United States v. Prosperi

UNITED STATES of America, Plaintiff-Appellee,
v.
Arnold Paul PROSPERI, Defendant-Appellant.
United States of America, Plaintiff-Appellant,
v.
Arnold Paul Prosperi, Defendant-Appellee.
Nos. 98-4605, 98-4692.
United States Court of Appeals,
Eleventh Circuit.
Jan. 28, 2000.
Appeals from the United States District Court for the Southern District of Florida. (No. 96-08086-CR-KLR),
Kenneth L. Ryskamp, Judge.
Before COX, Circuit Judge, KRAVITCH, Senior Circuit Judge, and PROPST*, Senior District Judge.
KRAVITCH, Senior Circuit Judge:
This appeal involves a statutory interpretation question of first impression: whether the definition
of "counterfeited" provided in 18 U.S.C. § 513(a) incorporates or replaces the preexisting common law
definition which requires a showing of similitude between the counterfeit and genuine obligations. Also
presented is the extent to which evidence, admitted for charges that were later dismissed, may "spill over"
and prejudice the jury's consideration of the remaining counts. Finally, this appeal considers allegations of
juror misconduct, a disputed Allen charge, and challenges to the admission of evidence of extrinsic offenses.
I. BACKGROUND AND PROCEDURAL HISTORY
Arnold Paul Prosperi practiced real estate law in Palm Beach, Florida. As an attorney, Prosperi
represented Patrick Donovan, an Irish citizen, and managed various financial matters for him. From
approximately 1979 until 1995, Prosperi handled all of Donovan's investments in the United States, both in
*
Honorable Robert B. Propst, Senior U.S. District Judge for the Northern District of Alabama, sitting by
designation.
real estate and securities, acting as attorney and trustee. During his winter visits to Florida, Donovan met with
Prosperi and reviewed the status of his investments at these meetings. Prosperi conducted much of Donovan's
business through the Amaretto Corporation ("Amaretto"), a company incorporated in the Netherlands
Antilles. Amaretto was beneficially owned by Donovan and his family, but Prosperi was granted power of
attorney with authority to conduct all the corporation's affairs on Donovan's behalf.
During this period, Prosperi orchestrated three major real estate transactions and one mortgage
refinancing for Donovan. First, Prosperi arranged the purchase and subsequent sale of a golf course from
Amaretto to the United States Department of Veterans Affairs for $3,050,000 ("the Holigolf transaction").
Second, Prosperi arranged the purchase, renovation, and sale of a residential property at 143 East Inlet Drive
in Palm Beach, Florida ("the Inlet Drive transaction"). For this transaction only, Amaretto purchased 50%
of the property and initially loaned Prosperi money to acquire the other 50%. Third, Prosperi bought property
at 109 Royal Palm Way and constructed a commercial bank building using another company beneficially
owned by Donovan, Perth Holdings, Ltd. ("the Royal Palm transaction"). Prosperi also managed the building
on Donovan's behalf. Finally, Prosperi arranged the mortgage refinancing on the Royal Palm property for
an amount $1.6 million in excess of the remaining principal ("the Refinancing transaction").
According to the Government, Prosperi began to misappropriate funds from Donovan's proceeds in
1987 for his personal use, creating false account statements and other documents to hide his subterfuge.
Prosperi allegedly diverted the entire $3 million proceeds of the Holigolf transaction for his personal use1
while advising Donovan that these funds were invested in certificates of deposit ("CDs"). To bolster the
deception, Prosperi created documents purporting to be CDs issued by J.P. Morgan bank and Morgan
Guaranty Trust together with supporting paperwork. Prosperi presented these documents to Donovan during
their annual meetings and represented them as genuine investments. Prosperi then failed to report the
misdirected funds on his federal income tax returns, omitting $905,616 from his 1989 return and $532,000
1
The total proceeds of the sale were $3,050,000. Both parties agree that Prosperi retained $50,000 of that
amount as remuneration for arranging the transaction.
2
from his 1990 return. The Government also claims that Prosperi diverted rent revenue from the properties
on Inlet Drive and Royal Palm Way, as well as proceeds from the Refinancing transaction, and created false
account statements to shield these activities from Donovan.
Donovan did not suspect the embezzlement until he was contacted by a representative of the United
States Internal Revenue Service investigating Amaretto's tax liability arising from the Holigolf transaction.
Although Donovan initially denied any connection to the company,2 he later acknowledged his interest and
cooperated with the agent. During that time, Donovan provided the Government with the financial documents
he received from Prosperi and taped most of his phone conversations with Prosperi in which Prosperi
apologized for taking money from Donovan and promised to return the money with interest, as soon as he
was able.
