United States v. James Miller ( 2020 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, Nos. 17-50338
Plaintiff-Appellee, 18-50449
v. D.C. No.
2:14-cr-00471-GW-1
JAMES ROBERT MILLER,
Defendant-Appellant. OPINION
Appeal from the United States District Court
for the Central District of California
George Wu, District Judge, Presiding
Argued and Submitted January 10, 2020
Pasadena, California
Filed March 20, 2020
Before: Paul J. Watford and Mark J. Bennett, Circuit
Judges, and Jed S. Rakoff, * District Judge.
Opinion by Judge Rakoff
*
The Honorable Jed S. Rakoff, United States District Judge for the
Southern District of New York, sitting by designation.
2 UNITED STATES V. MILLER
SUMMARY **
Criminal Law
The panel affirmed a conviction for wire fraud and filing
false tax returns in a case in which a jury found that the
defendant embezzled over $300,000 from the company for
which he served as manager and president.
Overruling prior decisions of this court in light of the
Supreme Court’s intervening decision in Shaw v. United
States, 137 S. Ct. 462 (2016), the panel held that wire fraud
under 18 U.S.C. § 1343 requires the intent to deceive and
cheat — in other words, to deprive the victim of money or
property by means of deception — and that the jury charge
instructing that wire fraud requires the intent to “deceive or
cheat” was therefore erroneous. The panel nevertheless held
that the erroneous instruction was harmless.
The panel wrote that it was deeply troubled by the
disregard of elementary prosecutorial ethics by an Assistant
U.S. Attorney from the Central District of California who,
with a personal and financial interest in the outcome of this
case, impermissibly tainted the prosecution by involving
himself in the early stages of the investigation and then
continuing to express interest even after the U.S. Attorney’s
Office for the Central District recused itself from the matter.
The panel held that the misconduct of the AUSA does not
entitle the defendant to any relief because as soon as the
Department of Justice became aware of the impropriety, it
**
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
UNITED STATES V. MILLER 3
took every necessary step to cure any resulting taint,
including turning over the entire prosecution to disinterested
prosecutors from the Southern District of California.
The panel held that the district court correctly denied the
defendant’s motion for a new trial, and did not abuse its
discretion in denying his motion for an indicative ruling on
additional discovery, based on a special agent’s failure to
disclose his romantic relationship with an AUSA in the
recused Central District office. The panel concluded that
there was sufficient evidence to establish the interstate wire
element of the wire fraud offenses.
COUNSEL
Katherine Kimball Windsor (argued), Law Office of
Katherine Kimball Windsor, Pasadena, California, for
Defendant-Appellant.
Rebecca Suzanne Kanter (argued), Assistant United States
Attorney; Daniel E. Zipp, Special Attorney for the United
States; Robert S. Brewer Jr., United States Attorney;
William P. Barr, United States Attorney General; United
States Attorney’s Office, San Diego, California; for
Plaintiff-Appellee.
4 UNITED STATES V. MILLER
OPINION
RAKOFF, District Judge:
A jury in the Central District of California convicted
defendant-appellant James Miller of five counts of wire
fraud and four counts of filing false tax returns, finding that
he had embezzled over $300,000 from the company for
which he served as managing member and president. Miller
now appeals his conviction, as well as the district court’s
denial of various pre- and post-trial motions seeking
dismissal of the indictment, additional discovery, and other
forms of relief.
This appeal presents two main questions. The first is
whether the jury charge misstated the law by instructing that
wire fraud under 18 U.S.C. § 1343 requires the intent to
“deceive or cheat” rather than the intent to “deceive and
cheat.” We conclude that the charge was erroneous. Several
other circuit courts have long held that the crime of wire
fraud requires the specific intent to utilize deception to
deprive the victim of money or property, i.e., to cheat the
victim, and we now align the law of the Ninth Circuit with
that of the other circuits and with recent Supreme Court
precedent. Nevertheless, we find that the erroneous
instruction was harmless in this case.
The second question here presented is whether an
Assistant U.S. Attorney (AUSA) from the Central District of
California who had a personal and financial interest in the
outcome of this case impermissibly tainted the prosecution
by involving himself in the early stages of the investigation
and then continuing to express interest in the case even after
the entire U.S. Attorney’s Office for the Central District of
California recused itself from the matter. We are deeply
troubled by this Assistant’s disregard of elementary
UNITED STATES V. MILLER 5
prosecutorial ethics. But we also note that as soon as the
Department of Justice became aware of the impropriety, it
took every necessary step to cure any resulting taint,
including turning over the entire prosecution of the case to
disinterested prosecutors from the Southern District of
California. We therefore hold that the misconduct of the
Central District Assistant does not entitle Miller to any relief.
