USCA1 Opinion
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
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No. 94-1222
UNITED STATES OF AMERICA,
Appellee,
v.
WILLIAM J. CAMUTI,
Defendant, Appellant.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. William G. Young, U.S. District Judge]
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Before
Selya, Circuit Judge,
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Bownes, Senior Circuit Judge,
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and Boudin, Circuit Judge.
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Thomas V. Laprade, by Appointment of the Court, with whom Black,
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Lambert, Coffin & Rudman was on briefs for appellant.
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William P. Stimson, Assistant United States Attorney, with whom
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Donald K. Stern, United States Attorney, was on brief for the United
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States.
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March 12, 1996
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BOUDIN, Circuit Judge. In a jury trial beginning in
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September 1993, William Camuti was tried on 13 counts of mail
fraud in connection with a scheme to defraud investors by
obtaining their funds through false representations. 18
U.S.C. 1341, 2. On October 18, 1993, the jury acquitted
Camuti on two counts and convicted him on the remaining 11
counts. Camuti was sentenced on February 28, 1994 to 116
months' imprisonment and ordered to pay $2,528,000 in
restitution. He now appeals, challenging both his conviction
and his penalties. Taken in the light most favorable to
the government, United States v. Brien, 59 F.3d 274, 275 (1st
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Cir.), cert. denied, 116 S. Ct. 401 (1995), the evidence
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submitted at trial permitted the jury to find the following.
Starting in the early 1980s Camuti ran a mortgage brokerage
business called "The Loan Depot" from a building in Randolph,
Massachusetts. Camuti attracted a large number of homeowners
seeking second mortgages and placed their applications with
various lenders.
Beginning in December 1988 and continuing for some
period, Camuti began to solicit investments from several
Waltham businessmen, known at trial as "the Waltham Five."
He represented to them that their funds would be invested in
high-quality residential mortgages that he would select and
service. The Waltham Five invested more than $2.5 million
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with Camuti, but in fact Camuti never invested their money in
residential mortgages.
In February 1989, Camuti hired Joseph Carroll, a young
stockbroker, to market pools of mortgages to potential
investors. Carroll and several part-time salesmen telephoned
potential investors to persuade them to invest money in
mortgage pools. The first such pool was to be backed by a
mortgage on the Loan Depot office building in Randolph, but
Carroll testified at trial that this initial effort fell
short and that he managed to raise only $125,000 compared
with a goal of $900,000.
Carroll further testified that Camuti responded to this
setback by instructing Carroll to tell investors that each
mortgage pool consisted of a group of residential mortgages
on homes in well-to-do Boston suburbs. Camuti was
represented to be a co-manager of the pools, and he signed a
mortgage pool "participation certificate" that was sent to
each investor. Over the next year, the program attracted
over $1.7 million. In fact no residential mortgages secured
these investments.
In October 1989, about nine months after Carroll began
his efforts, the Securities Division of the Massachusetts
Secretary of State's office began to receive reports that
Camuti might be illegally marketing unregistered securities
and sent him a letter of inquiry. Camuti told his attorney
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to respond that the Loan Depot's solicitations had produced
no response; by letter of October 27, 1989, his lawyer told
the Securities Division, inaccurately, that no funds had been
collected and no mortgage pool participations had been
issued. In a subsequent letter, the lawyer told the
Securities Division, again inaccurately, that all such
solicitations had ceased.
In spring 1990, Camuti began falling behind in interest
payments and, in May 1990, a Boston newspaper reported
allegations that there were no residential mortgages backing
Camuti's pools. In December 1990, members of the Waltham
Five met with Camuti and he admitted that their funds were
not secured by residential mortgages. In later negotiations,
the Waltham Five sought other collateral; one proposal was to
have one of their members take control of the assets in the
Loan Depot as a trustee for the other investors, but no
settlement was ever reached.
At trial the government presented the evidence just
described through approximately twenty-five witnesses. These
included Carroll, various investors who had been solicited by
Carroll, other persons familiar with Camuti's role in the
Loan Depot, and four members of the Waltham Five. Three of
the four testified that Carroll himself had told them that
their investments would be backed by residential mortgages;
the fourth was not specific on this point.