In September 1996, a grand jury in Florida returned an indictment against Prosperi charging him with
two counts of mail fraud under 18 U.S.C. § 1341 (Counts I and II), three counts of possessing a counterfeited
security under 18 U.S.C. § 513(a) (Counts III-V), eight counts of money laundering under 18 U.S.C. §§ 1956
and 1957 (Counts VI-XIII), and two counts of filing a false tax return under 26 U.S.C. § 7206(1) (Counts XIV
and XV). The circumstances surrounding the Holigolf transaction proceeds comprised the basis of both the
counterfeiting and tax counts. The mail fraud and money laundering counts were based primarily on
Prosperi's alleged misappropriation of funds from the Inlet Drive transaction, the Royal Palm transaction, and
the Refinancing transaction. In June, 1997, the indictment was superseded to revise the money laundering
counts and to add a forfeiture count under 18 U.S.C. § 982 (Count XVI).
Prosperi filed four separate motions to dismiss Counts I and II, III-V, VI-IX, and X-XIII, respectively.
The district court adopted the Report and Recommendation of the magistrate judge and denied all the motions
to dismiss. The case then proceeded to a two-month long trial. At the close of the Government's evidence,
2
According to Prosperi, Donovan used Amaretto and Prosperi as part of a larger scheme to conceal his
wealth from the Irish Government. Donovan later settled his tax liability with the Irish Government for $4
million but denied that Prosperi's actions on his behalf had any illicit purpose.
3
Prosperi moved for a judgment of acquittal on the mail fraud and money laundering counts on the ground that
the Government had failed to prove that the mailings charged in the indictment furthered the scheme to
defraud. The district court granted the motion and acquitted Prosperi on counts I, II, and VI-XIII. The court
then sent the remaining tax and counterfeiting counts (counts III-V and XIV-XV, respectively) to the jury.
The jury returned a guilty verdict on all counts. Prosperi sought a judgment of acquittal on the
counterfeiting counts on the ground that the Government did not prove the J.P. Morgan CDs bore a sufficient
resemblance to genuine CDs in order to qualify as "counterfeited" within the meaning of 18 U.S.C. § 513.
The district court initially denied the motion, but on reconsideration and after oral argument, granted the
motion and entered an order granting acquittal as to Counts III, IV, and V.3 Prosperi appeals his remaining
convictions on the two tax counts, arguing that he was prejudiced by spillover evidence introduced for the
other counts, irregularities in the jury deliberations, and by the cumulative effect of prejudicial errors during
the trial. The Government, on cross-appeal, challenges the district court's grant of acquittal on the
counterfeiting counts.4 For the reasons that follow, we affirm Prosperi's convictions on the tax counts, reverse
the district court's grant of acquittal on the counterfeiting counts, and remand for resentencing.
II. ANALYSIS
A. Alleged Juror Misconduct
On the second full day of deliberation, a dismissed alternate juror notified Prosperi's counsel that one
of the sitting jurors, Marilyn Budd, had called her in tears because she was being pressured by other jurors
to convict Prosperi. The alternate also related that another sitting juror, Morris Levy, had decided to convict
on the first day of testimony and had arranged the election of a like-minded juror as foreperson. Counsel
reported this to the court and requested a mistrial or an inquiry. The district judge denied the request but sent
3
Prosperi also moved for a new trial on all counts; the district court denied this motion initially and again
after granting Prosperi's motion for acquittal.
4
The Government does not appeal the district court's order granting acquittal on the money laundering and
mail fraud counts.
4
the jury a note reminding them not to discuss the case unless all twelve jurors were present. Later, defense
counsel requested either a mistrial or full investigation after observing juror Levy in a heated discussion with
juror Budd away from the other jurors. The district court ruled that Federal Rule of Evidence 606(b)5
precluded him from inquiring into the jury deliberations. The next morning, the district court conducted a
limited inquiry, at the request of the Government, to determine if the dismissed alternate had exerted an
improper outside influence on Budd. The alternate juror reported that she had advised Budd to resist pressure
to change her vote. The district court did not permit defense counsel to make additional inquiry of the
alternate, again citing Rule 606(b).
Investigation of alleged juror misconduct is committed to the discretion of the district court and is
reviewed only for an abuse of that discretion. See United States v. Harris, 908 F.2d 728, 733 (11th Cir.1990).
Prosperi argues that the district court misapprehended the scope of its discretion under Rule 606(b) in refusing
to conduct an investigation, and that this was a per se abuse of discretion. We repeatedly have recognized
the breadth of the district court's discretion under Rule 606(b), and a "failure to hold a hearing constitutes an
abuse of discretion only when there is evidence that the jury was subjected to influence by outside sources."