Because we also find Miller’s remaining arguments to be
without merit, we affirm his conviction.
Background
Trial testimony established that, during the relevant time
period, defendant-appellant James Miller served as the
president and managing member of an online retail platform
called MWRC Internet Sales, LLC. Some years earlier, an
entrepreneur named Russell Lesser, who was Miller’s long-
time friend, had founded MWRC and recruited Miller to
work for the company. As he took on more senior roles,
Miller’s job responsibilities grew to include management of
MWRC’s day-to-day finances, with limited oversight by
Russell Lesser.
In 2009, Miller, who was experiencing personal financial
difficulties, began writing himself checks from one of
MWRC’s bank accounts. He did so without the knowledge
or consent of Russell Lesser or anyone else at MWRC. By
the end of 2010, he had issued a total of about $130,000 to
himself and had paid back roughly $30,000. In March 2011,
Miller disclosed to Russell Lesser a hint of what he had done,
but falsely told Lesser that he had only written himself
checks totaling $30,000. Upon hearing this, Lesser told
Miller, “you can’t do that. That is stealing.” Miller then
expressed remorse and promised to never write himself
checks again.
6 UNITED STATES V. MILLER
Miller only kept this promise for two months. He then
wrote himself another $3,000 check on April 29, 2011, and
over the rest of 2011 and 2012, wrote himself around fifty
additional checks from MWRC, totaling additional amounts
of another $200,000 or so. To disguise his payments, Miller
often listed them in MWRC’s ledger as internal transfers
between the company’s two bank accounts. Russell Lesser
eventually noticed that these ledger entries did not
correspond to actual deposits into the purported recipient
account. He then obtained bank records and cancelled
checks, which led to his discovery of the continuing check-
writing fraud. By the time of this discovery, Miller had
embezzled about $330,000 from MWRC. 1 Miller had also
failed to report any of this money as income on his tax
returns.
Based on the foregoing, a grand jury indicted Miller on
five counts of wire fraud in violation of 18 U.S.C. § 1343
and four counts of filing false federal tax returns in violation
of 26 U.S.C. § 7206(1). Miller pled not guilty on all counts
and proceeded to trial in June 2017. His chief defense was
that he always intended to (and eventually did) pay back the
full amount he had taken from MWRC. He also argued that
he always believed the funds to be loans that he was
authorized to issue to himself. At the conclusion of trial,
however, the jury convicted Miller on all counts.
On September 11, 2017, the trial court sentenced Miller
to nine months’ imprisonment, to run concurrently on all
counts, two years of supervised release, and a special
1
At this point, Miller had repaid to MWRC about $95,000 of the
embezzled funds. Of course, subsequent repayment is of itself no defense
to embezzlement or wire fraud, though it may bear on the issue of intent.
UNITED STATES V. MILLER 7
assessment of $900. Miller is on bail pending disposition of
this appeal.
At trial, Miller requested a jury instruction stating that,
to be guilty of wire fraud, he must have intended to “deceive
and cheat” MWRC. The trial court, however, delivered the
Ninth Circuit’s model jury instruction, which states that wire
fraud instead requires only the intent to “deceive or cheat”
(emphasis supplied) the victim. As his first issue on this
appeal, Miller argues that this jury instruction misstated the
law.
The facts that give rise to Miller’s second issue on appeal
occurred early in the investigation of this case. Indeed,
Miller goes so far as to speculate about whether law
enforcement would even have investigated him in the first
place were it not for the early involvement of Russell
Lesser’s son, Gregory (“Greg”) Lesser, an AUSA in the U.S.
Attorney’s Office for the Central District of California and
himself a 1.25% member of MWRC. Upon learning from his
father of Miller’s embezzlement, Greg Lesser called a friend
at the FBI to report Miller. 2 This outreach, Miller argues,
may well have expedited, or otherwise influenced, the
agency’s decision to open an investigation and to begin
coordinating with prosecutors in the Central District office.
In addition, over the next three weeks, the FBI arranged a
meeting at which Russell Lesser, wearing a wire, confronted
2
Specifically, AUSA Lesser reached out to a friend at the FBI, who
put the Lessers in touch with another agent. That agent in turn referred
the case to Special Agent Joseph Swanson “to open an investigation.”
Shortly thereafter, Swanson called Greg Lesser to inform him that the
FBI would be reaching out to the U.S. Attorney’s Office about the Miller
matter.
