly under-
mined Sine’s use of the Utah and Ohio litigation to prove his
good faith belief in his representations to “lenders.”
19
In addition to Judge Carr’s order, Sine complains about the introduc-
tion of other inadmissible evidence: A trial pleading filed by the govern-
ment in the Utah federal district court suit against Polly and Hare; a Fifth
Circuit opinion referencing a fraudulent scheme involving an entity called
Delmarva; deposition testimony by Panthaky; a consent decree signed by
Meddles; and testimony from several victims about the impact of the
fraud. Each of those items received only cursory reference during the trial
and the defense raised no contemporaneous objection to their introduction.
Even assuming the evidence was inadmissible, our evaluation of the over-
whelming nature of the admissible evidence of Sine’s lack of good faith
does not change. Our holding that referencing Judge Carr’s order did not
affect the outcome of the trial extends to the use of the other challenged
evidence. We therefore do not resolve whether those pieces of evidence
were properly admitted.
UNITED STATES v. SINE 8563
[17] So, entirely leaving out Judge Carr’s findings about
Sine’s tactics, Sine’s use of the litigation involving Meddles
and the Bank of New York to demonstrate his good faith was
doomed to failure. No jury could have believed that Sine
really thought that filing those suits demonstrated he was act-
ing as trustee for a legitimate financing operation that owned
legitimate securities. Judge Damrell, who had heard first-hand
all the trial testimony, so concluded in denying Sine’s post-
trial motion for a new trial:
[Y]ou have substantial overwhelming evidence, in
my view, of fraud committed by both defendants. . . .
It’s my assessment, that this jury, long before Judge
Carr’s name is mentioned in this courtroom could
reasonably conclude, and I think did reasonably con-
clude, that there were two fraudsters on trial who
bilked people of millions of dollars. One as an
instrumentality using his law degree and legal pro-
fession and his role as trustee.
The evidence was absolutely overwhelming
before we get to the issue of this lawsuit filed in
Utah or Ohio.
We agree with this assessment of the evidence.
As to the second potential effect of the order — its poten-
tial to substitute Judge Carr’s evaluation of Sine’s credibility
for the jury’s ultimate role to decide credibility — we are
much more troubled. The order’s use of terms like “chicanery,
mendacity, deceit, and pretense” are highly pejorative, how-
ever accurately they may have described Sine’s behavior. The
impact of this strongly negative assessment was bolstered by
the prosecutor’s juxtaposition, during Sine’s cross-
examination and during closing argument, of Judge Carr’s
unflattering conclusions with Sine’s claims that he was now
telling the truth. The jury’s evaluation of Sine’s entire testi-
mony could well have been influenced by knowing that a
8564 UNITED STATES v. SINE
judge — who would be presumed to have expertise in judging
credibility — had already deemed him untrustworthy. See
Chein, 373 F.3d at 989 n.6 (“[T]he likely impact on the jury
of a sitting state court judge pronouncing the existence of an
essential element of a crime, while vigorously denouncing the
defendant and his credentials, is difficult to ignore.” (empha-
sis added)). The jury has the ultimate task of making credibil-
ity determinations about individual witnesses; those
evaluations may be prejudiced when the jury is in effect asked
to rely on a third party’s expertise instead. See Binder, 769
F.2d at 602 (holding testimony that “in effect . . . impermiss-
ibly . . . asked [the jury] to accept an expert’s determination
that these particular witnesses were truthful” was erroneous
because “[i]t is the jurors’ responsibility to determine credibil-
ity by assessing the witnesses and witness testimony in light
of their own experience,” and finding this error was prejudi-
cial when the credibility of the particular witnesses was cru-
cial to the case).
In this case, however, we cannot find that Sine has demon-
strated a “reasonable probability” that the jury’s verdict would
have been altered had the references to Judge Carr’s findings
not made it harder than it already was for the jury to view
Sine as a credible witness. For, even without the order, it was
already extremely unlikely that the jury would have viewed
Sine as credible. Sine’s testimony was contradicted by the tes-
timony of several other witnesses and simply defied common
sense.