United States v. Watchmaker, 761 F.2d 1459, 1465 (11th Cir.1985). In this case, the district court
investigated the possibility of external influence by the excused alternate, but declined to investigate
allegations of internal influence occurring during deliberations. Not only was this decision within its
discretion, but a contrary decision may have invited reversible error. See United States v. Norton, 867 F.2d
5
Federal Rule of Evidence 606(b) provides:
Upon an inquiry into the validity of a verdict or indictment, a juror may not testify as to any
matter or statement occurring during the course of the jury's deliberations or to the effect of
anything upon that or any other juror's mind or emotions as influencing the juror to assent
to or dissent from the verdict or indictment or concerning the juror's mental processes in
connection therewith, except that a juror may testify on the question whether extraneous
prejudicial information was improperly brought to the jury's attention or whether any outside
influence was improperly brought to bear upon any juror. Nor may a juror's affidavit or
evidence of any statement by the juror concerning a matter about which the juror would be
precluded from testifying be received for these purposes.
5
1354, 1366 (11th Cir.1989) (finding no abuse of discretion in district court's declination to question juror
regarding alleged duress during deliberations because the "alleged harassment or intimidation of one juror
by another would not be competent evidence to impeach the guilty verdict"). Even if the district court
underestimated the scope of its discretion under Rule 606(b), the court's ultimate decision not to investigate
allegations of misconduct that were entirely endemic to the deliberations was not an abuse of its discretion.
B. The Contested Allen Charge
During its deliberations, the jury sent the judge a note "indicating a verdict on 3, 4 and 5[the
counterfeiting counts]" but that "they are hung up on 14 and 15 [the tax counts] and ... there is no change in
the near future."6 Over defense counsel's objection, the district judge declined to give a full Allen charge and
instead instructed the jury to "please continue to deliberate on counts 14 and 15."7 Prosperi argues this
instruction constituted an abbreviated Allen charge that coerced the jury's ensuing guilty verdict on all counts.
Prosperi relies exclusively on United States v. Bass, 490 F.2d 846, 854-55 (5th Cir.1974), overruled on other
grounds by United States v. Lyons, 731 F.2d 243, 246 (5th Cir.1984), in which our predecessor court reversed
a conviction coerced by an improper Allen charge.8 This reliance is misplaced. In Bass the jury asked
whether it would be acceptable to return a mixed verdict of guilt on some counts and hung as to others, to
which the district court responded with an instruction to continue to deliberate on those counts for which the
jury were "not yet in unanimous agreement." Id. at 854. The Bass court found that, because this instruction
bore all the coercive aspects of a typical Allen charge but none of its curative features, it may have caused
the jury to believe that only guilty verdicts were acceptable. See id.
An Allen charge in the absence of a prior poll of the jury will warrant reversal only when "inherently
coercive." United States v. Trujillo, 146 F.3d 838, 846 (11th Cir.1998). The instruction given here, however,
6
R34 at 4814-15.
7
Id. at 4815.
8
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir.1981) (en banc), this court adopted as
binding precedent all decisions of the former Fifth Circuit handed down prior to October 1, 1981.
6
can not be properly considered an Allen charge. The judge's simple request that the jury continue
deliberating, especially when unaware of the composition of the jury's nascent verdict, was routine and
neutral. Nothing in the brief instruction suggested that a particular outcome was either desired or required
and it was not "inherently coercive." See Watchmaker, 761 F.2d at 1465 (finding judge's entreaty to "go back
in there and work with those other eleven people and try to render a verdict" was not coercive); see also
Norton, 867 F.2d at 1366 (finding instruction encouraging continued deliberation did not "approximate an
Allen charge or in any other way urge a verdict").9
C. The Counterfeiting Statute
The jury found Prosperi guilty of three counts of making, uttering, or possessing a counterfeited
security with the intent to deceive another person, in violation of 18 U.S.C. § 513(a).10 The statute defines
the term "counterfeited" as "a document that purports to be genuine but is not, because it has been falsely
made or manufactured in its entirety." 18 U.S.C. § 513(c)(1). After the verdict was returned, Prosperi moved
for acquittal on the counterfeiting counts because the Government had failed to establish the requisite
similarity between the J.P. Morgan CDs and genuine CDs. The court initially denied the motion but, on
reconsideration, granted the acquittal. On appeal, the Government argues the district court erred in
interpreting § 513(a) to require a finding of similitude in contravention of the statute's plain definition of the
term "counterfeited." We find the Government's argument persuasive.
9
Prosperi also suggests that, in light of the irregularities in the jury proceedings, the subsequent charge
would appear to the jury as an exhortation to convict. However, the "irregularities" cited by Prosperi, and
discussed in the previous section, are not as irregular as he submits. Any suggestion that the jury was made
more vulnerable to coercion thereby is speculation unsupported by the record.
10
18 U.S.C. § 513(a) provides:
Whoever makes, utters or possesses a counterfeited security of a State or a political
subdivision thereof or of an organization, or whoever makes, utters or possesses a forged
security of a State or political subdivision thereof or of an organization, with intent to
deceive another person, organization, or government shall be fined under this title or
imprisoned for not more than ten years, or both.
