USCA1 Opinion
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
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No. 97-1209
UNITED STATES,
Appellee,
v.
JEROME E. ROSEN,
Defendant, Appellant.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Robert E. Keeton, U.S. District Judge]
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Before
Torruella, Chief Judge,
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Aldrich, Senior Circuit Judge,
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and Lynch, Circuit Judge.
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Morris M. Goldings, with whom Richard S. Jacobs and Mahoney,
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Hawkes & Goldings were on brief for appellant.
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Mark J. Balthazard, Assistant United States Attorney, with
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whom Donald K. Stern, United States Attorney, was on brief for
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appellee.
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November 12, 1997
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TORRUELLA, Chief Judge. Attorney Jerome Rosen appeals
TORRUELLA, Chief Judge.
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his conviction on four counts of federal mail fraud stemming from
certain representations Rosen made to the trustee of a debtor in
bankruptcy. He was sentenced to two years probation, including
eight months home confinement, and fined $30,000. Rosen argues
that the elements of mail fraud were not met by his failure to
disclose certain information about a proposed asset sale, and
that there was insufficient evidence to convict. We affirm.
BACKGROUND
BACKGROUND
On an appeal from a jury conviction, we must view the
evidence in the light most favorable to the jury's verdict, see
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United States v. Gonz lez-Maldonado, 115 F.3d 9, 12 (1st Cir.
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1997), unless presented with a claim that suggests that the
jury's balanced assessment of the evidence was itself somehow
tainted, see United States v. Roberts, 119 F.3d 1006, 1008 (1st
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Cir. 1997) (no need to view record in light most favorable to
government in context of prosecutorial misconduct claim). On
this appeal, we are limited to the evidence and inferences most
favorable to the verdict, and on this basis the following facts
could have been found by the jury.
Rosen served as legal counsel to the owners and
operators of New England Tri-State Development Corporation ("Tri-
State"). Tri-State, which was owned and operated by George and
Kevin Kattar, operated a golf course in Massachusetts and held an
approximately 1,100 acre parcel of undeveloped land in Maine. In
April1992, Tri-Statefileda voluntaryChapter11 bankruptcypetition.
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At some point in the winter of 1993-94, Kevin Kattar
told Rosen that a Maine lumberman named Michael Griffen was
potentially interested in purchasing the Maine property for a
total of approximately $1 million, to be paid in installments.
Griffen was in contact with another Maine lumberman, Orland
Dwelley, who also had some interest in purchasing and developing
the Maine property. In March 1994, the Tri-State case was
converted to a Chapter 7 liquidation, and Joseph Braunstein was
appointed as trustee. During the Chapter 7 conversion hearing,
Rosen, appearing as the debtor Tri-State's attorney, stated that
Tri-State had received an offer of $500,000 for the Maine
property, and also stated that Tri-State believed the property to
be worth $750,000.
After the conversion, and no later than May 1994, Rosen
began negotiating a possible sale price with Griffen. Although
Kevin Kattar sought a $1 million sale price during a meeting with
Griffen and Rosen on May 25, 1994, no concrete terms were
assented to. In a letter of May 16, 1994, Rosen indicated to the
trustee that Rosen was attempting to find a buyer for the Maine
property at a price of "$500,000 cash." In a letter to Griffen
dated June 6, 1994, Rosen stated that, based on the May 25, 1994
meeting with Griffen in Boston, it was Rosen's understanding that
Griffen wished to "buy the above property . . . at a total cost
to you which will not exceed $1,000,000.00, including legal and
consulting fees, payable no more than $525,000.00 upon delivery
of good, clear, and marketable title . . . and any balance over
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up to four years." The June 6, 1994 letter to Griffen also
suggested two approaches to selling the Maine property, one of
which was the following:
2. Having you make an offer to purchase
directly to the trustee for $500,000 cash and
then hiring Kevin and George Kattar to help
you develop the property at a salary of
$60,000.00 per year each on a four year
employment contract.1
Griffen did not sign or return Rosen's letter.
