United States v. Sullivan

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, 
Plaintiff-Appellee, No. 06-50710
v.
 D.C. No.
CR-04-01697-
THOMAS PATRICK SULLIVAN, aka
Seal B, GAF-2
Defendant-Appellant.

UNITED STATES OF AMERICA, 
Plaintiff-Appellee, No. 06-50714
v.
 D.C. No.
CR-04-01697-
THOMAS EDWARD RUBIN, aka
Seal A, GAF-1
Defendant-Appellant.

UNITED STATES OF AMERICA,  No. 07-50087
Plaintiff-Appellee, D.C. No.
v.  CR-04-01697-
GEOFFREY C. MOUSSEAU, GAF-3
Defendant-Appellant.
 OPINION
Appeal from the United States District Court
for the Central District of California
Gary A. Feess, District Judge, Presiding
Argued and Submitted
January 9, 2008—Pasadena, California
Filed April 11, 2008
3791
3792 UNITED STATES v. SULLIVAN
Before: Jerome Farris and Milan D. Smith, Jr.,
Circuit Judges, and H. Russel Holland,* District Judge.
Per Curiam Opinion
*The Honorable H. Russel Holland, Senior United States District Judge
for the District of Alaska, sitting by designation.
UNITED STATES v. SULLIVAN 3795
COUNSEL
Vicki I. Podberesky, Esq., Nasatir, Hirsch, Podberesky &
Genego, Santa Monica, California, for defendants-appellants
Thomas Rubin and Thomas Sullivan.
Michael D. Rounds and Cassandra P. Joseph, Watson Rounds,
Reno, Nevada, for defendant-appellant Geoffrey Mousseau.
Ranee A. Katzenstein and Paul G. Stern, United States Attor-
ney’s Office, Los Angeles, California, for the plaintiff-
appellee.
OPINION
PER CURIAM:
Thomas Sullivan, Thomas Rubin, and Geoffrey Mousseau
appeal their convictions and sentences for mail, wire, and
bankruptcy fraud, money laundering, and conspiracy to com-
mit fraud and money laundering. The defendants contend that
(1) the evidence is insufficient to support the convictions, and
(2) the government created a prejudicial variance between the
indictment and proof at trial. Mousseau further contends that
his trial should have been severed, and that the prosecutor
engaged in misconduct. We have jurisdiction over defendants’
timely appeal pursuant to 28 U.S.C. § 1291. We affirm.
Background
Thomas Rubin and Thomas Sullivan were the Chief Execu-
tive Officer and Chief Financial Officer, respectively, of
3796 UNITED STATES v. SULLIVAN
Focus Media, Inc., a Santa Monica, California-based advertis-
ing agency. Geoffrey Mousseau is an attorney who repre-
sented Focus in bankruptcy proceedings and other business
matters.
Focus was in the advertising placement business. The
agency placed commercial advertisements on television and
radio for clients including Sears Roebuck & Co., 20th Cen-
tury Fox, and Universal City Studios, Inc. Focus’ services
included booking air time for its clients’ commercials, track-
ing whether the commercials reached their desired audience,
and negotiating compensation with stations when advertise-
ments failed to air or reach their promised audience.
After commercials aired, media stations sent an invoice to
Focus, and Focus in turn invoiced its advertising clients.
Focus billed its clients for the actual cost of the air time and
charged a fee for its additional services. Focus’ clients were
expected to pay within 30 days of receipt of an invoice. Focus
in turn paid the media stations 90 days after the commercial
broadcast date. This procedure allowed clients to avoid writ-
ing hundreds of checks to the individual stations that aired the
commercials, and Focus had the benefit of the 60-day “float”
on which it could earn interest.
The record reflects that none of the foregoing was docu-
mented by agreements between Focus and its clients or Focus
and the media. Media stations considered both Focus and
Focus’ clients to be liable for the cost of air time purchased,
but the clients relied upon Focus to pay the stations.
Focus’ business thrived for much of the 1990’s. But in
1999, Focus lost three of its four major accounts when 20th
Century Fox, DreamWorks, and Universal Studios stopped
doing business with the agency. Universal Studios cited as
reasons for terminating its account, Focus’ failure to deliver
promised savings and poor record of placing advertisements
that reached the company’s target audience. In the summer of
UNITED STATES v. SULLIVAN 3797
1999, Focus’ last major client, Sears, expressed concern that
Focus was not paying media stations in a timely manner and
cut the fee it paid Focus. Sears fired Focus on March 14,
2000.
By the end of 1999, Focus was laying off employees and
was insolvent. Focus’ cash-flow was limited by its dwindling
client base and CEO Rubin’s practice of borrowing from
Focus. From 1996 to 1999, Focus disbursed $16 million in
shareholder loans to Thom Rubin & Associates, Rubin’s
d/b/a.
In early 2000, Focus failed to pay media stations for adver-
tising time it purchased on behalf of Universal Studios and
Sears during the fourth quarter of 1999. Both clients remitted
funds to Focus to pay the cost of their advertising in late
1999, but Focus transferred just a fraction of this money to the
media outlets. Of the approximately $34 million that Sears
remitted to Focus to cover its fourth quarter advertising costs,
Focus paid $10.5 million to media outlets and retained more
than $23 million. Focus failed to pay Warner Brothers’ affili-
ates more than $7 million, NBC more than $400,000, and
ABC more than $900,000 owed for Sears’ advertisements.
