United States v. Salman ( 2008 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA,  No. 05-10093
Plaintiff-Appellee,
v.  D.C. No.
CR-03-00197-LRH
ALBERT R. SALMAN,
OPINION
Defendant-Appellant.

Appeal from the United States District Court
for the District of Nevada
Larry R. Hicks, District Judge, Presiding
Argued and Submitted
June 9, 2008—San Francisco, California
Filed July 7, 2008
Before: A. Wallace Tashima, M. Margaret McKeown, and
Ronald M. Gould, Circuit Judges.
Opinion by Judge Gould
8119
UNITED STATES v. SALMAN 8121
COUNSEL
Franny Forsman, Federal Public Defender, and Michael K.
Powell, Assistant Federal Public Defender, Reno, Nevada, for
the defendant-appellant.
8122 UNITED STATES v. SALMAN
Gregory A. Brower, United States Attorney, Robert L. Ell-
man, Appellate Chief, and Elizabeth A. Olson, Assistant
United States Attorney, Reno, Nevada, for the plaintiff-
appellee.
OPINION
GOULD, Circuit Judge:
Albert R. Salman appeals his convictions for two counts of
passing a fictitious financial instrument, in violation of 18
U.S.C. § 514(a)(2), and two counts of attempting corruptly to
interfere with the administration of the internal revenue laws,
in violation of 26 U.S.C. § 7212(a). On two separate occa-
sions, Salman sent a document he titled “Sight Draft” and a
tax payment voucher for the amount of the sight draft to the
Internal Revenue Service (“IRS”). Relying on our decision in
United States v. Howick, 263 F.3d 1056 (9th Cir. 2001), Sal-
man argues that the sight drafts he submitted to the IRS are
not unlawful fictitious financial instruments under 18 U.S.C.
§ 514(a)(2), and therefore the government presented insuffi-
cient evidence to support his convictions on those counts. Sal-
man also challenges the sufficiency of the evidence to support
his convictions for corruptly interfering with the administra-
tion of the internal revenue laws, arguing that because his
convictions under 26 U.S.C. § 7212(a) are directly dependent
on his passing of unlawful fictitious instruments, they can
only stand if his convictions under 18 U.S.C § 514(a)(2)
stand. We have jurisdiction pursuant to 28 U.S.C. § 1291, and
we affirm Salman’s convictions, concluding that the docu-
ments he presented to the IRS are unlawful fictitious financial
instruments under 18 U.S.C. § 514(a)(2).
I
On November 5, 1998, the IRS received from Salman a
UNITED STATES v. SALMAN 8123
1998 Payment Voucher 3, Form 1040-ES, a form used to
make a payment of estimated taxes for the 1998 tax year,
which indicated that Salman was paying $750,000 in esti-
mated taxes. Along with the voucher, the IRS received a doc-
ument labeled “SIGHT DRAFT” which included many
characteristics common to a check.1
On January 25, 1999, the IRS received from Salman a 1998
Payment Voucher 4, Form 1040-ES, a form also used to make
a payment of estimated taxes for the 1998 tax year, which
indicated that Salman was paying $250,000 in estimated
taxes. Along with the voucher, the IRS received a document
nearly identical to the one Salman sent in December 1998, but
for the amount of $250,000.2
On October 22, 2003, Salman was indicted on two counts
of passing a fictitious instrument, in violation of 18 U.S.C.
§ 514(a)(2). On April 7, 2004, a federal grand jury returned
a four-count superseding indictment, adding to the two counts
in the previous indictment two counts of attempting to inter-
fere with the administration of the internal revenue laws, in
violation of 26 U.S.C. § 7212(a).
On September 14, 2004, Salman’s jury trial commenced.
At the trial, Kristy Morgan, an IRS employee, testified to Sal-
man’s past history of tax violations, stating that Salman owed
more than $4500 in taxes and $2000 in penalties. Ted
Reusser, a bank examiner from the Office of the Comptroller
of the Currency of the Department of the Treasury, testified
that “the Treasury doesn’t use sight drafts as a method of pay-
ment so there is no such instrument as a sight draft issued by
the Treasury.” The government asked Reusser to compare the
sight drafts to a common check. Reusser testified that the
words “NON-NEGOTIABLE” on the sight drafts meant that
“you can’t use it like a common check, you can’t take it to
1
See infra app. A.
2
See infra app. B.