8 UNITED STATES V. MILLER
Miller about his check-writing, leading to some admissions
from Miller. 3
It was not until approximately three weeks after he had
first called his friend in the FBI that Greg Lesser reported his
obvious conflict-of-interest in the Miller case to his
supervisor in the Central District. At that point the supervisor
recused the entire office and turned over the matter to the
U.S. Attorney’s Office for the Southern District of
California. 4 However, unbeknownst to the Southern District
prosecutors, Greg Lesser continued for a while to maintain a
tangential but still inappropriate level of involvement in the
case. For example, as detailed below, AUSA Lesser had
additional direct and indirect contact with Special Agent
Swanson concerning the progress of the case.
The Government disclosed all of this to Miller well in
advance of trial, at which point Miller filed a motion for
additional discovery into Greg Lesser’s involvement in the
case. The district court denied this motion except to order the
Government to produce the grand jury testimony from
Miller’s indictment proceedings in order to confirm that the
grand jury was not presented with testimony that was tainted
by Greg Lesser’s involvement. After the Government
produced the grand jury transcripts, Miller filed a motion to
dismiss the indictment with prejudice on two grounds. First,
Miller moved to dismiss the indictment under the Due
3
At this meeting, Lesser asked, “[D]o you admit that’s money that’s
been stolen?” and Miller replied, “Yes. Well . . . [w]ith an intention to
repay.” Miller also acknowledged that he had used some of the money
to make payments on his personal mortgage and credit card debt.
4
The Southern District prosecutors who handled the matter still, of
course, prosecuted the case in the Central District, where most of the
underlying events occurred.
UNITED STATES V. MILLER 9
Process Clause of the Fifth Amendment or, alternatively,
under the trial court’s supervisory powers, because of Greg
Lesser’s role as an interested prosecutor. See United States
v. Restrepo, 930 F.2d 705, 712 (9th Cir. 1991). Second,
Miller moved to dismiss the indictment under the Due
Process Clause because of allegedly false testimony that was
presented to the grand jury. The district court denied both
grounds, leading to Miller’s second main issue on this
appeal.
Discussion
I. The Jury Instructions
At trial, the Government requested that the court charge
the jury that, to be guilty of wire fraud, a defendant must
have acted with the intent to “deceive or cheat.” As thus
stated in the alternative, Miller could theoretically have been
convicted of deceiving MWRC (as, for example, through the
false ledger entries), even if he had no intent to cheat
MWRC, that is to, “deprive [MWRC] of something valuable
by the use of deceit or fraud,” Merriam-Webster’s Collegiate
Dictionary, 10th ed. (1997). The defense, based on its view
that Miller’s alleged belief that his withdrawals were simply
“loans” meant that he lacked an intent to cheat, requested an
instruction that wire fraud requires the intent to “deceive and
cheat.” Over the defense’s objection, but in line with existing
Ninth Circuit pattern instructions, the district court gave the
Government’s proposed instruction, and Miller now appeals
his conviction on the ground that this instruction misstated
the law.
We review de novo whether a trial court’s jury
instructions correctly stated the elements of a crime, United
States v. Anguiano-Morfin, 713 F.3d 1208, 1209 (9th Cir.
2013), and we have no trouble concluding that this
10 UNITED STATES V. MILLER
instruction was erroneous. Like the mail fraud statute from
which it is derived, the wire fraud statute, in plain and simple
language, criminalizes the use of interstate wires to further,
not mere deception, but a scheme or artifice to defraud or
obtain money or property, i.e., in every day parlance, to
cheat someone out of something valuable. It follows that to
be guilty of wire fraud, a defendant must act with the intent
not only to make false statements or utilize other forms of
deception, but also to deprive a victim of money or property
by means of those deceptions. In other words, a defendant
must intend to deceive and cheat.
This has long been the law of several other circuits. For
example, in United States v. Walters, 997 F.2d 1219 (7th Cir.
1993), the court reviewed the conviction for mail fraud 5 of a
sports agent who had defrauded the NCAA, not by stealing
its property, but by inducing college athletes to sign secret
representation contracts in violation of the Association’s
rules. In other words, Walters had deceived, but not cheated,
his victim. The Seventh Circuit reversed Walters’
conviction, holding that the statute requires “a scheme to
obtain money or other property from the victim,” and that
“[l]osses that occur as byproducts of a deceitful scheme do
not satisfy the statutory requirement.” Id. at 1227.
Other circuits have held similarly. The Second Circuit
had already concluded as much some two decades before
Walters, holding in United States v. Regent Office Supply
Co., 421 F.2d 1174, 1180 (2d Cir. 1970) that “the
5
Although Walters was prosecuted under the mail fraud statute,
18 U.S.C. § 1341, courts typically interpret the mail and wire fraud
statutes the same way, as their language is largely identical. See, e.g.,
United States v. Kuecker, 740 F.2d 496, 504 (7th Cir. 1984); United
States v. Greenberg, 835 F.3d 295, 305 (2d Cir. 2016).