Rubin and Sullivan offered several excuses to the media sta-
tions for the unpaid invoices, including that Focus was not
obligated to pay because the stations had contacted Sears and
Universal Studios directly and that Universal Studios never
remitted funds to Focus to pay for its advertisements.
In January 2000, Rubin and Sullivan began disbursing
Focus’ funds to private accounts under their control. In March
2000, Sears filed a civil suit against Focus in California supe-
rior court alleging, inter alia, conversion and breach of con-
tract. Sears obtained a preliminary injunction enjoining Focus
from spending its funds. Universal Studios obtained a similar
preliminary injunction against Focus in May 2000.
Despite these court orders, from March to July 2000, Rubin
and Sullivan transferred more than $16 million from Focus’
3798 UNITED STATES v. SULLIVAN
accounts to Thom Rubin & Associates. Focus forgave the $16
million in shareholder loans that the agency had made to
Thom Rubin & Associates. Rubin used more than $10 million
of these funds to pay his personal taxes. The money also
financed a $250,000 credit balance on a corporate American
Express credit card in the names of Rubin and Sullivan. Rubin
continued to use the corporate card after he quit Focus in July
2000. In 2000, Rubin received more than $18 million in cash
from Focus. Focus lost almost $9 million that year.
Still unpaid, NBC, ABC, and Paxson Communications, Inc.
filed an involuntary bankruptcy petition against Focus on
October 6, 2000, triggering an automatic stay of the Califor-
nia proceedings under 11 U.S.C. § 362.1 Rubin had retained
Mousseau to represent him personally on September 27, 2000,
but Mousseau began to work on Focus’ bankruptcy case.2
Mousseau had experience in business litigation, employment
law, and transactional work, but had no bankruptcy experi-
ence.
On October 26, 2000, Sears filed a motion to appoint an
interim trustee to take possession of Focus’ remaining assets
and preserve them during the bankruptcy proceedings. The
same day, Focus retained the law firm Stutman, Treister &
Glatt as bankruptcy counsel. The firm agreed to represent
Focus, but insisted that Focus’ funds not be used to pay its
retainer. (The state court injunctions were still in place.)
On October 26 and 27, Sullivan disbursed approximately
$1.2 million from Focus’ accounts to himself, Rubin,
Mousseau, Rubin’s corporate American Express Card, and
1
For details of Focus’ bankruptcy litigation, see Focus Media, Inc. v.
Nat’l Broad. Co. (In re Focus Media, Inc.), 378 F.3d 916 (9th Cir. 2004).
2
Mousseau claimed that he was personally retained by Rubin and Sulli-
van in a February 2002 declaration submitted during Focus’ bankruptcy
proceedings. Mousseau’s claim was inconsistent with his prior representa-
tions that he was solely Rubin’s attorney.
UNITED STATES v. SULLIVAN 3799
other third parties. Sullivan transferred $500,000 from Focus
to Mousseau’s client trust account. Mousseau later used these
funds to pay Stutman’s retainer. In so doing, Mousseau told
Stutman partner Theodore Stolman that the funds came from
Rubin, who had earlier deposited them in Mousseau’s client
trust account. Stutman was not informed of Sullivan’s other
disbursements.
At 4 p.m. on October 27, 2000, the bankruptcy court
granted Sears’ motion and appointed an interim trustee. When
the trustee sought an accounting of Focus assets that had been
sold or transferred within the past year, Mousseau did not
report the $500,000 that Sullivan transferred to his client trust
account. Rubin and Sullivan did not report the transfers made
from Focus’ accounts to their private accounts on October 26
and 27.
In December 2000, Stolman learned of Sullivan’s October
26 and 27 disbursements and Stutman terminated its represen-
tation of Focus. In September 2001, the bankruptcy court
granted a partial summary judgment in favor of Focus’ credi-
tors. We affirmed this decision in 2004. See In re Focus
Media, Inc., 378 F.3d at 931.
Criminal Proceedings
On October 26, 2005, Rubin and Sullivan were indicted for
conspiracy, mail fraud, wire fraud, and money laundering in
connection with the alleged misappropriation of client funds
owed to media outlets. Rubin, Sullivan, and Mousseau were
indicted for bankruptcy fraud stemming from the disburse-
ment of Focus’ funds during the involuntary bankruptcy pro-
ceedings.
The government charged Rubin with conspiracy to commit
mail and wire fraud in violation of 18 U.S.C. § 371; mail
fraud in violation of 18 U.S.C. § 1341; four counts of wire
fraud in violation of 18 U.S.C. § 1343; wire fraud involving
3800 UNITED STATES v. SULLIVAN
the deprivation of honest services, in violation of 18 U.S.C.
§§ 1343 and 1346; conspiracy to commit bankruptcy fraud in
violation of 18 U.S.C. § 371; seventeen counts of bankruptcy
fraud in violation of 18 U.S.C. § 152; and two counts of
money laundering in violation of 18 U.S.C. § 1957. Sullivan
was charged under the same counts and one additional count
of money laundering. The government charged Mousseau
with seventeen counts of bankruptcy fraud and one count of
conspiracy to commit bankruptcy fraud.