Soon, it became clear that Orland Dwelley, and not
Griffen, would be the most likely purchaser and developer of the
Maine property. Rosen telephoned Dwelley to discuss a sale at a
net price of $1 million, with $500,000 to be paid up front. On
July 12, 1994, Rosen sent a letter to Dwelley stating that the
offer price was for $500,000, and adding the following:
In addition, our understanding is that
you, with Mr. Griffin, will engage the
Kattar boys as your consultants for a
total amount of $475,000, payable over
four years in monthly payments totalling
$9896.00 (each of the two Kattars to
receive one-half, or $4948.00 per month).
Lastly, you will pay me a fee of
$25,000.00 if you are successful at
acquiring the property, but not
otherwise, payable at closing.
Dwelley signed and returned an attached letter dated July 14,
1994, which Rosen had prepared, stating in pertinent part:
we (together with our associates) are
prepared to pay the sum of $1,000,000 for
the Property in approximately the
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1 The other approach discussed in the letter was reaching an
understanding with the holders of the mortgage on the Maine
properties to buy the property from the Trustee and then sell it
to Griffen.
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following manner: $500,000 upon delivery
of a Deed conveying good record and
marketable title, . . . and the balance
(less our expenses for your services)
over a period of years (not to exceed
five) either by way of a secured note or
consulting fees, secured by a lien on the
property.
For your services as aforesaid, we will
pay you the sum of $25,000, plus actual
expenses, at Closing.
Rosen also drafted an offer letter from Dwelley to the
trustee, which stated a $500,000 offer price but did not mention
any further payments to be made to either the Kattars or Rosen.
The offer letter, which was signed by Dwelley and forwarded by
Rosen to the trustee on July 18, 1994, stated that "we would
expect to seek to employ one or more of the former officers of
Tri-State to assist us in marketing the property," but did not
provide any further details.
Rosen never disclosed to the trustee the substance of
the employment relationship discussed in his correspondence with
Dwelley. Rosen did not provide the trustee with a copy of the
July 14, 1994 letter that Dwelley signed. When the trustee
questioned Rosen on July 25, 1994 about the reference in
Dwelley's offer letter to the possible employment of "one or more
of the former officers" of Tri-State, Rosen told the trustee that
there "was nothing definite as far as what the compensation
[would be] or even if they would be employed."
In a letter to Dwelley dated August 2, 1994, Rosen
wrote:
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I forgot to mention in our telephone
conversation that if you get a call from
the Trustee, whose name is Joseph
Braunstein, or his associate . . . I
would prefer that you not give either of
them the salary details about your
agreement to hire the Kattar boys if the
sale goes through.
Rosen used another attorney, John Rodman, as the attorney of
record for Dwelley. When Rodman asked Rosen if there had been
any specific employment arrangements for the Kattars, Rosen told
him that there was nothing in writing and no specific agreement,
which information Rodman later relayed to the trustee.
In November 1994, the trustee ultimately accepted
Dwelley's second written offer for the Maine properties, which
again offered $500,000, but with a higher initial deposit. That
offer tracked the language of the first offer letter and had been
mailed to Rosen, who then forwarded it to the trustee. The
trustee sought bankruptcy court approval for the sale. On
January 3, 1995, Rosen attended the bankruptcy court hearing on
the motion to sell the property to Dwelley, and said nothing to
contradict the notion that Dwelley's $500,000 was the best
available offer for the debtor's Maine property, or to indicate
that a larger offer of $1 million had been contemplated by
Dwelley.
Before the scheduled closing, an attorney working for
Dwelley in Maine asked Rosen to explain the employment
arrangement regarding the Kattars. That attorney, Laurie Dart,
then informed the trustee that there may have been additional
arrangements for future payments to the Kattars. Upon hearing of
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the previously undisclosed arrangements, the trustee filed a
motion to revoke the court-approved sale of the Maine property.
