109 F.3d 539 (9th Cir. 1997), 96-10175, United States v. Ortland

Docket Nº:96-10175.
Citation:109 F.3d 539
Party Name:Serv. 1971, 97 Daily Journal D.A.R. 3611 UNITED STATES of America, Plaintiff-Appellee, v. Gerald ORTLAND, Defendant-Appellant.
Case Date:March 18, 1997
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

Page 539

109 F.3d 539 (9th Cir. 1997)

Serv. 1971,

97 Daily Journal D.A.R. 3611

UNITED STATES of America, Plaintiff-Appellee,


Gerald ORTLAND, Defendant-Appellant.

No. 96-10175.

United States Court of Appeals, Ninth Circuit.

March 18, 1997

Argued and Submitted Feb. 11, 1997.

Page 540

[Copyrighted Material Omitted]

Page 541

Erik Babcock and Paul Wolf, Oakland, CA, for defendant-appellant.

Wayne Lamprey, Assistant United States Attorney, San Francisco, CA, for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of California, Fern M. Smith, District Judge, Presiding. D.C. No. CR-93-00172-FMS.

Before: BRUNETTI, FERNANDEZ, and HAWKINS, Circuit Judges.

Opinion by Judge FERNANDEZ; Concurrence by Judge Hawkins.

FERNANDEZ, Circuit Judge:

Gerald Ortland appeals his jury conviction and sentence for mail fraud. See 18 U.S.C. §§ 1341, 1346. He claims that his conviction should be reversed because evidence was admitted in violation of his attorney-client privilege, because testimony of an expert witness was excluded, and because he was not permitted to show that his former wife, Patricia Ortland, had fled. He also asserts that the district court committed various sentencing errors. We affirm his conviction but vacate his sentence and remand for resentencing.


A grand jury indicted Gerald Ortland and his then-wife Patricia Ortland on five counts of mail fraud spanning the period from August, 1986 to July, 1990. The Ortlands were charged with defrauding investors of Three El Sobrante, a partnership that they created to develop residential real estate. Before trial, Patricia tried several times to have the trial continued. When the court rejected her delaying tactics, Patricia fled. At the time of trial, she had not been located, and Gerald's trial was severed from hers.

Gerald and Patricia were the two general partners in the limited partnership, Three El

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Sobrante, which they formed to raise the capital necessary to purchase and develop land. Gerald used many of the contacts he had gained as a stockbroker to solicit funds for the partnership. Ultimately, the partnership built several homes on previously undeveloped land. During the course of the partnership, the Ortlands withdrew and diverted substantial sums of money from Three El Sobrante's accounts. They used much of the money for their personal expenses. They also took several steps to hide the amount of funds they had taken from the partnership. At trial, Ortland argued that the partnership agreement did not prohibit him from withdrawing the money, that he was unaware of any wrongdoing because Patricia hid important facts from him, and that he had only done what Patricia told him to do. The court prohibited Ortland from calling an expert witness to explain the meaning of the partnership agreement. The government presented evidence that Ortland knew what his wife was doing and that he actively participated in the fraud.

The Ortlands asked Mark Ericsson, an attorney who had previously worked for them, to help them draft the Three El Sobrante limited partnership agreement. The court denied Ortland's pretrial motion to quash a subpoena to Ericsson and admitted Ericsson's testimony at trial over Ortland's objection. The court found that Patricia and Gerald both waived their attorney-client privilege with regard to any communications they had with Ericsson about the partnership agreement.

Ericsson testified that he did not remember any specific conversations with Gerald; he testified largely in generalities based on what he thought he would have told clients. He testified that he drafted the partnership agreement based on an agreement he had drafted earlier for a different Ortland partnership, but he made changes to the agreement based on conversations where both Patricia and Gerald were present. He said that he had explained the provisions relevant to this action to Gerald and Patricia. He indicated that Gerald was paying less attention than Patricia, however.

Many people who worked in the Ortlands' office also testified for the government. For example, Doris Watson, a bookkeeper with many years of experience, worked for the Ortlands from 1986 until she resigned in 1990. She kept the books for four different Ortland entities, including Three El Sobrante. She frequently told Patricia that it was improper for her to use Three El Sobrante money for personal items; she told Patricia the money was not hers and that she would have to pay it back. Gerald was present during at least one of these conversations and "seemed angry." Interestingly enough, at one point Gerald, Patricia, and Watson all drove together to Ericsson's office "to see what [they] could do about the partnership agreement and what it really spells out." After this meeting the Ortlands told Watson they were "having the agreement amended." There never was an amendment. Watson, however, also aided in the commission of improprieties, by, for example, preparing false financial statements and false copies of tax returns. At one point, early in her employment, Patricia told her that she should keep information from Gerald and that the "[less] that Jerry knew the better."