For example, several financial professionals testified that
they confronted Sine about the sham he was perpetrating. Yet,
despite these clear warnings from knowledgeable individuals,
Sine made no effort to confirm that Alpha Trust legitimately
owned the securities but instead continued to promote the
scheme. Had Sine genuinely been acting as a conscientious
but naive trustee, the warnings certainly would have given
him pause, causing him to take steps to confirm the validity,
or even the existence, of the securities. But Sine took no such
UNITED STATES v. SINE 8565
steps. Likewise, Sine admitted he did not retain copies of the
letters he claimed to have written to confirm the legitimacy of
the securities’ transfer nor documented the conversations with
third-parties who he claimed confirmed Alpha Trust’s owner-
ship. Given the critical importance of such confirmations for
his task as trustee, these failure are inexplicable.
Again, we find Judge Damrell’s observations instructive to
our prejudice inquiry. In denying the motion for a new trial,
Judge Damrell noted that “Mr. Sine’s credibility was in tatters
by the time this evidence [from Judge Carr] came in.” He
commented at length about the “[u]tterly incredible” and
“[s]imply incredible” nature of Sine’s testimony. Judge Dam-
rell particularly highlighted Sine’s claims that some of the
transactions merely involved “refinancing” rather than a
Ponzi scheme — a claim so preposterous that “[t]he tempera-
ture in this courtroom dropped 20 degrees” when it was made.
Ultimately, Judge Damrell concluded that “the defendant’s
testimony in this [case] was was [sic] the most powerful evi-
dence of his guilt.”20
[18] Our independent review of the record supports the
findings about Sine’s complete lack of credibility from the
judge who was the first-hand witness to his testimony. Sine
has therefore failed to establish a “reasonable probability” that
the jury would have acquitted him absent the references to
Judge Carr’s findings. Cf. United States v. Geston, 299 F.3d
1130, 1136-37 (9th Cir. 2002) (holding that impermissible
questioning that attacked a defense witness’s credibility con-
stituted reversible plain error when the defendant’s “fate
hinged on resolution of the conflicting testimony presented by
the parties” and noting “[w]e may consider the relative
strength of the parties’ positions in deciding whether reversal
is appropriate”); United States v. Brooke, 4 F.3d 1480, 1488
20
During Sine’s sentencing hearing, Judge Damrell again noted the per-
jurious nature of his testimony and accordingly applied an obstruction-of-
justice enhancement to the Sentencing Guidelines calculations.
8566 UNITED STATES v. SINE
(9th Cir. 1993) (refusing to find the trial court’s erroneous
admission of evidence that impugned a defendant’s credibility
was harmless when “the trial centered around the conflicting
testimony” of the defendant and a government witness and the
erroneous evidence “in all likelihood affected the jury’s deter-
mination of which of the two antagonists to believe”); United
States v. Necoechea, 986 F.2d 1273, 1278 (9th Cir. 1993)
(holding that reversing based on plain error partly depends on
the “closeness of the case” when a prosecutor vouches for the
truthfulness of a government witness).21
V.
[19] The government’s decision to inform the jury that a
judge had made factual findings inconsistent with the defen-
dant’s theory of the case ran far too great a risk of unfairly
prejudicing the defendant, and allowed the government to
shortcut the usual process of proving facts by putting wit-
nesses before a jury. In this case, however, the defendant
completely failed to object to the government’s repeated
impermissible references to the judge’s order. Because the
trial judge’s failure sua sponte to prevent such references did
not affect Sine’s substantial rights in a case where other evi-
dence overwhelmingly proved the defendant’s guilt, Sine’s
conviction must stand.
AFFIRMED.
21
Because we hold that the errors in this trial did not affect Sine’s sub-
stantial rights, we need not decide whether they were “plain.” We do note
that although there is no Supreme Court case law or case law in this circuit
precisely on point, Chein points in the direction of our evidentiary hold-
ings, and the pertinent case law in other circuits all supports Sine’s argu-
ments. These circumstances suggest that the error was in fact plain. See
United States v. Shwayder, 312 F.3d 1109, 1121 (9th Cir. 2002).