In the fall of 1995, the trustee ultimately received a
third offer from Dwelley, and entered into an agreement to sell
the Maine property to Dwelley for $730,000 in cash. No terms
regarding any subsequent payments (or regarding the Kattars'
employment) were part of the final sale transaction.
At trial, the government sought to prove that Rosen's
failure to disclose information regarding what the government
referred to as the "side agreement" with Dwelley was a fraudulent
scheme intended to prevent the trustee from receiving as much as
possible from the sale of the debtor's estate. Specifically,
Rosen was charged with using the mails in the course of tricking
the trustee into approving a $500,000 sale which in fact was a $1
million dollar sale, with the remainder to be paid to the Kattars
and Rosen. The four counts of Rosen's indictment under 18 U.S.C.
1341 comprised of two mailings related to each of Dwelley's two
offers to purchase the property for $500,000 -- including
mailings from Dwelley to Rosen that Rosen forwarded to the
trustee in July and October 1994.
The jury rendered guilty verdicts on all four counts.
Prior to the end of trial, the district court denied Rosen's
motion for judgment of acquittal. On appeal, Rosen again argues
that there was insufficient evidence to support a mail fraud
conviction, in essence because there was not a binding employment
agreement between Dwelley and the Kattars.
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DISCUSSION
DISCUSSION
Rosen's chief contention on appeal is that to support
his conviction under 18 U.S.C. 1341, the government bore the
burden of proving beyond a reasonable doubt that a binding
employment agreement existed between the purchaser, Dwelley, and
Rosen's clients, the Kattars, that Rosen failed to disclose.
Thus, Rosen argues that either his motion for judgment of
acquittal should have been granted -- because such proof was not
offered -- or, in the alternative, his proposed jury instruction
stating that proof of an employment agreement was necessary to
support a guilty verdict should have been incorporated into the
district court's instructions.
Without doubting that a binding employment agreement
would have made Rosen's incomplete disclosures to the trustee
more egregious, or more obviously illegal, we find that proving
Rosen's failure to disclose a binding agreement was not a
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necessary prerequisite to establishing this mail fraud violation.
When the evidence is viewed as a whole, in the light most
favorable to the verdict, drawing all credibility issues in favor
of the verdict, as is appropriate in reviewing a sufficiency
claim, see, e.g., United States v. Fulmer, 108 F.3d 1486, 1490
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(1st Cir. 1997), we see a set of facts that would be sufficient
to "allow a rational jury" to render a guilty verdict. Id.; see
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also United States v. Batista-Polanco, 927 F.2d 14, 17 (1st Cir.
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1991) (stating standard of review for sufficiency claims).
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The elements of a mail fraud offense under 18 U.S.C.
13412 are: (1) the defendant's knowing and willing
participation in a scheme to defraud with a specific intent to
defraud; and (2) the use of the mails in furtherance of the
scheme. See United States v. Montminy, 936 F.2d 626, 627 (1st
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Cir. 1991) (listing elements of mail fraud); see also United
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States v. Ruiz, 105 F.3d 1492, 1501 (1st Cir. 1997) (same). A
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defendant need not have been successful in his scheme to defraud
in order to be convicted under the mail fraud statute. See
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United States v. Jordan, 112 F.3d 14, 19 (1st Cir.), cert.
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denied, ___ U.S. ___, No. 97-5823, 1997 WL 562297 (Oct. 14,
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1997). Section 1341's scope is broad. It covers deceptive
schemes to deprive victims of a wide variety of tangible and
intangible property interests; such a scheme must, at a minimum,
contemplate either some "articulable harm" befalling the fraud
victim or "some gainful use" of the object of the fraudulent
scheme by the perpetrator, regardless of whether this use is
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2 18 U.S.C. 1341 (Supp. 1997) provides in pertinent part:
Whoever, having devised or intending to
devise any scheme or artifice to defraud,
or for obtaining money or property by
means of false or fraudulent pretenses,
representations, or promises . . . for
the purposes of executing such scheme or
artifice or attempting to do so, places
in any post office or authorized
depository for mail matter, any matter or
thing whatever to be sent or delivered by
the Postal Service, . . . or takes or
receives therefrom, . . . any such matter
or thing, shall be fined under this title
or imprisoned not more than five years,
or both.