7
A district court's interpretation of a statute is a question of law reviewed de novo. See Rodriguez v.
Lamer, 60 F.3d 745, 747 (11th Cir.1995). Interpretation of this particular aspect of the counterfeiting statute
is a question of first impression,11 but recourse to older counterfeiting statutes is instructive. Traditional
counterfeiting statutes left their key term undefined. In determining whether a fraudulent $100 bill was
counterfeited within the meaning of 18 U.S.C. § 264, the Court of Appeals for the Third Circuit applied the
following test:
[W]hether the fraudulent obligation bears such a likeness or resemblance to any of the genuine
obligations or securities issued under the authority of the United States as is calculated to deceive an
honest, sensible and unsuspecting person of ordinary observation and care when dealing with a
person supposed to be upright and honest.
United States v. Lustig, 159 F.2d 798, 802 (3d Cir.1947), rev'd on other grounds, 338 U.S. 74, 69 S. Ct. 1372,
93 L. Ed. 1819 (1949). This has become known as the similitude requirement and was adopted by virtually
every court of appeals including this one. See United States v. Wethington, 141 F.3d 284, 287 (6th Cir.1998);
United States v. Parr, 716 F.2d 796, 807 (11th Cir.1983); United States v. Parnell, 581 F.2d 1374, 1381
(10th Cir.1978); United States v. Anderson, 532 F.2d 1218, 1224 (9th Cir.1976); United States v. Chodor,
479 F.2d 661, 664 (1st Cir.1973); United States v. Smith, 318 F.2d 94, 95 (4th Cir.1963). The counterfeiting
statutes, 18 U.S.C. §§ 472, 473, and 474, were then held to require a finding of similitude, with the
understanding that the common law definition would apply. See Wethington, 141 F.3d at 287 (§ 472);
Chodor, 479 F.2d at 664 (§§ 472, 473, and 474); Smith, 318 F.2d at 95 (§ 472).
11
Two courts have briefly addressed the meaning of "counterfeited" in § 513 in different contexts. In
United States v. Pullman, 187 F.3d 816, 822 (8th Cir.1999), cert. denied, --- U.S. ----, 120 S. Ct. 802, ---
L.Ed.2d ---- (2000), the Eighth Circuit observed, without discussion, that § 513 provided its own definition
of "counterfeited." The question before the Pullman court, however, was whether § 513 applied to documents
"made from scratch," thus its brief discussion of the statute does not illuminate the discussion here. In United
States v. Davis, 888 F.2d 283, 285 (3d Cir.1989), the Third Circuit concluded, without discussion, that
because "washed" automobile certificates satisfied the "falsely made" requirement of 18 U.S.C. § 2314, they
were also counterfeit within § 513's definition as "falsely made or manufactured in its entirety." See also
United States v. Blakey, 960 F.2d 996, 999-1000 (11th Cir.1992) (citing § 513's definition of "counterfeited").
8
With the passage of § 513, Congress broke from the tradition established in §§ 472, 473, and 474 by
incorporating its own definition of the term "counterfeited": "a document that purports to be genuine but is
not, because it has been falsely made or manufactured in its entirety." 18 U.S.C. § 513(c)(1). In spite of this
language, the district court accepted Prosperi's argument that § 513, like its counterfeiting predecessors,
contained an implicit similitude requirement. Finding the government had not met its burden to prove
similitude between the J.P. Morgan CDs and genuine CDs, the court granted Prosperi's motion for acquittal
on the three counterfeiting counts. On appeal, the Government argues the district court misinterpreted the
statute.12
In the case of currency or other generally recognizable documents, a similitude requirement
developed both as a definition, allowing for juries to determine whether a counterfeit document copied its
genuine analogue, and as evidence of the defendant's intent to defraud. See United States v. Hall, 801 F.2d
356, 358-59 (8th Cir.1986). In cases involving less recognizable documents, however, the Government
argues that greater protection for the unsuspecting individual is warranted.
Review of a statute begins with its language. See Landreth Timber Co. v. Landreth, 471 U.S. 681,
685, 105 S. Ct. 2297, 2301, 85 L. Ed. 2d 692 (1985). If the meaning of the statutory language is plain,
reference to legislative history is not necessary. See United States v. Ron Pair Enter., Inc., 489 U.S. 235, 240-
41, 109 S. Ct. 1026, 1030, 103 L. Ed. 2d 290 (1989). By its plain language, § 513 defines the term
"counterfeited" without reference to similitude. Legislative usurpation of existing common law definitions
should not be presumed lightly. See Isbrandtsen Co. v. Johnson, 343 U.S. 779, 783, 72 S. Ct. 1011, 1014, 96
L. Ed. 1294 (1952). But when Congress speaks clearly on an issue, and when the language chosen comports
with the statutory purpose, the legislative definition supplants the preexisting common law definition. See
id.; United States v. Texas, 507 U.S. 529, 533, 113 S. Ct. 1631, 1634, 123 L. Ed. 2d 245 (1993).