UNITED STATES V. MILLER 11
government can[not] escape the burden of showing that
some actual harm or injury [to the victim’s money or
property] was contemplated by the schemer.” See also
United States v. Starr, 816 F.2d 94, 101 (2d Cir. 1987) (“[I]t
is error for a trial judge to charge a jury that contemplated
harm is not an element of fraudulent intent.”). The D.C.
Circuit has also agreed, at least in dicta. United States v.
Lemire, 720 F.2d 1327, 1335–36 (D.C. Cir. 1983) (“[T]here
is judicial consensus about certain requisite elements of a
scheme to defraud. . . . [T]he scheme to defraud must
threaten some cognizable harm to its target. . . .”). See also,
e.g., United States v. Allen, 491 F.3d 178, 187 (4th Cir. 2007)
(upholding a jury instruction that, for the purposes of the
wire fraud statute, to act with the intent to defraud means “to
act knowingly and with the specific intent to deceive, for the
purposes of causing some financial or property loss to
another”); 2 Sand et al. Modern Federal Jury Instructions,
Instruction 44-5 (2019) (“‘Intent to defraud’ means to act
knowingly and with the specific intent to deceive, for the
purpose of causing some financial or property loss to
another.”).
The Ninth Circuit, on the other hand, employs the
“deceive or cheat” language in its model jury instruction on
wire fraud, Manual of Modern Criminal Jury Instructions
for the District Courts of the Ninth Circuit § 8.124 (2019),
and this court has upheld this instruction on at least three
occasions in the past. United States v. Shipsey, 363 F.3d 962,
967 (9th Cir. 2004); United States v. Treadwell, 593 F.3d
990, 998–99 (9th Cir. 2010); see United States v. Livingston,
725 F.3d 1141, 1148 (9th Cir. 2013). Nor is this the only
circuit that uses the “deceive or cheat” language. See
Treadwell, 593 F.3d at 999 (citing the model instructions of
the Third, Fifth, Sixth, Tenth, and Eleventh Circuits as
support for the “deceive or cheat” formulation).
12 UNITED STATES V. MILLER
But we think that these holdings are no longer tenable in
light of the Supreme Court’s intervening ruling in Shaw v.
United States, 137 S. Ct. 462 (2016). Indeed, another panel
of this court has already acknowledged as much in a non-
precedential memorandum disposition. United States v.
George, 713 F. App’x 704, 705 (9th Cir. 2018). 6 In Shaw,
the Supreme Court considered a jury instruction defining
“scheme to defraud” for the purpose of the bank fraud
statute 7 as “any deliberate plan of action or course of conduct
by which someone intends to deceive, cheat, or deprive a
financial institution of something of value.” Id. at 469. The
Court cast serious doubt on the accuracy of this instruction
on the ground that “the scheme must be one to deceive the
bank and deprive it of something of value.” 8 Id. We think
that this language and reasoning clearly control here.
Although the wording of Shaw’s instruction was not
identical to Miller’s, both arguably allowed a jury to convict
“if it found no more than that [the defendant’s] scheme was
one to deceive the [victim] but not to ‘deprive’ the [victim]
of anything of value.” Id. In light of Shaw, we therefore
overrule our prior cases on this question and hold that wire
fraud requires the intent to deceive and cheat — in other
6
But see United States v. Stewart, 728 F. App’x 651, 653 (9th Cir.
2018) (affirming the “deceive or cheat” instruction without analyzing it
in light of Shaw).
7
18 U.S.C. 1344(1). Because the bank, mail, and wire fraud statutes
all use highly similar language, we take the Supreme Court’s reasoning
in Shaw to apply to the wire fraud statute as well.
8
The Court remanded the case to the Ninth Circuit for us to
determine whether the instruction was lawful. 137 S. Ct. at 470. On
remand, a panel of this court held that this argument was not properly
preserved below, and, in any case, any error in the instruction was
harmless. United States v. Shaw, 885 F.3d 1217 (9th Cir. 2018).
UNITED STATES V. MILLER 13
words, to deprive the victim of money or property by means
of deception.
Despite this error in the jury charge, however, we affirm
Miller’s conviction on the ground that the error was
harmless. See United States v. Wilkes, 662 F.3d 524, 544 (9th
Cir. 2011). It is true that the Government emphasized the
“deceive or cheat” distinction in its summation, arguing to
the jury that Miller’s false checkbook entries were sufficient
to demonstrate intent to deceive, and therefore sufficient
evidence that Miller had the mens rea for wire fraud. 9
Nevertheless, we still find beyond a reasonable doubt that
the jury would have convicted Miller even if it had been
properly instructed, for two reasons:
First, Miller’s primary defense — that he was not guilty
of wire fraud because he intended to pay back the funds he
deceptively obtained from MWRC — is not a defense at all.