Prior to trial, the district court denied a motion from
Mousseau to sever the counts related to Rubin and Sullivan’s
alleged defrauding of Focus’ clients and the media outlets. On
June 19, 2006, a jury convicted Rubin on all counts except
one count of wire fraud and one count of bankruptcy fraud.
Sullivan was convicted on all counts except one wire fraud
count. Mousseau was convicted on five counts of bankruptcy
fraud and one count of conspiracy to commit bankruptcy
fraud, and was acquitted on the remaining charges.
The defendants filed post-trial motions for acquittal and for
a new trial. The district court denied the motions for a new
trial and the motions for acquittal on all but one count, grant-
ing Rubin and Sullivan’s acquittal motion for deprivation of
honest services. On December 6, 2006, the defendants were
sentenced and ordered to pay restitution.
I
Rubin and Sullivan challenge their convictions for mail and
wire fraud (Counts 2-4, 6), conspiracy to commit mail and
wire fraud (Count 1), fraudulent bankruptcy transfers (Counts
11-22), and false declarations in bankruptcy (Count 23), argu-
ing the evidence submitted at trial was insufficient to support
the jury’s verdict. Rubin, Sullivan, and Mousseau claim there
was insufficient evidence to sustain their convictions for con-
cealment of bankruptcy assets (Counts 9 and 10), withholding
of information from the interim trustee (Count 26), and con-
UNITED STATES v. SULLIVAN 3801
spiracy to commit bankruptcy fraud (Count 8). Sullivan and
Mousseau raise sufficiency of the evidence challenges to their
convictions for false declarations in bankruptcy (Counts 24
and 25).3
“Claims of insufficient evidence are reviewed de novo.”
United States v. Shipsey, 363 F.3d 962, 971 n.8 (9th Cir.
2004). There is sufficient evidence to support a conviction if,
“viewing the evidence in the light most favorable to the prose-
cution, any rational trier of fact could have found the essential
elements of the crime beyond a reasonable doubt.” Jackson v.
Virginia, 443 U.S. 307, 319 (1979) (emphasis in original).
A: Counts 2, 3, 4, and 6
[1] The elements of mail and wire fraud are: (1) proof of
a scheme to defraud; (2) using the mails or wires to further the
fraudulent scheme; and (3) specific intent to defraud. See 18
U.S.C. §§ 1341, 1343. “The Supreme Court has interpreted
§ 1343 broadly and twice held that individuals who retain or
misappropriate the money or property of others, regardless of
how they acquired it, fall within the purview of mail or wire
fraud.” United States v. Jones, 472 F.3d 1136, 1139 (9th Cir.
2007). “It is settled law that intent to defraud may be estab-
lished by circumstantial evidence.” United States v. Rogers,
321 F.3d 1226, 1230 (9th Cir. 2003). Intent may be inferred
from misrepresentations made by the defendants, see United
States v. Lothian, 976 F.2d 1257, 1267-68 (9th Cir. 1992), and
the scheme itself may be probative circumstantial evidence of
an intent to defraud. United States v. Plache, 913 F.2d 1375,
1381 (9th Cir. 1990).
Rubin and Sullivan argue that the evidence established nei-
ther the existence of a scheme to defraud nor that they had
specific intent to defraud their clients. They contend that cli-
3
Sullivan and Mousseau were charged in Count 24 but only Mousseau
was charged in Count 25.
3802 UNITED STATES v. SULLIVAN
ent funds remitted to Focus constituted Focus’ income and
that they were not obligated to use these funds to pay their cli-
ents’ media bills. Noting that Sears and Universal Studios
commercials aired during the fourth quarter of 1999, they
argue that their clients received the benefit of what they paid
for. They claim the government’s remaining evidence merely
points to a civil dispute between Focus and media outlets over
payments.
[2] Rubin and Sullivan’s argument ignores evidence that
Focus’ clients relied on Focus to pay media stations for their
advertisements. Sears executive Mark Cohen and Universal
Studios executive Mark Kristol testified that their companies
hired Focus in part to pay the individual media stations that
broadcast their advertisements. Cohen, Kristol, and Debra
Stover, Sears’ comptroller for marketing, testified that their
companies remitted funds to Focus on the understanding that
they would be used to pay the media bills referenced on Focus
invoices. The government produced Focus invoices to Sears
and Universal Studios itemizing the media bills that client
funds were used to pay.
[3] Assuming, arguendo, that Focus was not obligated to
pay its clients’ media bills, the company still was required to
pay media outlets for advertising time it purchased, as Rubin
and Sullivan acknowledge. Focus was insolvent at the end of
1999. Instead of paying off Focus’ media company creditors,
Rubin and Sullivan disbursed client funds earmarked for the
media outlets to their private accounts. The government
offered evidence that Rubin and Sullivan repeatedly misrepre-
sented why they could not pay their clients’ advertising bills
when media stations tried to collect payment in early 2000.
Their basic scheme—bill Focus’ clients for aired advertise-
ments, then disburse remitted funds to their private accounts
instead of to the media outlets—falls within the Supreme
Court’s broad interpretation of fraudulent activity under
§§ 1341 and 1343. See Jones, 472 F.3d at 1139-40.