12
Both the Government and Prosperi argue the other waived their respective similitude arguments by not
raising them at trial, but the Government timely appealed the district court's grant of acquittal on Prosperi's
counterfeiting counts. Review of this decision turns on the proper interpretation of 18 U.S.C. § 513, a
question we review de novo.
9
In determining that a finding of similitude was required for Prosperi's conviction, the district court
relied on one statement from the legislative history of § 513 stating that the statute's definition of
counterfeited "carries forward the general view that, in order for an article to be counterfeit, it need only bear
such likeness or resemblance to the genuine article as is calculated to deceive an honest, sensible and
unsuspecting person of ordinary observation and care dealing with a person supposed to be upright and
honest." Senate Report of the Committee on the Judiciary, Criminal Code Reform Act of 1981, No. 97-307,
97th Cong. § 1741 at 775-776. In light of the unambiguous language in the statute, reference to the legislative
history was not necessary.
An interpretation of § 513 that does not incorporate a similitude requirement also is supported by the
statute's stated purpose. The Government notes that § 513 was enacted to address the increasing production
of counterfeited documents that are not as generally recognizable as currency, such as CDs. See S.Rep. No.
225, 98th Cong., 1st Sess. at 371, reprinted in 1984 U.S.S.C.A.N. 3182, 3512 ("Present Federal law is
inadequate to combat widespread fraud schemes involving the use of counterfeit State and corporate
securities."). With that goal in mind, Congress needed a broader definition of "counterfeited." If the average
consumer does not know what a genuine CD looks like, she would not be protected fully by a statute
criminalizing only those counterfeits that resemble genuine CDs.13
13
In addition to arguing that § 513 does not require a finding of similitude, the Government rummages
about the case law for decisions in which courts have not required similitude in other counterfeiting cases.
The Government cites Hall, 801 F.2d at 358, for the proposition that similitude is only required in possession
cases. In Hall, the Eighth Circuit held a finding of similitude was not required for a conviction of passing
an altered obligation in violation of 18 U.S.C. § 472. See id. at 360. The court reasoned that the similitude
requirement originated primarily as a definition of "counterfeited" and secondarily as evidence of intent to
defraud, an element of all counterfeiting laws but especially significant in cases of possession only. See id.
at 358-59. Because an intent to defraud could be inferred from the defendant's attempt to pass an altered $10
bill and because the currency involved was altered rather than counterfeited, the Hall court found a similitude
requirement unnecessary for either of its two purposes. Id. at 360. The Hall decision does not inform the
question before this court.
As another alternative, the Government cites United States v. Turner, 586 F.2d 395 (5th
Cir.1978), to argue the similitude requirement was satisfied here. In Turner, our predecessor court
held that crude, one-sided, monochromatic photocopies of dollar bills were counterfeit within the
meaning of 18 U.S.C. § 474 even though they bore scant resemblance to genuine currency. See id.
10
Although § 513's definition of "counterfeited" is unique among counterfeiting statutes, § 2B5.1 of
the United States Sentencing Guidelines defines "counterfeited" in precisely the same terms, see U.S.
Sentencing Guidelines Manual § 2B5.1 applic. n. 3 (1998), and courts interpreting the "purports to be
genuine" language in § 2B5.1 have not required a finding of similitude. See United States v. Webster, 108
F.3d 1156, 1157 (9th Cir.1997) (Section 2B5.1 does "not require counterfeit bills to be of 'passable' quality.
They must 'purport' to be genuine but need not be mistakable as such."); see also United States v. Lamere,
980 F.2d 506, 513 (8th Cir.1992) (U.S.S.G. § 2B5.1 does not "require that the counterfeit bill or bills in
question be of passable quality").
Prosperi suggests that because J.P. Morgan does not issue CDs, the phony J.P. Morgan CDs could
not purport to be genuine. Accepting this argument would license counterfeiters to create fictitious
documents with impunity. Cf. United States v. Schlei, 122 F.3d 944, 972-73 (11th Cir.1997) (holding that
counterfeit, forged, and nonexistent securities were included within the definition of "security" for purposes
of securities fraud charge because to hold otherwise would only encourage fraud), cert. denied, 523 U.S.
1077, 118 S. Ct. 1523, 140 L. Ed. 2d 674 (1998). Prosperi also argues that, without hearing evidence on the
characteristics of a genuine CD, the jury would have been unable to determine whether the CDs "purported
to be genuine." Prosperi notes the false J.P. Morgan CDs here were very crude and lacked many crucial
features of genuine CDs, most significantly a drawer's signature. However, similarity to genuine CDs, to the
extent that could have been elucidated given their inherent variety, is only one factor to consider in
determining whether a security "purports to be genuine."