In United States v. Treadwell, this court already considered
and rejected the argument that the wire fraud statute requires
an intent to permanently deprive a victim of money or
property. 10 593 F.3d at 996–98 (citing with approval United
States v. Hamilton, 499 F.3d 734, 736 (7th Cir. 2007) (“If
you embezzle from your employer you are not excused just
because you had an honest intention of replacing the money,
9
The falsified ledger entries were, to be sure, also strongly probative
of Miller’s intent to cheat, and the jury may properly have considered
them in that light.
10
To be clear, we overrule Treadwell in part, insofar as we hold that
the “deceive or cheat” instruction misstates the requirement that wire
fraud requires the intent to deprive a victim of money or property, at least
momentarily. But nothing in Shaw compels us to go so far as to hold that
wire fraud requires an intent to permanently deprive the victim of
property. We know of no cases that so hold, and appellant cites none.
14 UNITED STATES V. MILLER
maybe with interest . . . .”). Intent to repay, therefore, is not
a defense to wire fraud.
Second, Miller’s only other material defense was that, at
the very time he obtained the funds, he believed the funds to
be bona fide loans that he was fully authorized to issue to
himself, albeit by means of the deceptive ledger entries. This
defense did, in effect, raise the claim that Miller, while
intending to deceive, did not intend to cheat. But we are
persuaded, based on other language in the jury instructions,
that there is no way the jury made this determination. Most
importantly, the district court’s instruction on the “scheme
to defraud” element of the wire fraud counts told the jury
that it must find that Miller “knowingly engaged in a scheme
or plan to defraud or obtain money or property by means of
false or fraudulent pretenses, representations, or promises.”
If the jury had believed that there was any inconsistency
between this language and the subsequent language about
“deceive or cheat,” they undoubtedly would have sought
further instruction, which they did not. Further, any notion
that the jury thought that Miller was guilty of deception, but
not cheating, because he allegedly had permission to give
himself loans from company funds is flatly contradicted by
the jury’s conviction on all the tax counts. This is because
the jury was expressly instructed that “[t]he proceeds of a
loan are not taxable income,” and that Miller could not be
convicted of filing a false tax return unless he did so
“willfully.” So instructed, the jury could only have convicted
Miller of the tax counts if they found beyond a reasonable
doubt that he did not really believe that the funds he took
from the company were bona fide loans. For these reasons,
we hold that the error in the jury instructions was harmless.
UNITED STATES V. MILLER 15
II. The Interested Prosecutor
“A prosecutor has the responsibility of a minister of
justice and not simply that of an advocate.” Model Rules of
Professional Conduct Rule 3.8 Cmt. 1. She represents not
her own interest but “the interest of society as a whole.”
Ferri v. Ackerman, 444 U.S. 193, 202–03 (1979). For this
very reason, the Department of Justice holds United States
Attorneys and their Assistants to exacting ethical standards,
not least with respect to actual and apparent conflicts of
interest. See, e.g., U.S. Attorneys’ Manual § 1-4.320(F)
(“Employees may not engage in outside activities that create
or appear to create a conflict of interest with their official
duties. Such a conflict exists when the outside activity would
. . . create an appearance that the employee’s official duties
were performed in a biased or less than impartial manner.”).
Moreover, federal law itself contains a criminal prohibition
on prosecutors and other government employees
“participat[ing] personally and substantially” in a “judicial
or other proceeding” in which they have an interest.
18 U.S.C. § 208.
AUSA Greg Lesser’s role in the Miller prosecution,
however limited, was a clear violation of his ethical and
professional duties. Nothing, of course, prevented his father
from reporting the embezzlement to the FBI, as through a
public tip line or the like. But it was totally inappropriate for
AUSA Lesser to, at a minimum, create the appearance of
having used his personal contacts in the Bureau as a means
to pull strings in favor of an investigation. 11 See U.S.
11
We observe, as does Miller, that the FBI did not produce any
“302 reports” detailing its contacts with Greg Lesser, as it would
typically have done to memorialize contacts with a complaining witness.
16 UNITED STATES V. MILLER
Attorneys’ Manual § 9-27.260(A)(3) (“In determining
whether to commence or recommend prosecution or take
other action against a person, the attorney for the
government should not be improperly influenced by . . . [t]he
possible affect [sic] of the decision on the attorney’s own
professional or personal circumstances.”). And his errors
compounded: after helping to initiate the Miller
investigation, Lesser faced an obvious duty to report his
conflict of interest (and presumptive recusal) to his
supervisor as soon as possible. See U.S. Attorney’s Manual
§ 3-2.170 (“A United States Attorney who becomes aware
of circumstances that might necessitate his or her recusal or
that of the entire office, should promptly notify [the general
counsel’s office] to discuss whether a recusal is required.”)