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Camuti's own position at trial was that Carroll had
deceived Camuti and that Camuti had discovered Carroll's
misrepresentations only in the spring of 1990, and then
discharged Carroll. As to the Waltham Five, Camuti suggested
that they, or at least some of them, were engaged in an
effort to secure control of the Loan Depot which, in its
mortgage broker activities, had been a successful business.
Camuti also denied representing to the Waltham Five that
their investments would be used to purchase residential
mortgages.
On this appeal, Camuti does not claim that the evidence
was insufficient to hold him liable for mail fraud. Rather,
he argues on several fronts that the trial court effectively
deprived him of a fair trial by restricting his opportunity
to present his defense and, further, that the court
misinstructed the jury. He also contests his sentence and
restitution order. The Cross-Examination of the Waltham
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Five. The government had little trouble in this case proving
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that Carroll had defrauded the mortgage pool investors; its
problem was to implicate Camuti in these actions. The main
witness for the government, unfortunately, was Carroll who
directly implicated Camuti but, as a self-confessed
defrauder, was hardly a perfect witness. The government did
have other evidence linking Camuti to Carroll's frauds, but
it was obviously quite helpful to the government to show that
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Camuti himself had been making comparable misrepresentations
to his own friends, namely, the members of the Waltham Five.
In response, Camuti asserted that the Waltham Five were
using their transactions with Camuti to take over Camuti's
business. To make this showing, Camuti sought to cross-
examine a Waltham Five member about the proposed trust
document that the Waltham Five had tendered to Camuti, and
posed questions designed to show that another member had
acquired an interest in certain of the Loan Depot's assets.
The district judge sustained a number of objections by the
government to these inquiries. Camuti now claims that these
rulings were error.
Few of the tasks of a trial judge are more difficult
than coping with this kind of problem. A fragment of
evidence is offered seemingly remote from the main issues.
At this point, the trial judge has to rule on relevance, at
least provisionally, without knowing how this fragment will
look as part of a larger pattern. And (assuming a proper
objection), the judge may also have to consider other
limitations, such as those based on prejudice or confusion,
in deciding how far to let issues of marginal relevance be
pursued.
In this instance, the district court sought side bar
explanations for the disputed evidence and made clear its
willingness to give the defense wide latitude to explore the
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alleged scheme of the Waltham Five if it could be shown to
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bear on the question whether Camuti had acquired money from
the Waltham Five based on false representations. But as we
read the colloquies, ultimately the district court concluded
that the necessary foundation was lacking and that questions
about the trust document or the present ownership of Loan
Depot assets were at best minimally relevant, confusing and a
waste of time.
We think that this judgment was clearly within the broad
discretion allowed to district courts in these matters,
United States v. Jarabek, 726 F.2d 889, 902-03 (1st Cir.
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1984), and Camuti's claim of error fails without regard to
the government's procedural objections (several of which have
some bite). The crime with which Camuti was charged--mail
fraud--did not require that the victims be pure of heart or
even that they have been effectively deceived by the charged
misrepresentations. Materiality issues aside, all that
matters is that the representations were deliberately made by
the defendant. United States v. Allard, 926 F.2d 1237, 1242
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(1st Cir. 1991).
Camuti's position, as we understand it, is that the
alleged motives and later actions of the Waltham Five bore on
the question of whether Camuti had ever made the
misrepresentations to them at all; Camuti argues that the
Waltham Five loaned money to Camuti rather than invested it
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in supposed residential mortgages; and--or so Camuti further
reasons--the malign motive and later actions that the defense
has attributed to the Waltham Five are inconsistent with
their story that Camuti made misrepresentations.
But the inferences are so thin that they can barely, if
at all, meet the generous test of relevance under Fed. R.
Evid. 401. That the Waltham Five sought security after they
discovered Camuti's fraud hardly suggests that any of them
were previously plotting to take over the Loan Depot
business; and even a prior plot to obtain such control would
tell little about whether Camuti had made false statements
when he obtained their funds. The difference between proof
and speculation is a matter of degree, but the proof here is
close to the latter end of the spectrum.