8124 UNITED STATES v. SALMAN
your bank, you can’t endorse it, you can’t move [it] around,
it should be negotiated between the parties on the document.”
Reusser also testified that even though the sight drafts had
features common to checks, they also lacked things associated
with checks, like a bank in the address line, a magnetic ink
routing number, special paper, and watermarks. He also noted
that none of these features were required for a check to be
valid.
At the close of the government’s case, Salman made a Fed-
eral Rules of Criminal Procedure Rule 29 motion, arguing that
there was insufficient evidence of a fictitious obligation—the
government had not shown Salman’s intent to defraud or his
intent corruptly to impede or to interfere with the enforcement
of the internal revenue laws. The district court denied the
motion.
Salman then called his friend, Pat Devore, who testified
that he and Salman designed the sight drafts “specifically so
they could not be considered as any one specific type of
instrument.” Devore testified that Salman and he had spent
“literally hundreds of hours” researching various aspects of
the work of Roger Elvick, including how to create a fictitious
sight draft. Devore testified that as Salman and Devore cre-
ated the sight drafts, Devore questioned Elvick, in writing and
by phone, about the procedures he recommended. In a letter
to Elvick, Devore explained that he and Salman wanted to
ensure that if Salman was ever “dragged into court,” he would
be “laughing all the way to the bank.”
On September 16, 2004, the jury found Salman guilty of all
four counts. On January 21, 2005, the district court entered
judgment, sentencing Salman to 12 months of imprisonment
on each count, to be served concurrently, and five years of
supervised release. Salman timely filed a notice of appeal
challenging the sufficiency of the evidence to support his con-
victions.
UNITED STATES v. SALMAN 8125
II
We review de novo the sufficiency of the evidence to sup-
port a conviction. United States v. Esquivel-Ortega, 484 F.3d
1221, 1224 (9th Cir. 2007). “There is sufficient evidence to
support a conviction if, viewing the evidence in the light most
favorable to the prosecution, any rational trier of fact could
have found the essential elements of the crime beyond a rea-
sonable doubt.” United States v. Moreland, 509 F.3d 1201,
1216 (9th Cir. 2007) (internal quotation marks and citation
omitted).
III
Counts I and II of the superseding indictment, based on the
$750,000 and $250,000 sight drafts, charged Salman with pre-
senting fictitious instruments to the IRS in violation of 18
U.S.C. § 514(a)(2) (“§ 514”). The fictitious instrument statute
provides:
Whoever, with the intent to defraud . . . passes,
utters, presents, offers, brokers, issues, sells, or
attempts or causes the same, or with like intent pos-
sesses, within the United States . . . any false or ficti-
tious instrument, document, or other item appearing,
representing, purporting, or contriving through
scheme or artifice, to be an actual security or other
financial instrument issued under the authority of the
United States, a foreign government, a State or other
political subdivision of the United States, or an orga-
nization, shall be guilty of a class B felony.
18 U.S.C. § 514(a)(2).
[1] In Howick, we interpreted § 514, determining that it
“was intended to criminalize a range of behavior not reached”
by the counterfeit statute, 18 U.S.C. § 472. 263 F.3d at
1066.We delineated the distinction as follows:
8126 UNITED STATES v. SALMAN
A “counterfeit” obligation is a bogus document con-
trived to appear similar to an existing financial
instrument; a “fictitious” obligation is a bogus docu-
ment contrived to appear to be a financial instru-
ment, where there is in fact no such genuine
instrument, and where the fact of the genuine instru-
ment’s nonexistence is presumably unknown by, and
not revealed to, the intended recipient of the docu-
ment.
Id. at 1067. Applying this distinction, we interpreted “ficti-
tious instruments” to mean “nonexistent instruments,” and
concluded that § 514 requires verisimilitude, which demands
that the documents have the quality of appearing to be true or
real. Id. To meet its burden of proof under § 514, the govern-
ment must show that the:
unlawful fictitious obligation . . . appears to be “ac-
tual” in the sense that it bears a family resemblance
to genuine financial instruments. The offending doc-
ument must, in other words, include enough of the
various hallmarks and indicia of financial obligations
so as to appear to be within that class. The test, then,
is not whether the document is similar to any finan-
cial obligation in particular, but whether taken as a
whole it is apparently a member of the family of “ac-
tual . . . financial instrument[s]” in general.
Id. at 1068 (alterations in original) (emphasis added).
Salman contends that Howick precludes his convictions for
passing fictitious financial instruments in violation of § 514.