(emphasis supplied); id. § 3-2.220 (same recusal rules apply
to AUSAs). Instead, inexplicably, he waited three weeks to
disclose his conflict, even while his father was, at the behest
of the FBI, secretly recording a conversation with Miller.
Just as concerning are AUSA Lesser’s apparent
continued attempts to involve himself in the Miller case even
after the Central District’s recusal. For example, in January
2013, AUSA Lesser called Special Agent Swanson to
inquire, “in his capacity as part-owner (or part-shareholder)
of MWRC,” about the status of the case. 12 At some point
after that, Greg Lesser solicited his colleagues’ help through
his work e-mail to track down information on Mr. Miller’s
employment history. These attempts represented a
This implies that the FBI agents viewed Greg Lesser, at least initially,
not as a witness, but as the prosecutor.
12
Special Agent Swanson merely replied that the investigation was
ongoing.
UNITED STATES V. MILLER 17
continuing violation of Greg Lesser’s ethical obligations as
an Assistant United States Attorney.
The question before us, however, is not whether AUSA
Lesser acted improperly, which is clear. Our question is
whether Lesser’s ethical and professional lapses entitle
Miller to dismissal of the indictment. We review the district
court’s denial of Miller’s motion to dismiss on Due Process
grounds de novo, and we review for abuse of discretion the
district court’s decision not to dismiss the indictment under
its supervisory powers. United States v. Barrera-Moreno,
951 F.2d 1089, 1091 (9th Cir. 1991); United States v.
Restrepo, 930 F.2d 705, 712 (9th Cir. 1991).
Although we have held that a prosecutor may violate a
defendant’s Due Process rights through conduct that “is so
grossly shocking and so outrageous as to violate the
universal sense of justice,” Restrepo, 930 F.2d at 712
(quoting United States v. O’Connor, 737 F.2d 814, 817 (9th
Cir. 1984)), we think that the facts of this situation do not
rise to that level, chiefly because the prosecutorial
improprieties had no material effect on the case and because
the Department of Justice took every step it could reasonably
have been expected to take to cleanse the Miller prosecution
of any possible taint from AUSA Lesser’s involvement.
Most significantly, after the Central District of California
recused itself from any further involvement in the
prosecution, an AUSA from the Southern District of
California took over the case. She had no contact with Lesser
whatsoever, and she came to an independent decision on
whether and how to charge Miller. And although AUSA
Lesser’s limited attempts to involve himself in the case after
the Central District’s recusal were more than sufficient to
create an appearance of impropriety, there is no indication
that Lesser in any way influenced the prosecutor who was
18 UNITED STATES V. MILLER
actually in charge of the case at that time. Further, even
during the three weeks before the Central District’s recusal,
there is no evidence that AUSA Lesser himself, rather than
Special Agent Swanson, was directing the investigation of
Miller.
On the same analysis, the facts of this situation do not
implicate the Supreme Court’s holding in Young v. U.S. ex
rel. Vuitton et Fils S.A., 481 U.S. 787 (1987), the chief case
on which Miller relies. In Young, the Court exercised its
supervisory powers to reverse the criminal contempt
convictions of four defendants because the prosecutor who
prosecuted the case and obtained those convictions was
conflicted. Indeed, the conflict was extreme, as the
prosecutor, specially appointed by the district court, was also
serving as counsel to the party that was the beneficiary of the
injunction that defendants were being prosecuted for civilly
violating. Id. at 790. By contrast, AUSA Lesser was not in
any material respect Miller’s prosecutor. At most, AUSA
Lesser may have induced the FBI to look at the case more
closely than it might otherwise have in the case’s early
stages. In any event, given the blatant evidence of
embezzlement, it would not have taken much to catch the
FBI’s attention if, instead, it had been reported by Russell
Lesser instead of Greg Lesser, as it most likely would have
been. And all the crucial decisions in the investigation and
prosecution were made by Special Agent Swanson and the
Southern District AUSA who took over the case from the
Central District. The district court therefore did not abuse its
discretion in denying Miller’s motion to dismiss the
indictment under the court’s supervisory powers. 13
13
For the same reasons, the district court also did not abuse its
discretion in denying Miller’s motion for additional discovery beyond
UNITED STATES V. MILLER 19
Miller also argues that the district court erred in denying
his motion to dismiss on the ground that the grand jury
received materially false testimony. 14 “[T]he Due Process
Clause of the Fifth Amendment is violated when a defendant
has to stand trial on an indictment which the government
knows is based partially on perjured testimony, when the
perjured testimony is material, and when jeopardy has not
attached.” United States v. Basurto, 497 F.2d 781, 785 (9th
Cir. 1974). But here, the false testimony Miller cites — a
statement by an FBI agent that Russell Lesser was the
majority shareholder of MWRC (while, in reality, Russell
Lesser was simply a plurality shareholder, owning an 18%
interest in the company) — was not remotely material. 15 The
defense argues that the testimony was material because it
gave the impression that Russell Lesser had total authority
over MWRC, thus potentially leading the grand jury to
discount the idea that Miller believed he was authorized to
lend himself company money. But the grand jury also heard
testimony that Miller had admitted to Lesser that he had
taken the funds without authorization. Moreover, the petit
jury also considered and rejected this defense at trial,
therefore rendering any error in the grand jury testimony
harmless. United States v. Bingham, 653 F.3d 983, 998 (9th
that discussed below. See United States v. Mazzarella, 784 F.3d 532, 537
(9th Cir. 2015).