At the same time, quite apart from irrelevance, the
evidence sought to be adduced did have the capacity to
mislead and confuse the jury. See Fed. R. Evid. 403.
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Although irrelevant to any proper defense, it lent itself to
the suggestion that whatever Camuti may have done, the
Waltham Five took advantage of him when he found himself
hard-pressed and that one member had enriched himself at
Camuti's expense. In other words, the scenario that Camuti
sought to suggest could easily have been useful to Camuti but
not for any legitimate purpose.
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Camuti cites to us precedent that the right of cross-
examination is secured by the Confrontation Clause of the
Constitution, but those cases involve unjustifiable
restrictions on cross-examination. E.g., Chambers v.
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Mississippi, 410 U.S. 284 (1973). The ordinary application
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of Fed. R. Evid. 401-03 does not even remotely impair any
constitutional right under the Sixth Amendment. See Delaware
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v. Van Arsdall, 475 U.S. 673, 679 (1986); United States v.
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Kepreos, 759 F.2d 961, 964 (1st Cir. 1985). It is worth
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adding that the district court went out of its way to offer
Camuti an opportunity to create a foundation for the evidence
he sought to adduce.
The Telephone Tape. As part of the defense's case,
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Camuti sought to play for the jury an audio tape recording.
The tape had been found in Carroll's desk and, taken at face
value, included several telephone sales pitches by Carroll to
prospective investors. In the course of one of the pitches,
apparently relating to commercial property mortgages, the
speaker--purporting to be Carroll--said that, with respect to
an investment vehicle, "I have one of my clients that's gonna
take the whole deal, and that's a half a million dollars,
himself."
Camuti's position, at trial and on appeal, is that this
comment showed that Carroll's sales efforts to raise money on
commercial mortgages were a success. This fact, Camuti
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reasons, undermined Carroll's own testimony that his
commercial-mortgage sales efforts had largely failed and that
this failure caused Camuti to instruct Carroll to begin
pitching non-existent residential mortgages instead.
Camuti's brief assumes that, if the tape were played,
Carroll's comment about his half-a-million-dollar client
would have been admissible for its truth.
The tape recording, like most other "real" evidence,
could be admitted only upon an offer or promise of evidence
sufficient to permit the jury to find that the tape was what
its proponent (Camuti) claimed it to be: here, recordings of
actual telephone sales calls by Carroll. See Fed. R. Evid.
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901. Camuti offered to testify that he himself recognized
the voice as that of Carroll. The government said that this
was insufficient, pointing out that no chain of custody had
been proved and that Camuti himself had recorded over
portions of the tape by using it to record calls to or from
his own telephone.
The district judge listened to the tape and chose to
exclude it. His first comment was that the tape had not been
adequately authenticated. He continued by saying that, in
light of Camuti's constitutional right to confront witnesses
against him, see Chambers, 410 U.S. at 294, the court would
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admit the tape if "truly exculpatory." But the judge ruled
that the call in question appeared to deal with "interests in
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commercial property" and was therefore "not central to this
case . . . ."
Chain of custody is one means of authenticating evidence
but not the only means; and voice identification by Camuti
would have served as evidence that Carroll was the speaker.
The government's better argument is that there is some
internal evidence that raises doubts about the tape's
authenticity, which Carroll could have removed if Camuti had
called him to authenticate the tape. The district judge has
considerable discretion in resolving authentication issues
under Rule 901, United States v. Carbone, 798 F.2d 21, 24
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(1st Cir. 1986), but the district court did not choose to
exclude the tape on this ground--saying, instead, that the
evidence was not exculpatory.
We conclude that if the tape had any relevance at all,
it was so slight that the exclusion of the tape was at the
most harmless error. Under ordinary hearsay rules the tape
was never admissible as evidence that Carroll had in fact
sold a commercial mortgage to one of his clients for
$500,000. The taped conversation, even if authentic, was an
out-of-court statement by Carroll; and Camuti makes no effort
to show that the statement falls within any hearsay
exception. Accordingly, if offered for the truth of the
matter asserted--as Camuti assumes it to be--the taped
comment is excluded by Fed. R. Evid. 802.