He offers three principal arguments to support this contention.
First, Salman argues that the IRS is not among the class of
victims that Congress intended to protect by enacting § 514.
Second, Salman contends that Howick requires that the ficti-
tious instruments be negotiable to satisfy the intent to defraud
element of § 514, and that his sight drafts are clearly marked
UNITED STATES v. SALMAN 8127
“NON-NEGOTIABLE.” Finally, Salman argues that the doc-
uments he sent to the IRS do not bear sufficient indicia or
hallmarks of financial obligations, and therefore are not
unlawful fictitious instruments under § 514. We reject Sal-
man’s arguments, and uphold his convictions. We distinguish
Howick based on the type of financial obligations under
examination in that case, and hold that a rational jury could
have found beyond a reasonable doubt that the sight drafts
Salman submitted to the IRS were unlawful fictitious instru-
ments under § 514.
A
[2] Salman first challenges his convictions under § 514 by
arguing that the IRS is not among the class of victims Con-
gress intended to protect by the fictitious instrument statute.
In support of this argument, Salman points to language in
Howick that states, “[B]y enacting section 514, Congress pro-
vided protection from fraud to a particularly vulnerable class
of victims.” 263 F.3d at 1068. This argument fails for two rea-
sons. First, the plain language of the statute does not limit its
application to a particular class of victims. See 18 U.S.C.
§ 514; see also 142 Cong. Rec. S10155, S10183 (Sept. 10,
1996) (statement of Sen. D’Amato) (explaining the need for
the legislation, D’Amato detailed the story of a woman who
had fraudulently passed comptroller warrants to the IRS, and
had evaded prosecution because of the loopholes in the coun-
terfeit statute). Second, Salman takes the language in our
Howick opinion out of context. In Howick, we emphasized the
particularly vulnerable class of victims to explain why we
were implementing a low threshold for what constituted a
credibly fictitious financial instrument, not to identify a lim-
ited class of protected victims. 263 F.3d at 1068 (Because
“those who regard fictitious obligations as genuine will likely
include persons of a rather credulous nature . . . the statute
criminalizes even bogus obligations that a prudent person
might upon consideration be unlikely to accept as genuine, so
long as those documents bear a family resemblance to actual
8128 UNITED STATES v. SALMAN
financial obligations.”). The plain language of the statute and
our holding in Howick do not limit violations of § 514 to acts
committed against a particular class of victims.
B
Next, Salman argues that because he marked his sight
drafts “NON-NEGOTIABLE,” they are disqualified from
“appearing, representing, purporting, or contriving . . . to be
an actual security or other financial instrument issued under
the authority of the United States,” 18 U.S.C. § 514(a). Sal-
man contends that our Howick decision interpreted § 514 to
require that any false instrument be negotiable in order to
qualify as an unlawful fictitious obligation. We hold, how-
ever, that in Howick we focused on the negotiable nature of
the documents at issue solely because the false documents
there were negotiable Federal Reserve notes. Here, where the
documents at issue are nonnegotiable sight drafts, the “NON-
NEGOTIABLE” mark does not place them beyond the reach
of § 514.
[3] The plain language of the statute does not require that
fictitious financial instruments be negotiable to be unlawful.
See 18 U.S.C. § 514(a)(2). The statute requires only that a fic-
titious document appears, represents, purports or contrives
through scheme or artifice, “to be an actual security or other
financial instrument issued under the authority of the United
States, a foreign government, a State or other political subdi-
vision of the United States, or an organization.” Id. In support
of his contention that the passing of nonnegotiable fictitious
instruments is not unlawful under § 514, Salman points to
then-Senator D’Amato’s comments, published in the Con-
gressional Record, that the Financial Instruments Anti-Fraud
Act of 1995 makes it a violation of law to pass with the intent
to defraud “any items purporting to be negotiable instru-
ments.” See 141 Cong. Rec. S9533-34 (June 19, 1995).
Because then-Senator D’Amato’s comments were made as an
introduction to his proposed bill, and not as an explanation of
UNITED STATES v. SALMAN 8129
why § 514 excludes nonnegotiable instruments from its defi-
nition of fictitious obligations, they do not offer support for
limiting the scope of § 514 to include only negotiable instru-
ments. Moreover, the purpose identified by then-Senator
D’Amato for the legislation—to “close[ ] a loophole in Fed-
eral counterfeiting law”—supports the broadest possible read-
ing of “actual security or other financial instrument,” one that
would include both negotiable and nonnegotiable instruments.