UNITED STATES v. SULLIVAN 3803
[4] Rubin and Sullivan contend that they lacked specific
intent to defraud at the time they used the mails to invoice
Sears and Universal Studios for advertisements broadcast in
the fourth quarter of 1999. This argument is meritless. The
government established beyond a reasonable doubt that begin-
ning in December 1999, Rubin and Sullivan failed to pay
media outlets for Sears and Universal Studios advertisements
and misrepresented why they did not pay for their clients’
advertisements. From January to July 2000, they appropriated
funds from Focus’ accounts receivable for their personal use.
This provided sufficient circumstantial evidence from which
the jury could find that Rubin and Sullivan specifically
intended to defraud their clients and the media outlets when
the invoices were mailed.4 Rubin and Sullivan’s subsequent
fraudulent appropriation of funds also satisfies the intent
requirements of §§ 1341 and 1343 for Counts 3, 4, and 6,
which involved wire transfers of Sears funds to Focus in
December 1999 and January 2000. See Jones, 471 F.3d at
1140 (“Although . . . Jones did not possess a fraudulent intent
when he received the money, his fraudulent appropriation of
the funds still satisfies the elements of § 1343.”). There is suf-
ficient evidence to uphold Rubin and Sullivan’s convictions
on the mail and wire fraud charges.5
4
Rubin and Sullivan cite United States v. Starr, 816 F.2d 94, 99-100 (2d
Cir. 1987), for the proposition that intent to defraud does not exist where
the client obtains the benefit of the bargain and suffers no harm. Here,
both Focus’ clients and the media outlets suffered significant financial
harm. Sears lost $8 million and Focus owed more than $25 million to
media outlets named in the indictment. Rubin and Sullivan’s reliance on
Starr is misplaced.
5
Rubin and Sullivan contend that if there is insufficient evidence to sup-
port their mail and wire fraud convictions, their convictions for money
laundering (Counts 27-29) must also be reversed since the government
alleged that the money laundered was the product of mail and wire fraud.
This is the only argument Rubin and Sullivan raise with respect to Counts
27-29. Therefore, by affirming the jury’s verdict on the mail and wire
fraud charges, we also affirm Rubin and Sullivan’s money laundering con-
victions.
3804 UNITED STATES v. SULLIVAN
B: Count 1
Rubin and Sullivan submit that the evidence was insuffi-
cient to convict them for conspiracy to commit mail and wire
fraud.
“To prove a conspiracy under 18 U.S.C. § 371, the govern-
ment must establish: (1) an agreement to engage in criminal
activity, (2) one or more overt acts taken to implement the
agreement, and (3) the requisite intent to commit the substan-
tive crime.”6 United States v. Montgomery, 384 F.3d 1050,
1062 (9th Cir. 2004) (citation and internal quotation marks
omitted). “The agreement need not be explicit; it is sufficient
if the conspirators knew or had reason to know of the scope
of the conspiracy and that their own benefits depended on the
success of the venture.” Id. (citing United States v. Romero,
282 F.3d 683, 687 (9th Cir. 2002)).
[5] The government introduced sufficient evidence to sus-
tain the conviction on the conspiracy charge. The evidence
indicates that Rubin and Sullivan both knew of the scope of
the conspiracy. From January to March 2000, both men mis-
represented why Focus could not pay media outlets for the
Sears and Universal Studios advertisements, at the same time
they were transferring funds from Focus’ accounts receivable
to their personal accounts. Sullivan authorized the illicit trans-
fers of which Rubin had knowledge. The evidence supports
the jury’s verdict on the conspiracy to commit mail and wire
fraud count.
C: Counts 9, 10
Rubin, Sullivan, and Mousseau argue that evidence submit-
ted at trial was insufficient to support the jury’s verdict on the
6
Consistent with our conclusion that the evidence of intent is sufficient
for the mail and wire fraud counts, the evidence of intent is sufficient for
the conspiracy charge.
UNITED STATES v. SULLIVAN 3805
concealment of bankruptcy assets counts. The counts involved
two $250,000 wire transfers from Focus to Mousseau’s client-
trust account on October 26 and 27, 2000, funds that were
later used to pay Stutman and other law firms.
[6] Concealment of bankruptcy assets requires the govern-
ment to prove that the defendants knowingly and fraudulently
concealed property of the bankruptcy estate from the trustee.
18 U.S.C. § 152(1). “Concealment . . . need not consist of
secretly appropriating funds for one’s own use. It is sufficient
if one withholds knowledge of assets about which the trustee
should be told.” United States v. Weinstein, 834 F.2d 1454,
1462 (9th Cir. 1987) (citation omitted). A violation of
§ 152(1) can exist where the concealment of funds from the
bankruptcy estate occurred before the appointment of the
trustee. See, e.g., Max Sugarman Funeral Home, Inc. v.
A.D.B. Investors, 926 F.2d 1248, 1255 (1st Cir. 1991) (trans-
fers made nine months before a bankruptcy proceeding were
sufficient to show a violation of § 152(1)).