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In Chambers, the Supreme Court held that it can violate
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due process to exclude reliable hearsay evidence crucial to
the defense; there, the state court in a murder trial had
excluded out-of-court statements of another that he had
committed the crime with which the defendant was charged.
410 U.S. at 292-93. But the Chambers statements were
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arguably reliable, cf. Fed. R. Evid 804(b)(3), and vitally
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important to the defense; the hearsay comment of Carroll is
neither. Chambers is not a general abrogation of the hearsay
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rule. Lee v. McCaughtry, 933 F.2d 536, 538 (7th Cir.), cert.
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denied, 502 U.S. 895 (1991).
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Of course, Carroll's statement might still have been
admissible not for its truth but for impeachment, if
sufficiently inconsistent with his trial testimony.
Ordinarily, extrinsic evidence is not admissible to impeach
by contradiction; but an exception exists where the
contradiction is on a material issue. United States v.
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Perez-Perez, 72 F.3d 224, 227 (1st Cir. 1995). It is not
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easy to tell whether the vague reference on the tape to a
prospective $500,000 investment is at odds with any point in
Carroll's trial testimony.
But even if we assume that the tape was authentic and
extrinsic evidence of Carroll's statement admissible to
impeach, it could not have altered the outcome of this case.
At most the contradiction, if contradiction there was, would
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have cast a small measure of additional doubt upon Carroll's
veracity. But Carroll was already a proven liar, having
engaged for months in selling investors phony mortgage
certificates. The jury nevertheless believed him when he
said that Camuti was responsible for the scheme.
The jury had a basis for believing Carroll's trial
testimony because there was also a fair amount of other
evidence supporting the view that Camuti had collaborated in
the fraud: for example, evidence that Camuti was familiar
with Carroll's operation, had signed the investment
certificates, had told similar lies about residential
property to the Waltham Five, and had instructed his own
lawyer to mislead the state authorities when they began to
investigate. The idea that one additional lie from Carroll
would have undermined this structure is fanciful. United
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States v. Legarda, 17 F.3d 496, 499 (1st Cir.), cert. denied,
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115 S. Ct. 81 (1994).
Jury Instructions. Camuti says that the district court
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erred in two rulings on jury instructions: one was the
court's refusal to give Camuti's requested instruction that
good faith was a defense to the fraud charge; the other was
granting the government's request to instruct that a
defendant's knowledge of fraud may be inferred from willful
blindness. Camuti's counsel did not object after the jury
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was instructed and before it retired, as required by Fed. R.
Crim. P. 30, so our review is limited to plain error.
On the good faith instruction, there was no error at
all, let alone plain error. A separate instruction on good
faith is not required in this circuit where the court
adequately instructs on intent to defraud. United States v.
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Dockray, 943 F.2d 152, 155 (1st Cir. 1991). Here, the
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court's instruction on fraud is not seriously challenged.
Camuti says that the instruction was needed here because the
court limited Camuti's evidence offered to show good faith.
But missing evidence is not supplied by instructions; and if
evidence of good faith was excluded in error, Camuti was free
to raise the point.
As for the willful blindness instruction, it was amply
justified in this case. United States v. Gabriele, 63 F.3d
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61, 66-67 (1st Cir. 1995). A jury could reasonably find that
even if Camuti had not actually directed the fraud, the
warning signs were ample to have alerted Camuti to the fraud
unless he deliberately chose to close his eyes to them; two
good examples are the newspaper reports of the fraud
(articles Camuti discussed with his investors) and the
contacts by the state investigators (which Camuti sought to
thwart with false information).
Camuti suggests that this blindness instruction was
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faulty because it could have led the jury to apply a
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negligence standard in determining his guilt. On the
contrary, the judge not only properly instructed the jury as
to the elements of fraud and used the usual formula for
willful blindness, see E. Devitt, et al., Federal Jury
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Practice and Instructions 17.09 (4th ed. 1992); Gabriele,
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63 F.3d at 66 n.6, but the judge also told the jury that it
could not find that Camuti acted knowingly if he "was simply
careless."