Id. Under the plain language of the statute, Salman’s docu-
ments qualify as unlawful fictitious instruments under § 514
because they appear to be financial obligations—sight drafts
—issued under the authority of the United States. Because
these phony sight drafts on their face pose a capacity to
deceive, they come within the literal language and common
intendment of § 514’s prohibition.
Despite the plain language of the statute, Salman argues
that Howick prohibits nonnegotiable instruments from quali-
fying as unlawful fictitious documents under § 514. In How-
ick, we analyzed whether fraudulent Federal Reserve notes
were sufficiently credible to constitute fictitious obligations
under § 514. 263 F.3d at 1067. We defined the standard for
credibility to be “whether [when] taken as a whole [the docu-
ment] is apparently a member of the family of ‘actual . . .
financial instrument[s]’ in general,” and acknowledged that
determining whether a document is sufficiently credible is “by
necessity an ad hoc analysis, for the range of possible finan-
cial obligations is limitless and so too, for that reason, is the
range of fictitious ones.” Id. at 1068. We then made several
references to the requirement that an instrument be negotiable
to be deemed credible under this standard. See id. (“No partic-
ular mark or characteristic is independently determinative
such that its presence or absence alone could resolve the ques-
tion whether a document purports to be a negotiable instru-
ment.”) (“To trigger liability, in other words, the document
need only credibly hold itself out as a negotiable instru-
ment.”); Id. at 1069 (“The bills were also free of disqualifying
marks, such as, for example, a statement that the document is
8130 UNITED STATES v. SALMAN
not negotiable.”). Salman argues that this requirement that a
fictitious instrument be negotiable extends beyond the facts of
Howick, which involved negotiable Federal Reserve notes, to
all cases under § 514, and precludes the prosecution of indi-
viduals who pass fictitious nonnegotiable instruments, no
matter how closely the fictitious instruments resemble genu-
ine financial instruments. We decline to adopt Salman’s read-
ing of Howick because it would unnecessarily limit the scope
of § 514, contrary to what Congress said in its statutory lan-
guage, and would reopen a loophole in the counterfeit statute
that Congress purposely closed when it enacted § 514.
Instead, Howick’s discussion of a negotiable requirement
reflects the type of fictitious instruments that were squarely at
issue in that case. Howick involved Federal Reserve notes of
$100,000,000 and $500,000,000. 263 F.3d at 1067. A Federal
Reserve note is a negotiable instrument—it can “pass from
hand to hand, either by delivery or indorsement, giving to
each successive recipient a right against the debtor.” THOMAS
E. HOLLAND, THE ELEMENTS OF JURISPRUDENCE 315-16 (13th ed.
1924). In order for the Federal Reserve notes in Howick to
have been sufficiently credible to constitute unlawful ficti-
tious instruments under § 514, they must have been negotiable
financial instruments. As such, the class of financial instru-
ments that the fictitious Federal Reserves notes in Howick had
to resemble were negotiable instruments. To the contrary, the
fictitious financial instruments passed by Salman were sight
drafts. Ted Reusser, a bank examiner with the Office of the
Comptroller of the Currency of the Department of the Trea-
sury, testified at Salman’s trial that sight drafts are commonly
nonnegotiable and that labeling a sight draft nonnegotiable
does not render it invalid, but merely places “some limitations
on how [it] can be passed around if people play by the rules.”3
3
Nonnegotiable instruments are incapable of being transferred by
indorsement or delivery. BLACK’S LAW DICTIONARY 1082 (8th ed. 2004).
According to Reusser, “[a] draft is simply an order to pay, and by putting
the word sight in front of it just implies that you’re to pay that item on
UNITED STATES v. SALMAN 8131
Therefore, a sight draft, unlike a Federal Reserve note, is not
necessarily a member of the negotiable class of financial
instruments, and a fictitious sight draft cannot be disqualified
from being an unlawful fictitious obligation under § 514
merely on the basis that it is a nonnegotiable instrument. Our
decision in Howick does not preclude prosecution of individu-
als, like Salman, who pass fictitious nonnegotiable instru-
ments. The evil that Congress assessed and the scope of its
remedy cover fictitious, deceptive financial instruments,
whether or not they are in a class that is negotiable. For a fic-
titious negotiable instrument to have verisimilitude, it must
appear to be negotiable. However, it stands to reason that for
a fictitious nonnegotiable financial instrument, verisimilitude
will not require an appearance of negotiability.