14
The district court ordered the Government to produce these
transcripts so that the defense could examine “if, for example, Lesser
was creating false evidence or something of that sort.”
15
Miller also points to testimony heard by the grand jury that he had
only paid back $40,000 of the roughly $330,000 he took from MWRC,
while in fact he eventually paid back the entire amount. This is also
immaterial, however, because failure to repay is not an element of wire
fraud, and intent to repay is not a defense. See supra pp. 13–14.
20 UNITED STATES V. MILLER
Cir. 2011) (holding that, after a petit jury convicted the
defendant on all counts, “any error in the grand jury
proceeding connected with the charging decision is deemed
harmless beyond a reasonable doubt”) (quoting People of
Guam v. Muna, 999 F.2d 397, 399 (9th Cir. 1993)). The
district court accordingly did not err in rejecting this Due
Process claim.
III. Additional Arguments
Miller raises two additional arguments, but both are
unpersuasive and do not provide a basis for reversal.
First, Miller challenges the district court’s denial of his
post-conviction motion for an indicative ruling on additional
discovery and/or a new trial based on the disclosure of a
romantic relationship between Special Agent Swanson and
an AUSA in the recused Central District office. 16 Defense
counsel argues that such evidence would have been material
at trial and speculates that “[t]he relationship may also have
16
In October 2017, after Miller’s conviction and sentencing, the
U.S. Attorney’s Office for the Southern District of California learned of
an investigation by the Justice Department’s Office of Professional
Responsibility (OPR) into this previously-undisclosed relationship. The
Southern District prosecutors on the Miller case informed defense
counsel of this development about a month later, as this appeal was
pending. In response, Miller requested discovery from the Government
including the name of the AUSA; any communications between this
AUSA, Swanson, and/or Greg Lesser concerning the Miller case; and
any reports or conclusions from the OPR investigation. The Government
voluntarily provided the name of the AUSA, told defense counsel that
there were no such communications on their respective government
email accounts and that this AUSA had not worked on the Miller case,
and noted that the OPR investigation into Swanson had been closed. The
district court later denied the motion.
UNITED STATES V. MILLER 21
resulted in a significant breach of the recusal order” by
creating a back channel to Greg Lesser.
Even if we apply de novo review, 17 we hold that the
district court correctly denied Miller’s motion for a new trial
because Special Agent Swanson’s failure to disclose his
relationship with an AUSA is not sufficiently material to
warrant relief. This would have served as impeachment
evidence at most, and even if the jury had deeply discounted
Swanson’s testimony, we are convinced that they still would
have convicted Miller. It is true that Swanson was an
important Government witness; perhaps most significantly,
Swanson testified that Miller had admitted to the FBI that he
knew that writing himself checks from MWRC’s account
was wrong. But this testimony was far from the only
evidence establishing Miller’s guilt. Not least among the
other evidence, the jury still had the wire recording of the
November 28, 2012 conversation between Russell Lesser
and Miller, in which Miller admits to Lesser’s
characterization of his activities as stealing and
embezzlement, albeit “[w]ith an intention to repay” (which,
as noted, is no defense). The jury also heard Lesser’s
testimony about Miller’s 2011 confession and subsequent
17
As a threshold matter, the parties disagree on how to characterize
Miller’s claim. The defense argues that it is a motion for a new trial based
on a Brady violation, see Brady v. Maryland, 373 U.S. 83 (1963), while
the Government argues that it is a Fed. R. Crim. P. 33 motion for a new
trial based on newly-discovered evidence. The parties would therefore
have us apply different standards of review: we would review the district
court’s denial of a motion for a new trial based on a Brady violation de
novo, United States v. Pelisamen, 641 F.3d 399, 408 (9th Cir. 2011),
while we would review the district court’s denial of a motion for a new
trial based on newly discovered evidence for abuse of discretion, United
States v. Hinkson, 585 F.3d 1247, 1259 (9th Cir. 2009). For the sake of
argument, we apply the standard more favorable to the defense.