[7] Rubin, Sullivan, and Mousseau argue that they dis-
closed Focus as the source of the funds and that they did not
knowingly conceal funds from the interim trustee. A rational
juror could have concluded otherwise. The government intro-
duced evidence that Stutman informed the appellants that it
would not accept Focus funds to pay its retainer. Stolman, the
Stutman partner who handled Focus’ communications with
the interim trustee, testified that Mousseau told him that
Rubin was the source of the retainer funds. On the cover page
of a December 8, 2000 fax, Mousseau asserted to Stolman
that the funds used to pay Stutman’s retainer came from his
client trust account and not directly from Focus.7 In January
7
Mousseau contends that this statement cannot support an intent to con-
ceal because the fax, on a subsequent page, disclosed that the funds origi-
nated with Focus. While Mousseau argued this theory to the jury, the jury
was entitled to disbelieve his explanation. See Weinstein, 834 F.2d at
1462.
3806 UNITED STATES v. SULLIVAN
2002, Sullivan and Mousseau declared that the funds were
transferred to Mousseau’s client trust account pursuant to Sul-
livan’s indemnification agreement with Focus, despite evi-
dence that Mousseau did not represent Sullivan in his
personal capacity. These misrepresentations are evidence of
appellants’ efforts to conceal Focus’ assets from the trustee.
See Lothian, 976 F.2d at 1267-68. Stolman further testified
that portions of a December 8, 2000 fax from Mousseau that
allegedly disclosed Focus as the source of the funds were
illegible. In addition, neither Mousseau nor Sullivan disclosed
the $500,000 transfers to the interim trustee.
Mousseau asserts that evidence of intent is lacking because
funds that pass through a client trust account are readily trace-
able. This argument fails. We have held that an “easily trace-
able” transfer can still show intent to conceal under § 152(1).
See Weinstein, 834 F.2d at 1462. In addition, Mousseau’s
contention that a debtor may use its funds to hire an attorney
before the trustee is appointed does not negate the intent to
conceal. So long as an intent to conceal assets from the trustee
may be inferred from the evidence, the government has met
its burden under § 152(1).
Mousseau’s contentions that he was not Focus’ bankruptcy
attorney and that he corresponded with the interim trustee to
the best of his ability are not well taken. Mousseau chose to
represent Focus in its bankruptcy proceedings despite having
no experience in this highly specialized practice area. Even an
inexperienced attorney should have known to report the
$500,000 transfers to the interim trustee. Mousseau know-
ingly involved himself in Rubin and Sullivan’s scheme and
assisted in the concealment of Focus’ assets. His lack of expe-
rience in bankruptcy law is not a shield from criminal liabil-
ity.
[8] Rubin argues that he lacked the requisite intent to prove
concealment because he had no knowledge of the October
2000 wire transfers. He notes that he resigned from Focus
UNITED STATES v. SULLIVAN 3807
three months before the transfers took place. The government
introduced billing records from Zelle Hofmann Voelbel
Mason & Gette, LLP, another law firm retained by Focus,
indicating that Rubin took part in decisions regarding Focus’
response to the October 6 involuntary bankruptcy petition.
Stolman also testified that Rubin called him on December 9,
2000 in an effort to persuade Stutman not to withdraw as
Focus’ bankruptcy counsel. Even if Rubin was not directly
involved in the wire transfers, a rational juror could have
found that the transfers were reasonably foreseeable to him as
part of the conspiracy to commit bankruptcy fraud charged in
Count 8. See infra Section I-G. Under Pinkerton v. United
States, 328 U.S. 640 (1946), a conspirator is “criminally liable
for the substantive offenses committed by a co-conspirator
when they are reasonably foreseeable and committed in fur-
therance of the conspiracy.” United States v. Long, 301 F.3d
1095, 1103 (9th Cir. 2002) (citing Pinkerton, 328 U.S. at 645-
48). Rubin’s participation in strategy sessions to respond to
the involuntary bankruptcy petition support an inference that
he could have foreseen the transfers. The evidence is suffi-
cient to uphold the defendants’ convictions for concealment
of bankruptcy assets.
D: Counts 11-22
Rubin and Sullivan argue there is insufficient evidence that
they made fraudulent bankruptcy transfers on October 27 and
November 20, 2000, contending the transfers were made to
pay routine business expenses and without the intent to
defraud. We reject the argument.
To prove a violation of 18 U.S.C. § 152(7), the government
must show that the defendants knowingly and fraudulently
transferred or concealed property “with intent to defeat the
provisions of title 11.” 18 U.S.C. § 152(7). Intent may be
established through circumstantial evidence. See United
States v. McCormick, 72 F.3d 1404, 1406 (9th Cir. 1995).
3808 UNITED STATES v. SULLIVAN
[9] The record shows that Rubin and Sullivan caused
eleven checks to be drawn on Focus accounts on October 27,
disbursing funds to Rubin, Sullivan, Rubin’s adult children,
Rubin’s corporate credit card, and Rubin’s personal physi-
cian, among other recipients. The bankruptcy court appointed
the interim trustee at 4:00 p.m. that day. Stolman testified that
Sullivan and Mousseau were aware of Sears’ ex parte applica-
tion to appoint an interim trustee on October 26. Zelle, Hof-
mann billing records showed that Rubin, Sullivan, and
Mousseau held meetings on how to respond to the filing
throughout the day. Peter Anderson, counsel for the interim
trustee, testified that Sullivan and Mousseau did not provide
the interim trustee with the location of Focus’ bank accounts
until the eleven checks had already cleared. As of December
7, 2000, Rubin and Sullivan had not revealed to the trustee all
of Focus’ banking records. Their actions prevented the
interim trustee from taking full possession of Focus’ assets.