Using the evidence presented in this case as an example, the jury could have found the fraudulent
CDs "purported to be genuine" because they were accompanied by supporting documentation, were
at 397-98. The court reasoned that the successful use of the phony bills to obtain change from
machines "demonstrated their dangerousness." Id. at 398. The court's decision, however, turned on
the fact that "the language of section 474 covering obligations 'made or executed, in whole or in part,
after the similitude' of genuine obligations is amply broad to include the photocopies in this case."
Id. (quoting 18 U.S.C. § 474) (emphasis added). Because we do not interpret § 513 to require a
finding of similitude, these arguments do not affect our decision in any event.
11
represented as such by an attorney and trustee, and were, in fact, accepted as genuine by the intended victim.
Thus, although similitude to a genuine analogue may help establish that a bogus security "purports to be
genuine," a particular showing of such is not necessary to sustain a conviction under § 513. In any event, the
Government did elicit testimony from Sharon Adams, a manager for a subsidiary of J.P. Morgan, that the
counterfeited J.P. Morgan and Morgan Guaranty Trust Company CDs exhibited many official-looking
features, such as the Morgan name, an account number, opening and maturity dates, initial principal amount,
stated interest rate, and a warning of the penalty for early withdrawal of the deposited funds.14 The jury could
have found these features were included in the counterfeited CDs to increase the likelihood they would be
accepted as genuine, and that is the standard required by § 513. The district court erred in interpreting 18
U.S.C. § 513 to require a similitude requirement.15 The court's order of acquittal will be reversed and
Prosperi's convictions for making, uttering, or possessing a counterfeit security in violation of 18 U.S.C. §
513(a) will be reinstated.
D. Prejudicial Spillover
Prosperi argues his convictions on the tax counts were impermissibly tainted by the substantial
evidence admitted on the mail fraud and money laundering counts that were dismissed before submission to
the jury. The Government acknowledges that the counterfeiting and tax counts were both predicated on the
Holigolf transaction, but argues that nonetheless the evidence regarding the other transactions would have
been admitted under Federal Rule of Evidence 404(b)16 as evidence of Prosperi's intent to deceive Donovan
14
R15 at 1098-1100.
15
Because we interpret § 513 as not requiring counterfeits to bear a similitude to genuine securities, we
do not express an opinion on the validity of Prosperi's counterfeiting convictions had we interpreted § 513
differently.
16
Federal Rule of Evidence 404(b) provides:
Evidence of other crimes, wrongs, or acts is not admissible to prove the character of a person
in order to show action in conformity therewith. It may, however, be admissible for other
purposes, such as proof of motive, opportunity, intent, preparation, plan, knowledge,
identity, or absence of mistake or accident, provided that upon request by the accused, the
12
on the counterfeiting counts.17 Prosperi counters that if the evidence could have been admitted under 404(b),
the judge would have had to have given a limiting instruction to the jury, which he did not do.
Dismissal of some counts charged in the indictment does not automatically warrant reversal of
convictions reached on remaining counts. See United States v. Pelullo, 14 F.3d 881, 897 (3d Cir.1994);
United States v. Friedman, 854 F.2d 535, 581 (2d Cir.1988). Rather, a reviewing court must consider
whether the convictions were the result of prejudicial spillover: that is, was there evidence (1) that would not
have been admitted but for the dismissed charges and (2) that was improperly relied on by the jury in their
consideration of the remaining charges. See United States v. Rooney, 37 F.3d 847, 856 (2d Cir.1994).
Because we have reinstated Prosperi's counterfeiting convictions, the first step in our inquiry will
focus on whether potentially prejudicial evidence was admitted that would not otherwise have been admitted
for either the counterfeiting or the tax counts. Prosperi contends that all the evidence regarding the Inlet
Drive, Royal Palm, and Refinancing transactions was admitted to establish Prosperi's scheme to defraud
Donovan, a necessary predicate to a mail fraud conviction. According to Prosperi, after the mail fraud-related
counts were dismissed, there was no longer a proper basis for admitting evidence of these transactions. The
Government persuasively argues, however, that evidence of these other transactions would have been
admitted properly under Federal Rule of Evidence 404(b), either as inextricably intertwined with the
counterfeiting counts or as evidence of Prosperi's intent to deceive Donovan. Because Prosperi's creation of
counterfeited CDs was only part of an ongoing plan to deceive Donovan and plunder his assets, evidence of
Prosperi's other deceptions was inextricably intertwined with the evidence supporting the counterfeiting
counts. See United States v. Lehder-Rivas, 955 F.2d 1510, 1515-16 (11th Cir.1992) ("Evidence of criminal
prosecution in a criminal case shall provide reasonable notice in advance of trial, or during
trial if the court excuses pretrial notice on good cause shown, of the general nature of any
such evidence it intends to introduce at trial.