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profitable in the economic sense. United States v. Czubinski,
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106 F.3d 1069, 1074-75 (1st Cir. 1997).
Direct proof of fraudulent intent is often difficult to
find, and thus we have long permitted the inference of fraudulent
intent from circumstantial evidence. See, e.g., United States v.
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Goodchild, 25 F.3d 55, 60 (1st Cir. 1994). Here, there was ample
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evidence to support the jury's conclusion that Rosen acted with
the purpose of defrauding Tri-State's trustee in bankruptcy of
amounts that a buyer, Orland Dwelley, was willing to pay for the
debtor Tri-State's Maine property. It is certainly not
irrational to conclude that information regarding Dwelley's
willingness to pay a total of one million dollars over time would
have been valuable to the trustee, regardless of whether it was
proven that Dwelley would have been willing to pay what he later
paid, namely $730,000, at the time of his second offer of
$500,000.
The letters between Rosen and Dwelley in July 1994
support the conclusion that a side agreement to employ the
Kattars -- and for Dwelley to thereby pay a total of
approximately $1 million -- existed. The language of Dwelley's
reply letter to Rosen dated July 14, 1994 is particularly
telling, stating that "[w]e (together with our associates) are
willing to pay a total of $1,000,000 for the Property in
approximately the following manner: $500,000 upon delivery of a
Deed . . . and the balance . . . over a period of years."
Comparing these letters with the testimony of the trustee and
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with the offer letters to the trustee indicates that Rosen was
not forthcoming in his representations regarding the structure of
the asset sale. Furthermore, Rosen asked Dwelley in writing to
"not give [the trustee or his associate] the salary details about
your agreement to hire the Kattar boys if the sale goes through."
All of this evidence can support a rational jury's conclusion
that Rosen, in structuring the initial offer by Dwelley, sought
to induce the trustee "into believing that a $500,000 offer had
been made to buy the Maine property, when in fact the offer was
for $1 million," as Rosen's indictment alleged.
Rosen argues that any side agreement between the
Kattars and Dwelley was not binding. The side agreement need not
have been binding, however, in order to establish that hiding the
information from the trustee satisfied the element of a "scheme
or artifice to defraud" in this case. 18 U.S.C. 1341. A
rational jury could have found that a legally non-binding
agreement between Rosen and Dwelley regarding a $1 million dollar
purchase price was intentionally kept hidden from the trustee,
and that regardless of its non-binding nature, the trustee was
thereby tricked into believing that $500,000 represented the
extent of Dwelley's interest in the properties. Simply put, from
the point of view of the trustee, the value of the information
that Rosen concealed derives from the fact that Dwelley may have
been willing to pay more than $500,000 for the property -- it
does not turn on whether that interest was fixed in a legally
binding agreement.
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A mail fraud conviction may be based on a defendant's
"deceptive conduct," a category that certainly may include the
dissemination of incomplete information, where the specific
intent to defraud exists. McEvoy Travel Bureau, Inc. v. Heritage
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Travel, Inc., 904 F.2d 786, 791 (1st Cir. 1990); see also United
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States v. D'Amato, 39 F.3d 1249, 1257 (2d Cir. 1994) ("'[T]he
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withholding or inaccurate reporting of information that could
impact on economic decisions can provide the basis for a mail
fraud prosecution.'") (quoting United States v. Wallach, 935 F.2d
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445, 462-63 (2d Cir. 1991)). The jury could choose not to
believe Rosen's explanation for his failure to disclose the
understanding reached with Dwelley, which is that he believed the
trustee did not want to entertain offers that involved payments
over time. A rational jury could also infer an intent to harm
the debtor estate, which under the most basic bankruptcy law
principles is entitled to the full value of the consideration
paid for an estate asset. 11 U.S.C. 541(a)(6); see, e.g.,
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United States v. Knight, 336 U.S. 505, 508 (1949) ("All the
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consideration which is paid for a bankrupt's assets becomes part
of the estate. No device or arrangement, however subtle, can
subtract or divert any of it.").