See 11 U.S.C. § 303(g). There was sufficient evidence from
which the jury could find the fraudulent intent required to
convict Rubin and Sullivan under 18 U.S.C. § 152(7).
E: Count 23
Sullivan and Mousseau challenge their convictions for false
declaration in a bankruptcy proceeding on the ground that the
statements they made to the bankruptcy court were not false.
Rubin challenges his conviction for aiding and abetting a false
declaration made by Sullivan, arguing that he had no role in
the statement.
To prove a violation of 18 U.S.C. § 152(3), the government
must establish beyond a reasonable doubt “(1) the existence
of the bankruptcy proceedings; (2) that a statement under pen-
alty of perjury was made therein, or in relation thereto; (3)
that the statement was made as to a material fact; (4) that the
statement was false; and (5) that the statement was knowingly
and fraudulently made.” United States v. Lindholm, 24 F.3d
1078, 1082-83 (9th Cir. 1994).
UNITED STATES v. SULLIVAN 3809
[10] In an October 27, 2000 declaration submitted in oppo-
sition to the appointment of an interim trustee, Sullivan told
the bankruptcy court that pending the resolution of the invol-
untary bankruptcy case, Focus intended to make ordinary
business expenditures and would preserve and protect the
company’s assets. As noted supra in Section I-D, that day,
Sullivan authorized the disbursement of $700,000 of Focus’
funds in a severance package to himself, Rubin, Rubin’s adult
children, and others. A rational juror could have found
beyond a reasonable doubt that Sullivan’s statement to the
court was knowingly false. A rational juror could also have
convicted Rubin for aiding and abetting the statement. Rubin
participated in several meetings with Sullivan and Mousseau
where they prepared declarations in response to Sears’ motion
to appoint an interim trustee. Cf. McCormick, 72 F.3d at
1410-11 (holding evidence of false statement was insufficient
where an appellant signed a bankruptcy petition without read-
ing it).
In a January 28, 2002 declaration, Sullivan asserted that the
$500,000 disbursement from Focus to Mousseau’s client trust
account was transferred pursuant to Sullivan’s indemnifica-
tion agreement with Focus. The government established that
the principal recipients of these funds, Mousseau and Stut-
man, never identified themselves as Sullivan’s counsel. Sulli-
van’s declaration is also at odds with testimony he delivered
under oath on January 15, 2002, stating that he was unfamiliar
with the indemnification agreement and had no legal expenses
stemming from Focus’ bankruptcy. In light of these discrep-
ancies, a rational juror could infer that Sullivan’s declaration
was false. See, e.g., United States v. Magallon-Jimenez, 219
F.3d 1109, 1114 (9th Cir. 2000) (“It is the province of the
trier of fact ‘to . . . resolve evidentiary conflicts, and draw rea-
sonable inferences from proven facts.’ ”) (citation omitted).
There is sufficient evidence to affirm Mousseau’s false
statement conviction in connection with the indemnification
agreement. Mousseau claimed that the Focus funds were dis-
3810 UNITED STATES v. SULLIVAN
bursed to his client trust account pursuant to Sullivan’s
indemnification agreement at a bankruptcy hearing to deter-
mine whether Mousseau violated 11 U.S.C. § 329, which
requires bankruptcy attorneys to disclose the compensation
they receive from debtor-clients. Mousseau’s assertion contra-
vened his earlier representation to Stolman that the funds
originated with Rubin. Anderson also testified that Mousseau
defied an April 14, 2002 order from the bankruptcy court to
face cross-examination over inconsistent statements he had
made concerning his bankruptcy compensation.
[11] The evidence also supports the jury’s finding beyond
a reasonable doubt that Mousseau made a false declaration
when he testified that he never told Stolman that he paid Stut-
man’s retainer with his own funds. Mousseau’s December 8,
2000 fax to Stolman expressly stated that “as you can see by
comparing the timing of the retainer check to when I received
transfers from Focus, the money used for the retainer was
mine.” Mousseau contends that his full testimony establishes
that his declaration was truthful. He explained that the money
used to pay Stutman’s retainer originated with Focus, but was
initially transferred to his client trust account in order to com-
ply with Stutman’s request that the retainer not be paid
directly by Focus. The jury was entitled to disbelieve this
explanation. See Weinstein, 834 F.2d at 1462.
F: Count 26
Rubin, Sullivan, and Mousseau assert the evidence is insuf-
ficient to uphold their conviction for withholding information
from the interim trustee. The record refutes the argument.
A conviction under 18 U.S.C. § 152(9) requires the govern-
ment to establish that a defendant knowingly and fraudulently
withheld information relating to the property of the debtor
from a trustee after the filing of title 11 proceedings. 18
U.S.C. § 152(9).