17
The Government also proffers an argument that the evidence would have been admissible to impeach
Prosperi, even though all the spillover evidence was admitted in the Government's case-in-chief. We need
not address the merits of this argument, however, in the wake of our conclusion that the spillover evidence
would have been admitted under Rule 404(b).
13
activity other than the charged offense is admissible for purposes of Rule 404(b) if it: 'pertain[s] to the chain
of events explaining the context, motive and set-up of the crime [and is] linked in time and circumstances
with the charged crime, or forms an integral and natural part of the crime, or is necessary to complete the
story of the crime for the jury.' ") (quoting United States v. Van Dorn, 925 F.2d 1331, 1338 (11th Cir.1991)).
In the alternative, the evidence of the other transactions could have been admitted under Federal Rule
of Evidence 404(b) to establish Prosperi's intent to deceive Donovan with respect to the counterfeiting counts.
Prosperi argues the Government had substantial evidence of Prosperi's intent to deceive Donovan from the
circumstances surrounding the relevant Holigolf transaction, and that duplicative evidence would have been
excluded by the district court under Federal Rule of Evidence 403.18 Exclusion of evidence under Rule 403
is within the discretion of the district court, see United States v. Cross, 928 F.2d 1030, 1048 (11th Cir.1991),
and this court will not speculate on what the district court would have done had a Rule 403 objection been
raised.
Even had the contested evidence not been admitted under Rule 404(b), Prosperi's claim would fail
on the second step of our inquiry, as there is insufficient indication in the record that Prosperi's convictions
on the tax counts were prejudicially influenced by evidence of the other transactions. In evaluating claims
of prejudicial spillover, we consider several factors that would indicate whether prejudice tainted the jury's
verdict. First, we consider whether the jury meticulously sifted the evidence admitted for all counts. See
United States v. Miranda, 197 F.3d 1357, 1359 (11th Cir.1999) (per curiam); United States v. Stefan, 784
F.2d 1093, 1101 (11th Cir.1986). Relevant to this inquiry is the similarity of the evidence introduced for the
separate counts: distinct evidence is less likely to result in prejudicial spillover. See Pelullo, 14 F.3d at 898.
A discriminating acquittal also can signal that the jury was able to sift through the evidence properly. See
18
Federal Rule of Evidence 403 provides:
Although relevant, evidence may be excluded if its probative value is substantially
outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury,
or by considerations of undue delay, waste of time, or needless presentation of cumulative
evidence.
14
United States v. Eason, 920 F.2d 731, 737 (11th Cir.1990); see also Pelullo, 14 F.3d at 899. Second, we
examine whether the contested evidence was inflammatory in nature, and thus liable to prejudice the jury.
See Rooney, 37 F.3d at 855. Third, we consider whether admission of the other evidence significantly altered
the defendant's trial strategy. See United States v. Ivic, 700 F.2d 51, 65 (2d Cir.1983). Finally, we assess the
strength of the evidence against the defendant on the remaining counts. See Rooney, 37 F.3d at 856.
Application of these factors to the evidence in this case suggests that no unfair prejudice resulted.
The jury convicted Prosperi on all five counts under its consideration, and the evidence supporting the tax
counts resembled that supporting the other counts, involving as they both did embezzlement from Donovan.
The jury was able to sift through the evidence presented, however, as evidenced by its delay in reaching a
unanimous verdict on the tax counts after finding Prosperi guilty of the counterfeiting counts.19 In addition,
the evidence of Prosperi's other misdeeds, all of the "white collar" variety, is not the type that would
ordinarily inflame or prejudice a jury. Indeed, the jury's hesitation and continued deliberation on the tax
counts after reaching a verdict on the counterfeiting counts strongly suggests the jury was not inflamed or
prejudiced by the spillover evidence. And other than a bare assertion that he might not have testified,
Prosperi presents no reasonable explanation that his trial strategy was altered by the admission of the other
evidence. Finally, notwithstanding the jury's initial hesitation in delivering a guilty verdict, our review of the
record shows the evidence supporting the tax counts was substantial.
Prosperi emphasizes the fact that the district court did not strike any of the evidence or provide a
limiting instruction. Limiting instructions by the court to the jury may provide further assurance that the jury
did not consider improper evidence. Cf. United States v. Adkinson, 135 F.3d 1363, 1373 (11th Cir.1998)
19
Prosperi finds evidence the jury was incapable of sifting through the evidence in its request for evidence
Prosperi contends did not pertain to the remaining counts. During deliberations, the jury requested the
transcript pages concerning purported loan checks from Perth Holdings, Ltd. to Amaretto. Prosperi's counsel
objected on relevancy grounds. The court, finding the evidence relevant to Prosperi's intent to defraud
Donovan with regard to the counterfeit securities, overruled the objection. Because the jury announced its
uncertainty on the tax counts after requesting and receiving this evidence, there is no indication the jury was
unable to properly sift through the evidence. Furthermore, this note was only one of many sent by the jury,
the number and substance of which exhibit the jury's careful consideration of the evidence.