Sentence Calculations. In calculating the offense level
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for Camuti's offense, the district judge increased the figure
by two levels for obstruction of justice under U.S.S.G.
3C1.1. From the prosecutor's request and the subsequent
colloquy, it is evident that the district court based this
ruling on a finding that Camuti had committed perjury during
the trial. United States v. Dunnigan, 113 S. Ct. 1111
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(1993), ordains an enhancement in those circumstances.
On appeal, Camuti argued that the district judge's bare
statement at sentencing--that an obstruction of justice had
occurred--was too bare to show that the district judge had
found each of the elements of the perjury enhancement as
required under Dunnigan: falsity, willfulness and
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materiality. See 113 S. Ct. at 1116-17. The government said
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that the findings could be inferred from context or that the
error, if any, was harmless. Instead of speculating, we
retained jurisdiction and, by order, asked the district court
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to identify the obstructive conduct and the basis for any
Dunnigan findings.
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By a supplemental order entered on November 9, 1995, the
district court supplied the specifics. Its order found that
the perjury lay in Camuti's testimony that he was unaware of
the misrepresentations made by Carroll to investors. The
district court's order also specifically found this testimony
to be false, willful and material. The findings are not
clearly erroneous and, in fact, Camuti has offered us no
reason to doubt that they were correct. Accordingly, nothing
more need be said about the perjury enhancement.
The district court imposed a further four-level upward
adjustment based on a finding that Camuti was the organizer
of a criminal organization that was "extensive." U.S.S.G.
3B1.1(a). This adjustment was imposed after a recitation by
the government of evidence showing that Camuti's Loan Depot
organization had employed the services of over a dozen
people, that the fraud was sophisticated and directed at many
investors, and that it was orchestrated by Camuti.
The district judge said that he was persuaded by this
argument. On appeal, Camuti argues (apparently for the first
time) that the enhancement required not only that the fraud
be extensive but also that Camuti have played an extensive
role as an organizer or leader. The guidelines do so
require, U.S.S.G. 3B1.1(a); United States v. Tejada-
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Beltran, 50 F.3d 105, 111 (1st Cir. 1995); but in adopting
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the prosecutor's scenario, the district judge so found and
the evidence supports him. Thus, if not forfeited, the
argument fails.
Camuti also contends that the same enhancement amounts
to double counting because the size of the fraud was already
reflected in an adjustment based on the loss inflicted by the
fraud. U.S.S.G. 2F1.1(b)(1). One could argue about
whether double counting is involved: the organizer
adjustment focuses not on the amount of loss but on the role
of the defendant and the size of the organization; still, the
latter element often correlates with the size of the loss.
But the short answer is that this is at worst permissible
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double counting, United States v. Lilly, 13 F.3d 15, 19 (1st
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Cir. 1994).
A final two-level upward adjustment was based upon
Camuti's abuse of a position of "private trust" to
"significantly facilitate[]" the offense. U.S.S.G. 3B1.3.
The government's theory was that, at least as to the Waltham
Five, Camuti was effectively a fiduciary trusted by them to
invest their money in residential mortgages that he (Camuti)
would select. Cf. United States v. Newman, 49 F.3d 1, 9 (1st
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Cir. 1995). The district court accepted the theory despite
Camuti's rather general objections that his relationship with
the investors had not facilitated any fraud.
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On appeal, Camuti has revised his objection. He now
says that his activities vis-a-vis the Waltham Five were
"incidental" to the offenses on which he was sentenced, and
he points out that all but one of the mail fraud counts
related to other investors solicited by Carroll. This
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argument rests on the peculiar logic of the mail fraud
statute which makes criminal not the scheme to defraud
standing alone but each use of the mails in connection with a
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scheme to defraud. 18 U.S.C. 1341.
The short answer is that for purposes of determining
responsibility at sentencing, the guidelines include not only
the offense of conviction but also any other conduct that is
"part of the same course of conduct or common scheme or plan
as the offense of conviction." U.S.S.G. 1B1.3(a)(2). The
government's main excuse for offering evidence as to the
Waltham Five was that the frauds directed against the Waltham
Five were part of the same overall scheme. On this theory,
those frauds were also "relevant conduct" at sentencing,
regardless of specific mailings.