UNITED STATES v. SULLIVAN 3811
[12] The defendants argue that they did not intentionally
withhold information and that their efforts to provide records
to the trustee were hampered by an exodus of Focus employ-
ees after the trustee was appointed. The record indicates oth-
erwise. On October 28, 2000, the day after the appointment
of the trustee, Focus employees used a computer data deletion
program to erase financial information in Focus’ computer
system. Stolman and Anderson testified that Sullivan and
Mousseau provided incomplete bank and accounting records,
despite repeated requests for information. Tom Jeremiassen,
a forensic accountant working for the trustee, testified that
Sullivan misrepresented the identity of the party who filed
Focus’ tax returns, delaying his effort to compile company
accounting records. A rational juror hearing this evidence
could have concluded that the defendants fraudulently with-
held information from the trustee.
G: Count 8
[13] Rubin, Sullivan, and Mousseau submit there is insuffi-
cient evidence in the record to support their conviction for
conspiracy to commit bankruptcy fraud.8 A rational juror
could infer an agreement between the co-defendants from the
October 27, 2000 disbursements of Focus funds to Rubin,
Sullivan, and Mousseau and their subsequent efforts to con-
ceal Focus’ assets from the interim trustee. The government
presented evidence that Rubin, Sullivan, and Mousseau met
several times in late October to discuss the involuntary bank-
ruptcy and argued the conspiracy was agreed to at these meet-
ings. Mousseau notes the government presented no direct
evidence that illegal activities were discussed at these meet-
ings and submits that the evidence was insufficient to estab-
8
“To prove conspiracy under 18 U.S.C. § 371, the government must
establish (1) an agreement to engage in criminal activity, (2) one or more
overt acts taken to implement the agreement, and (3) the requisite intent
to commit the substantive crime.” Montgomery, 384 F.3d at 1062. See
supra Section I-B.
3812 UNITED STATES v. SULLIVAN
lish an agreement between him and his co-defendants. We
have recognized that “ ‘the existence of an agreement may be
inferred from circumstantial evidence.’ ” United States v.
Moreland, 509 F.3d 1201, 1218 (9th Cir. 2007) (quoting
United States v. Fulbright, 105 F.3d 443, 448 (9th Cir. 1997),
overruled on other grounds by United States v. Heredia, 483
F.3d 913, 921 (9th Cir. 2007) (en banc)); see also United
States v. Castro, 972 F.2d 1107, 1110 (9th Cir. 1992) (“The
government does not have to present direct evidence. Circum-
stantial evidence and the inferences drawn from that evidence
will sustain a conspiracy conviction.”) (emphasis in original).
Given Mousseau’s role in facilitating the transfer of Focus
funds and in concealing Focus’ assets, the jury could reason-
ably infer that he joined an agreement to commit bankruptcy
fraud.
[14] The government introduced ample evidence of acts to
implement the agreement, including Sullivan’s disbursements
of Focus’ funds to Rubin, Mousseau, and himself on the eve
of the appointment of a trustee, and Focus’ failure to respond
to the trustee’s attempts to locate the agency’s bank accounts.
The testimony of Anderson and Stolman showed that the
defendants provided incomplete accounting records and failed
to identify the location of Focus’ bank accounts until checks
they had drawn on Focus’ account had already cleared. View-
ing the evidence in the light most favorable to sustaining the
jury’s guilty verdict, there was sufficient evidence from which
a reasonable jury could find the defendants guilty beyond a
reasonable doubt of conspiracy to commit bankruptcy fraud.
II
Rubin and Sullivan argue that there was a variance between
the mail and wire fraud charges alleged in the indictment and
the proof at trial that requires reversal.
We review de novo allegations of a material variance.
United States v. Bhagat, 436 F.3d 1140, 1145 (9th Cir. 2006).
UNITED STATES v. SULLIVAN 3813
“A material variance exists if a materially different set of facts
from those alleged in the indictment is presented at trial, and
if that variance affects the defendant’s ‘substantial rights.’ ”
Id. at 1146 (quoting United States v. Adamson, 291 F.3d 606,
615-16 (9th Cir. 2002)).
The defendants contend there was a variance between the
indictment, which alleged that they agreed to misappropriate
payments from Sears and Universal Studios when they
invoiced these clients in late 1999, and the government’s clos-
ing argument, where prosecutors argued that they decided to
“hedge their bets” with Sears by paying some of their client’s
fourth quarter advertising bills and retaining the rest of Sears’
funds until the company decided whether it would keep its
Focus account. There was no variance. As the government
notes, the indictment alleged that the defendants misappropri-
ated only a portion of the funds Sears remitted for its fourth
quarter advertisements. The government’s theory required
proof of the same set of facts charged in the indictment.
[15] This case is unlike Adamson, where the government
charged the defendant with one misrepresentation in the
indictment and offered proof of a different misrepresentation
at trial. See Adamson, 291 F.3d at 615. Here, the pertinent fact
is that at the time the invoices were mailed to Sears and Uni-
versal Studios, Rubin and Sullivan did not intend to use most
of the funds remitted to pay the media outlets for their clients’
advertising bills. The government alleged this conduct in the
indictment and offered proof of it at trial. The record does not
support a claim of variance. See Bhagat, 436 F.3d at 1146-47.
III
Mousseau argues that the district court erred by denying his
pre-trial motion to sever, pursuant to Federal Rule of Criminal
Procedure 14.