15
(expressing concern that "the government's evidence remained in; none was stricken. There was no
instruction to the jury to disregard any of it. If this strategy is sanctioned, the rules of evidence provide little
protection against conviction by inadmissible evidence.") (footnote omitted). Here, in light of the district
court's decision that the evidence of the Inlet Drive, Royal Palm, and Refinancing transactions was admissible
to establish Prosperi's intent to deceive Donovan, the court's failure to provide a specific limiting instruction
is hardly remarkable.
Although Prosperi challenges the sufficiency of the district court's instructions, he neither submitted
proposed jury instructions nor objected to the instructions delivered. In addition, the district court did instruct
the jury that:
A separate crime or offense is charged in each count of the indictment. Each charge and the evidence
pertaining to it should be considered separately. The fact that you may find the defendant guilty or
not guilty as to one of the offenses charged should not affect your verdict as to any other offense
charged.20
Only after the jury had been deliberating for several hours did defense counsel request a further
instruction to the jury "that they are not to consider evidence that doesn't pertain to the remaining charges"
because of concern the jury "may well be considering a lot of evidence which is no longer part of the case."21
The Government objected on the ground that all the evidence admitted was relevant to Prosperi's intent to
deceive Donovan under the counterfeiting counts. The court declined to instruct the jury further, reasoning:
The evidence that came in related to pending charges at the time, so there was certainly no error in
allowing the evidence to come in at the time.
The jury was instructed that they only had the two charges, that is, the tax charges and the
counterfeit security charges, so I think they understand that clearly.
Furthermore, by the closing argument of counsel, they directed the jury to what were the only
remaining issues, and I think they clearly understood closing argument of counsel in that regard.
The indictment still does charge the defendant with defrauding Mr. Donovan, and of course,
it's confined to the counterfeit securities, but the other actions with regard to the financial
20
Id. at 4787.
21
R33 at 4794.
16
statements—not financial statements, bank statements, was really not argued to the jury because it
would be outside the scope of the indictment.
Conceivably it could be to show intent to defraud in regard to other matters. They
understand that this issue is no longer before them. I think the jury understands its function and its
duty and it would be very difficult at this point to go through and remove exhibits from the jury or
to give them further instructions at this point. I think they have had all the proper instructions, so I
will deny the defendant's motion.22
The evidence of the Inlet Drive, Royal Palm, and Refinancing transactions would have been properly
admitted as either inextricably intertwined with the counterfeiting counts or as evidence to establish Prosperi's
intent to deceive Donovan with respect to the counterfeiting counts. Moreover, the record shows that there
was sufficient evidence, excluding the spillover evidence, to support Prosperi's convictions on the tax counts
and that the jury's verdict was not the result of unfair prejudice. Accordingly, we affirm Prosperi's
convictions on Counts XIV and XV.
E. Extrinsic Acts Evidence
Prosperi argues that evidence of his failure to file other tax returns, omissions not pleaded in the
indictment, contravened Federal Rule of Evidence 404(b). At trial, IRS Special Agent Jaque Nichols testified
that Prosperi did not file a trust return for the Royal Palm property in 1988 or 1989 or a corporate return for
Amaretto in 1989.23 Defense counsel's objections to this testimony on Rule 404(b) grounds were denied.
Evidence of extrinsic offenses properly may be admitted if relevant to an issue other than the defendant's
character and if its probative value is not substantially outweighed by the danger of unfair prejudice. See
United States v. Veltmann, 6 F.3d 1483, 1499 (11th Cir.1993). A district court's decision to admit such
evidence will not be reversed absent a clear abuse of discretion. See United States v. Edwards, 696 F.2d
1277, 1280 (11th Cir.1983).24 Here, the district court found the evidence was not admitted to impermissibly
22
Id. at 4796-97.
23
R20 at 2018-29.
24
Prosperi also argues the Government conceded this issue by failing to address it in its brief. Even if the
Government waived its right to argue the propriety of the extrinsic acts evidence, we would not reverse on
this ground without independent consideration.
17
establish propensity, but rather to prove Prosperi's criminal intent as manifested by his misrepresentations to
a bank and Amaretto's tax attorney that the tax returns had been filed.25 We cannot say this determination
was a clear abuse of discretion.
III. CONCLUSION
For the foregoing reasons, we REVERSE the district court's order of acquittal on Counts III-V,
AFFIRM Prosperi's conviction on Counts XIV and XV and REMAND for resentencing in accordance with
this opinion.
25
See R20 at 2020-22; id. at 2025-27.
18