22 UNITED STATES V. MILLER
continued check-writing, as well as Miller’s handwritten
ledger entries that disguised his payments to himself as
transfers from one of MWRC’s bank accounts to another. All
of this evidence was highly probative of Miller’s guilt, and
we accordingly do not find a “reasonable probability” that
the jury would have acquitted Miller if it had heard the
impeachment evidence about Swanson. 18 Kyles v. Whitley,
514 U.S. 419, 421–22 (1995).
On the same analysis, we hold that the district court did
not abuse its discretion in denying Miller’s motion for
additional discovery, since any such discovery would not
have produced evidence material to the outcome of the trial.
See United States v. Rivera-Relle, 333 F.3d 914, 918 (9th
Cir. 2003). Finally, any suggestion that the Central District
AUSA was serving as a conduit for nefarious
communications between Special Agent Swanson and Greg
Lesser is pure speculation by defense counsel and does not
merit relief.
18
The parties’ dispute about whether Miller has stated a Brady claim
also impacts the materiality standard that we apply. Brady evidence is
material if the admission of the suppressed evidence would result in a
“reasonable probability” of an acquittal. Kyles, 514 U.S. at 421–22, i.e.,
“a probability sufficient to undermine confidence in the outcome of the
trial.” United States v. Price, 566 F.3d 900, 911 (9th Cir. 2009) (citing
United States v. Bagley, 473 U.S. 667, 682 (1985) (plurality)) (internal
quotation marks omitted). In contrast, the bar for materiality in a Rule 33
claim is higher. To win a new trial based on newly-discovered evidence,
the defendant must show, among other requirements, that “the new
evidence is not merely . . . impeaching;” and that it “would probably
produce an acquittal.” United States v. Jackson, 209 F.3d 1103, 1106
(9th Cir. 2000). We need not reach the question of whether Miller has
demonstrated Brady suppression; since we hold that the evidence is not
material under the Brady standard, a fortiori it is also not material under
the Rule 33 standard.
UNITED STATES V. MILLER 23
Second, Miller appeals the district court’s denial of his
motion under Fed. R. Crim. P. 29(c) for a judgment of
acquittal on the wire fraud counts based on insufficient
evidence of an interstate wire communication. Rule 29(c)
requires a trial court to enter a judgment of acquittal if the
Government fails to present sufficient evidence to sustain a
conviction. Sufficient evidence is that which, “view[ed] . . .
in the light most favorable to the prosecution, any rational
trier of fact could have found the essential elements of the
crime beyond a reasonable doubt.” United States v. Dearing,
504 F.3d 897, 900 (9th Cir. 2007) (internal quotation marks
and citations omitted). Because defense counsel made this
motion at the close of the Government’s evidence and then
renewed the motion after the verdict, this Court reviews the
district court’s ruling de novo. Id.
We are satisfied that the Government introduced more
than sufficient evidence for a rational juror to conclude that
Miller utilized at least one interstate wire communication in
furtherance of his scheme. The Government called Lynn
Flanagan, the former operations manager at the bank where
MWRC maintained the account from which Miller
fraudulently withdrew funds. She testified that all checks
deposited into or drawn out of accounts at the bank are
processed via interstate wires, either through the Federal
Reserve Bank in Atlanta or Kansas City or through a clearing
bank in Wisconsin called FCN. 19 This testimony is sufficient
19
Defense counsel makes much of the fact that Flanagan’s
testimony as to the location of FCN was, read literally, ambiguous.
Referring to FCN (the “Fiserv Clearing Network”), the Government
asked Flanagan, “Where is Five Serve [sic] located,” and Flanagan
answered Wisconsin. But since Flanagan never explicitly defined the
acronym FCN, defense counsel argues that a rational juror might have
concluded that FCN and “Five Serve” were different entities and that
FCN might have been located within California. We think, though, that
24 UNITED STATES V. MILLER
evidence to establish the interstate wire element of the
§ 1343 offenses beyond a reasonable doubt.
Conclusion
We have considered Miller’s remaining arguments and
find them totally without merit. Accordingly, for the
foregoing reasons, the judgment of the district court is
AFFIRMED.
the correct meaning was obvious from the context. Moreover, the overall
thrust of Flanagan’s testimony was that all checks drawn on an account
at this bank travelled via interstate wire. For example, when asked
whether “that transaction that you just described [would] still happen
even though both the banks are in California,” Flanagan replied, “[y]es,
it would. We did not have direct clearing.”