We review a denial of a motion for severance for an abuse
of discretion. United States v. Pitner, 307 F.3d 1178, 1181
3814 UNITED STATES v. SULLIVAN
(9th Cir. 2002). “The test for abuse of discretion by the dis-
trict court is ‘whether a joint trial was so manifestly prejudi-
cial as to require the trial judge to exercise his discretion in
but one way, by ordering a separate trial.’ ” United States v.
Decoud, 456 F.3d 996, 1008 (9th Cir. 2006) (internal citation
and quotation omitted).
[16] Mousseau failed to renew his severance request at the
close of evidence. The parties agree that failure to renew a
severance request generally waives appellate review. “It is
well-settled that the motion to sever ‘must be renewed at the
close of evidence or it is waived.’ ” United States v. Alvarez,
358 F.3d 1194, 1206 (9th Cir. 2004) (quoting United States
v. Restrepo, 930 F.2d 705, 711 (9th Cir. 1991)). However, we
have identified exceptions to the renewal requirement where
the defendant “can show either that he diligently pursued sev-
erance or that renewing the motion would have been an
unnecessary formality.” Decoud, 456 F.3d at 1008. Mousseau
seeks to come within this exception by claiming the district
court made clear that it would not entertain further argument
on the severance issue in its denial of his pre-trial motion.
This argument lacks support in the record. The district court
addressed Mousseau’s severance argument a second time in
its order denying Mousseau’s post-trial motion for acquittal
and a new trial. Mousseau does not qualify for an exception
to our renewal requirement. His severance claim is waived.
Even if not waived, Mousseau’s severance argument would
fail on the merits. Mousseau claims he was prejudiced by his
joint trial with Rubin and Sullivan. In reviewing the prejudi-
cial effect of a joint trial, we consider the factors enumerated
in United States v. Fernandez, 388 F.3d 1199, 1241 (9th Cir.
2004).9 The most important factors are whether the jury can
9
These factors are “(1) whether the jury may reasonably be expected to
collate and appraise the individual evidence against each defendant; (2)
the judge’s diligence in instructing the jury on the limited purposes for
which certain evidence may be used; (3) whether the nature of the evi-
UNITED STATES v. SULLIVAN 3815
compartmentalize the evidence against each defendant and the
judge’s diligence in providing evidentiary instructions to the
jury. Id. Although Mousseau was named in Counts 8 through
26, the jury acquitted him on thirteen counts of bankruptcy
fraud for which Rubin and Sullivan were convicted (Counts
11-23). The jury’s selective verdicts against Mousseau dem-
onstrate that his case received individual consideration. See
United States v. Baker, 10 F.3d 1374, 1387 (9th Cir. 1993)
(observing that “the best evidence of the jury’s ability to com-
partmentalize the evidence is its failure to convict all defen-
dants on all counts.”) (citation and quotation marks omitted),
overruled on other grounds by United States v. Nordby, 225
F.3d 1053 (9th Cir. 2000). Mousseau’s severance argument is
meritless.
IV
Mousseau’s final claim is that the prosecutor engaged in
misconduct by referring to him as a liar in closing argument
and suppressing evidence that showed he disclosed Focus as
the origin of the funds in his client trust account.
Mousseau did not object at trial to these acts of alleged
misconduct. Accordingly, he must show that the district court
plainly erred when it did not sua sponte address the alleged
misconduct. United States v. Weatherspoon, 410 F.3d 1142,
1150-51 (9th Cir. 2005). “When prosecutorial misconduct is
alleged, ‘the issue is whether, considered in the context of the
entire trial, that conduct appears likely to have affected the
jury’s discharge of its duty to judge the evidence fairly.”
United States v. Henderson, 241 F.3d 638, 652 (9th Cir. 2000)
dence and the legal concepts involved are within the competence of the
ordinary juror; and (4) whether Appellants could show, with some particu-
larity, a risk that the joint trial would compromise a specific trial right of
one of the defendants, or prevent the jury from making a reliable judgment
about guilt or innocence.” Fernandez, 388 F.3d at 1241.
3816 UNITED STATES v. SULLIVAN
(citation omitted). “Prosecutors have considerable leeway to
strike ‘hard blows’ based on the evidence and all reasonable
inferences from the evidence.” Id.
[17] Mousseau contends that the prosecutor committed
misconduct by stating in closing argument that he “lied or
misled the bankruptcy court” and “[told] lies to bankruptcy
counsel, Ted Stolman.” This argument fails. While the prose-
cutor’s comments qualify as “hard blows,” they were a fair
inference from facts showing that Mousseau misrepresented
the source of the funds used to pay Stutman’s retainer to the
bankruptcy court and Stolman. See United States v. Necoe-
chea, 986 F.2d 1273, 1276 (9th Cir. 1993) (based on reason-
able inferences, prosecutors may argue in closing argument
that one side is lying).
Mousseau also argues that the prosecutor impermissibly
withheld a more legible copy of Mousseau’s December 8,
2000 fax showing that Focus was the source of the funds in
his client trust account. His contention lacks record support.
The government introduced into evidence the “more legible”
fax through the testimony of Anderson, making it available to
defense counsel for cross-examination and in closing argu-
ment. The record further indicates the relevant portions of the
“more legible” fax are also illegible to the naked eye. The
prosecutor’s conduct was not improper.
AFFIRMED.