[4] We hold that the plain language of 18 U.S.C.
§ 514(a)(2) prohibits the passing of any false or fictitious
instrument—whether negotiable or nonnegotiable —that
appears, represents, purports, or contrives through scheme or
artifice, to be an actual security or other financial instrument.
Where, as is the case here, the fictitious instrument is repre-
senting an actual instrument that is nonnegotiable, the label
“NON-NEGOTIABLE” on the fictitious instrument is not a
disqualifying mark.
C
Finally, Salman argues that the fraudulent sight drafts he
passed do not bear sufficient indicia or hallmarks of actual
financial obligations to be prohibited under § 514. In Howick,
we provided a nonexhaustive list of relevant attributes that
indicate the credibility of a fraudulent instrument:
sight.” Reusser also testified that sight drafts are usually nonnegotiable
instruments: “They’re prearranged situations where two parties—two or
more parties have agreed to make payment between themselves, and it
could have conditions attached to it, or it could have other items which
would not meet the terms of negotiability.”
8132 UNITED STATES v. SALMAN
official seals; serial numbers; portraits of govern-
ment buildings, officials, or statespersons; symbols
or mottos of the issuing nation or entity; official sig-
natures; dates of issue; and statements to the effect
that the document shall serve as legal tender or shall
be redeemable for something of value.
263 F.3d at 1068. Salman argues that none of these attributes
are found on his sight drafts, and that therefore his sight drafts
do not sufficiently resemble genuine financial documents to
be unlawful under § 514.
[5] The nonexhaustive list provided in Howick, however,
focused on attributes found on negotiable instruments, and
Federal Reserve notes in particular, leaving out attributes typ-
ically found on other financial obligations, like checks. Sal-
man’s sight drafts did not include official seals, mottos, or
watermarks, things typically found on, for example, checks
issued by the United States Treasury to individuals receiving
tax refunds. However, Reusser testified at Salman’s trial that
none of those features are requirements of a valid check.
Moreover, as an examination of Appendices A and B will dis-
close, Salman’s sight drafts did include (1) a pre-printed, 3-
line block of text that listed the “United States Treasury” and
an address; (2) a pre-printed, red-ink check number; (3) an
“Authorized Signature”; (3) pre-printed lines for a “Certified
Draft No.,” a “UCC Registration No.,” and a “Voucher No.”;
and (4) the phrase “TENDER-AT PAR (HJR-192).” Because
§ 514 “criminalizes even bogus obligations that a prudent per-
son might upon consideration be unlikely to accept as genu-
ine,” Howick, 263 F.3d at 1068, a rational jury could have
found beyond a reasonable doubt that Salman’s sight drafts
sufficiently resembled an actual financial obligation such that
they were unlawful under § 514.
[6] Salman argues that the government failed to present
sufficient evidence to convict him of violating § 514 because
the government’s expert, Reusser, only testified regarding the
UNITED STATES v. SALMAN 8133
hallmarks of checks, and did not testify as to the indicia of
sight drafts. Salman misunderstands the verisimilitude stan-
dard we articulated in Howick. A fictitious instrument need
not resemble a specific actual instrument. Instead, the test is
“whether taken as a whole it is apparently a member of the
family of ‘actual . . . financial instrument[s].’ ” 263 F.3d at
1068. The government was not required to present expert tes-
timony regarding sight drafts to prove that Salman’s fictitious
instruments resembled the family of actual financial instru-
ments.
Moreover, the context in which the fictitious sight drafts
were presented is not wholly irrelevant. These were tendered
to the IRS with tax payment vouchers, contributing to the
impression that these financial instruments were making a
payment, and heightening their capacity to deceive.
[7] We hold that Salman’s sight drafts bear sufficient indi-
cia or hallmarks of actual financial obligations to be prohib-
ited under § 514.
IV
In conclusion, we hold that Salman’s sight drafts qualify as
unlawful fictitious financial instruments under 18 U.S.C.
§ 514(a)(2). We also reject Salman’s second argument on
appeal—that the government presented insufficient evidence
to support his convictions under 26 U.S.C. § 7212(a)—
because it relies entirely on Salman’s unsuccessful first argu-
ment.
AFFIRMED.
8134 UNITED STATES v. SALMAN
APPENDIX A
APPENDIX B
Social Security Numbers redacted from documents.