There was certainly evidence that the Waltham Five were
defrauded. Whether there was only a single overarching
scheme might be debated, cf. U.S.S.G. 1B1.3, comment.
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(n.9); United States v. Sklar, 920 F.2d 107, 111 (1st Cir.
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1990); and there is no explicit finding on the point by the
district court. But neither did Camuti make his present
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argument at sentencing. It is enough here that the evidence
permitted the finding of a single scheme and there was
certainly no plain error where, without objection, the
district court proceeded on that premise.
Restitution. At sentencing, the district judge ordered
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Camuti to make restitution payments to members of the Waltham
Five in the amount of $2,528,000. This award was based on
computations in the pre-sentence report reflecting investment
losses in this range claimed by the individual members of the
Waltham Five. Camuti did not object to the pre-sentence
report nor object to the restitution order when the district
court specified the amounts. On appeal, Camuti claims for
the first time that the restitution order--aside from $37,500
owing to Bowse--was plain error.
Camuti's theory is straightforward. Under the statutory
language that applies to his case, restitution may be ordered
only for losses caused by the "offense" or "offenses" of
conviction. 18 U.S.C. 3663(a) (1988); see Hughey v. United
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States, 495 U.S. 411 (1990). Later amendments have broadened
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the authority to require restitution to include harm due to
"the defendant's criminal conduct in the course of the
scheme," 18 U.S.C. 3663(a)(2) (Supp. V, 1993), but the
changes are not retroactive. Newman, 49 F.3d at 11 & n.14.
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Camuti's argument is that none of the investments of the
Waltham Five, apart from $37,500 owing to Bowse, was related
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to an individual mailing specified as a count in the Camuti
indictment.
As already noted, the mail fraud offense is committed by
a mailing in aid of a scheme to defraud. One can therefore
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argue that a loss is caused by the "offense" only if it stems
from a transaction linked to a specific mailing for which the
defendant was indicted. Although several circuits have taken
a broader view, this circuit has twice construed the old
restitution statute to incorporate such a gloss, Newman, 49
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F.3d at 11; United States v. Cronin, 990 F.2d 663, 666 (1st
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Cir. 1993), and this precedent is binding on this panel.
The government's first answer is that Camuti did not
raise the Hughey issue in the district court and therefore
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waived it. Its other answer is to point to counts 11 and 12
of the indictment, charging Camuti with the mailings by his
lawyer to the state authorities. These mailings, says the
government, delayed the discovery and termination of the
scheme and thereby can be deemed to have caused the losses
from investments made after the date of the first letter.
According to the government, almost all of the Waltham Five
investments occurred after this date. Camuti, in turn, calls
this causal connection a threadbare speculation.
The government's waiver argument does not meet riposte
of plain error, see United States v. Olano, 113 S. Ct. 1770
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(1983); and our precedents limiting the reach of the old
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restitution statute are plain enough. It could be argued
that Olano's further requirement--that the plain error be "a
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miscarriage of justice" or the like, id. at 1779--is not
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satisfied where, as here, the losses in question were due to
Camuti's fraudulent scheme, even if not directly linked to
the charged mailings. But such a rough and ready approach
would arguably be at odds with our recent decision in United
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States v. Gilberg, No. 95-1586, slip op. at 15-17 (Jan. 31,
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1996).
But in this case, unlike Gilberg, the government does
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have an argument that the restitution ordered by the district
court can be sustained on the merits based on counts 11 and
12. The government's causation argument, and Camuti's
response, are largely fact-bound; to resolve the dispute
would require a remand to the district court to develop
further facts and a decision by the district court that might
show that the restitution judgment should be smaller. Since
Camuti failed to raise this issue in a timely fashion and it
is by no means certain that the restitution judgment is
substantially excessive, we exercise our undoubted discretion
under Olano to disregard the alleged error. 113 S. Ct. at
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1778.
Affirmed.
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