Rosen also seems to argue that the indictment itself
alleged that a binding employment agreement was part of the
fraudulent scheme. We might concur, but for the fact that Rosen
himself described the correspondence with Dwelley as an
"agreement." He cannot now be heard to complain about the
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government's and court's adoption of his own definition. It
follows that the district court did not err in failing to
instruct the jury that it must find that a binding agreement
between Dwelley and the Kattars was formed. Our review of an
alleged legal error in a jury instruction is de novo. We find no
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error in the district court's instructions, which informed the
jury that the government "must prove beyond a reasonable doubt
that there was an agreement to pay additional money," and that
gave an acceptable definition of an "agreement" as requiring that
the parties manifest an agreement to the same terms. As
discussed above, the mail fraud statute plainly does not require
that Rosen's deceptive behavior regarding a buyer's true level of
interest be in relation to a binding, as opposed to a non-
binding, agreement with the buyer to pay additional sums of
money.
Finally, relying on United States v. D'Amato,3 Rosen
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argues that, in the absence of a necessary harm resulting from
the fraudulent scheme, the government had to prove Rosen's intent
to defraud with independent evidence. See D'Amato, 39 F.3d at
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1257 ("Where the scheme does not cause injury to the alleged
victim as its necessary result, the government must produce
evidence independent of the alleged scheme to show the
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3 Rosen cites United States v. Sawyer, 85 F.3d 713, 715 (1st
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Cir. 1996), for the same proposition. Sawyer, however, pertained
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to proof regarding the elements, not of 1341, but of 1346,
the "honest services fraud" provision. The citation to Sawyer
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thus adds nothing to Rosen's argument under D'Amato on this
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point.
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defendant's fraudulent intent."). We disagree with the premise
that Rosen's scheme does not necessarily contemplate a harm.
Viewing the evidence in the light most favorable to the verdict,
we see an attempt to prevent all of the proceeds of an asset sale
from going to the debtor's estate itself. To deprive the trustee
of a debtor in bankruptcy of accurate information regarding
greater amounts that a potential buyer is willing to pay is harm
enough. Compare with Czubinski, 106 F.3d at 1074 (no deprivation
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of property interest in confidential information for purposes of
federal fraud statute where no gainful use or other articulable
harm followed from mere browsing of taxpayer files). Here, once
the side agreement was unearthed, the trustee took quick steps to
dissolve the approved $500,000 sale, and eventually sold the
property to the same buyer at $730,000. The two cases cited by
Rosen in support of his contention that no harm is implicated
here are readily distinguishable on the facts. See United States
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v. Jain, 93 F.3d 436 (8th Cir. 1996), cert. denied, ___ U.S. ___,
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117 S. Ct. 2452 (1997) (reversing conviction where there was no
evidence of harm to patients from scheme in which hospital paid
kickbacks to referring psychologist); United States v. Ashman,
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979 F.2d 469, 479 (7th Cir. 1993) (violation of a commodity
brokerage practice not a deprivation of property because customer
would have received identical price). Unlike in Jain and Ashman,
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the scheme at issue here threatened to place its victim in a
tangibly worse position, namely one in which a trustee could not
extract the maximum value for the debtor's assets.
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CONCLUSION
CONCLUSION
For the reasons stated in this opinion, we affirm the
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judgment of the district court.
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