Jay Margrey testified that he worked as the Ortlands' office manager from 1986 until 1988, and confirmed the purport of Watson's statements. He added that he overheard three or four conversations where Gerald was present and was told by Watson that money could not be taken from Three El Sobrante for other projects. At each conversation, Gerald became very angry. Karl Schunck, an accountant, also worked for the Ortlands. He told Gerald that the Ortlands were not entitled to fees from Three El Sobrante. Schunck explained to Gerald that, under the partnership agreement, the Ortlands were not entitled to obtain fees until the completion of the project. When Gerald became angry at Schunck's opinion, Schunck recommended that Gerald consult an attorney. Finally, the government called an accountant as an expert witness. Paul Ainslie testified that the Ortlands diverted a total of $1,458,671 from the Three El Sobrante account.

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After the jury convicted Ortland, the district court sentenced him to 41 months of imprisonment and the maximum fine of $75,000. The court did not order restitution. This appeal followed.


We review de novo a determination that there has been a waiver of the attorney-client privilege. See United States v. Plache, 913 F.2d 1375, 1379 (9th Cir.1990); United States v. Mendelsohn, 896 F.2d 1183, 1188 (9th Cir.1990). The district court's decision not to hold an evidentiary hearing is reviewed for abuse of discretion. See United States v. Mejia, 953 F.2d 461, 465 (9th Cir.1992). Contrary to Ortland's assertion, a "district court's decision to admit expert opinion testimony is reviewed for abuse of discretion." United States v. Castaneda, 94 F.3d 592, 595 (9th Cir.1996). Similarly, a district court's rulings on admission of other evidence "are reviewed only for an abuse of discretion." United States v. Collicott, 92 F.3d 973, 978 (9th Cir.1996).

We review ex post facto challenges to sentencing decisions de novo. See United States v. Castro, 972 F.2d 1107, 1111 (9th Cir.1992). Finally, we review a district court's interpretation and application of the Sentencing Guidelines de novo, but review its underlying factual findings for clear error. See United States v. Mende, 43 F.3d 1298, 1302 (9th Cir.1995).


  1. Waiver of Attorney-Client Privilege

    Ortland argues that attorney Ericsson's testimony was admitted in violation of his attorney-client privilege because the district court erred when it decided that he had impliedly waived the privilege. He also claims that the court abused its discretion by not holding an evidentiary hearing before ruling on this issue.

    We have generally held that, in order to waive the attorney-client privilege, the client must disclose the contents of a confidential communication. See Weil v. Investment/Indicators, Research & Management, Inc., 647 F.2d 18, 24 (9th Cir.1981). Nonetheless, the "attorney-client privilege is strictly construed," and there are other circumstances under which we will find a waiver. Id. Even when a party does not explicitly disclose the content of an attorney-client communication, he may waive the privilege implicitly. A person cannot always claim that he relied on counsel, while protecting what was said between them from disclosure. As we have said: "The privilege which protects attorney-client communications may not be used both as a sword and a shield. Where a party raises a claim which in fairness requires disclosure of the protected communication, the privilege may be implicitly waived." Chevron Corp. v. Pennzoil Co., 974 F.2d 1156, 1162 (9th Cir.1992)(emphasis added) (citation omitted); see also Glenmede Trust Co. v. Thompson, 56 F.3d 476, 486 (3d Cir.1995); Conkling v. Turner, 883 F.2d 431, 434 (5th Cir.1989); GAB Bus. Servs., Inc. v. Syndicate 627, 809 F.2d 755, 762 (11th Cir.1987); Sedco Int'l, S.A. v. Cory, 683 F.2d 1201, 1206 (8th Cir.1982).

    The facts show that Gerald did attempt to parry the government's thrust by telling the government investigators and attorneys that he had relied on his attorney's advice and counsel. At the same time he wanted to shield the content of that advice and counsel from discovery. In particular, on September 2, 1992, before the grand jury indicted Gerald and Patricia, the Ortlands went to the United States Attorney's office, with their counsel, in an attempt to convince the government that they lacked criminal culpability. They met with an Assistant United States Attorney, an FBI Agent, and an IRS Agent. The FBI and IRS Agents each prepared at least one memorandum memorializing the meeting. In general, Gerald claimed that he and Patricia had not intentionally done anything...

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