207 F.3d 1169 (9th Cir. 2000), 97-50518, United States v. Chang

Docket Nº:97-50518
Citation:207 F.3d 1169
Party Name:UNITED STATES OF AMERICA, Plaintiff-Appellee, v. WARREN S. CHANG, Defendant-Appellant.
Case Date:April 04, 2000
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

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207 F.3d 1169 (9th Cir. 2000)



WARREN S. CHANG, Defendant-Appellant.

No. 97-50518

United States Court of Appeals, Ninth Circuit

April 4, 2000

Argued and Submitted February 7, 2000--Pasadena, California

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William S. Harris, Stewart & Harris, Pasadena, California, for the defendant-appellant.

Nancy B. Spiegel, Assistant United States Attorney, Los Angeles, California, for the plaintiff-appellee.

Appeal from the United States District for the Central District of California; Audrey B. Collins, District Judge, Presiding. D.C. No. CR-96-00281-ABC

Before: Stephen S. Trott,[*] Pamela Ann Rymer, and Raymond C. Fisher, Circuit Judges.

FISHER, Circuit Judge:

Warren H. S. Chang appeals his conviction and sentence for conspiracy, uttering a counterfeit foreign obligation and possessing a counterfeit foreign obligation. On appeal, Chang challenges certain evidentiary rulings made by the district court, contends that the evidence presented against him at trial was insufficient to sustain part of his conviction and argues that the sentence imposed by the district court is illegal. We have jurisdiction pursuant to 28 U.S.C. S 1291 and 18 U.S.C. S 3742. We affirm the conviction but vacate Chang's sentence and remand for re-sentencing.


On October 25, 1996, a federal grand jury indicted Chang and a co-defendant, Harry New Blum, on three separate counts: (1) conspiracy, in violation of 18 U.S.C.S 371 ("Count One"); (2) uttering, passing, and putting off, in payment or negotiation, a counterfeit foreign obligation or security, in violation of 18 U.S.C. S 479 ("Count Two"); and (3) possessing a counterfeit foreign obligation or security, in violation of 18 U.S.C. S 480 ("Count Three").

These charges resulted from the two men's activities relating to a particular

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Japanese "Certificate of Payback Balance" with a face amount of 300 billion Japanese yen (the "Certificate"). Chang, who was Chairman for the Western Division of Panorama Foundation Limited (the "Panorama Foundation"), a Hong Kong corporation, during the period in question, testified that he acquired the Certificate on behalf of the Panorama Foundation in November 1993. Chang enlisted Blum to assist him in negotiating potential business transactions relating to the Certificate, and the co-defendants pursued such transactions until their arrest in February 1996. In particular, Chang and Blum negotiated a transaction with Midland Bank whereby the Certificate would be used as collateral for a loan.

Chang and Blum were tried concurrently. The government contended at trial that the co-defendants' activities were illegal because (a) the Certificate was counterfeit, (b) both defendants knew that the Certificate was counterfeit and (c) both defendants had negotiated various transactions involving the Certificate and, therefore, had uttered the Certificate with an intent to defraud.

The government's case centered around a series of events involving the Midland Bank transaction and the co-defendant's dealings with BNY Western Trust Company ("BNY") relating thereto. On October 18, 1995, Chang and Blum met with, among others, James L. Birdwell, BNY's Vice President of Operations, to discuss the possibility of (a) BNY acting as custodian of the Certificate in connection with the Midland Bank transaction and (b) BNY issuing an asset statement showing that BNY held the Certificate in its possession. At the October 18 meeting, both Chang and Blum represented that they would provide BNY with documentation establishing the Certificate's authenticity. After the October 18 meeting, Birdwell had reservations about the Certificate, so he contacted the FBI to verify that the proposed transaction was legitimate. The FBI informed Birdwell that it believed the Certificate to be counterfeit, and Birdwell agreed to cooperate in the FBI's investigation. On February 28, 1996, Chang and Blum again met with Birdwell and others at BNY's office in Los Angeles. The FBI recorded and videotaped the meeting. At the meeting, Chang and Blum showed the original Certificate to Birdwell and produced a black light to demonstrate the watermark and other aspects of the Certificate that, according to Chang and Blum, established its authenticity. The FBI arrested Chang and Blum at the conclusion of the meeting.

Both Chang and Blum insisted throughout trial that, at all times during their negotiations with BNY, Midland Bank and others, they believed the Certificate to be authentic. Chang testified that he had taken several steps to establish the Certificate's authenticity, both before and after acquiring the Certificate in 1993. Further, Chang and Blum pointed to the fact that the FBI previously had questioned each of them separately regarding the Certificate, but had not seized the Certificate, as an additional basis for their belief that the Certificate was authentic. Chang also attempted to introduce expert testimony from Edmond Lausier, an assistant professor of clinical marketing at the University of Southern California, to counter the government's evidence that the Certificate was counterfeit.1 On December 9, 1996, the jury convicted both Chang and Blum on all three counts. At sentencing, the district court ordered Chang confined to prison for 63 months on Count One, 36 months on Count Two, and 12 months on Count Three, all three terms to be served concurrently.


I. Exclusion of Professor Lausier's Expert Testimony

Professor Lausier, Chang's only proffered expert witness, would have opined

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that the Certificate was genuine, and his testimony would have directly contradicted the government's contention that the Certificate was counterfeit. If Chang had been able to prove the Certificate's authenticity, he would have been acquitted on all charges; therefore, Lausier's testimony, if properly admitted, would have been a key element of Chang's defense.

We review the district court's exclusion of Lausier's testimony for an abuse of discretion. See, e.g., United States v. Scholl, 166 F.3d 964, 971-72 (9th Cir.), cert. denied, _______ U.S. _______, 120 S.Ct. 176 (1999).

The Federal Rules of Evidence provide that expert testimony should be admitted only if it "will assist the trier of fact to understand the evidence or to determine a fact in issue." Fed. R. Evid. 702. To qualify as an expert, a witness must have "knowledge, skill, experience, training, or education" relevant to such evidence or fact in issue. Id. Further, evidence that is otherwise admissible under Rule 702"may be excluded if its probative value is substantially outweighed by the danger of . . . confusion of the issues, . . . undue delay, [or] waste of time . . . ." Fed. R. Evid. 403. We view "[t]he admissibility of expert testimony [as] a subject peculiarly within the sound discretion of the trial judge, who alone must decide the qualifications of the expert on a given subject and the extent to which his opinions may be required. " Fineberg v. United States, 393 F.2d 417, 421 (9th Cir. 1968). Thus, although Professor Lausier's testimony was a key element of Chang's defense, we accord a high degree of deference to the district court's findings regarding Professor Lausier's qualifications and the relevance of his proffered testimony to the issues presented at trial.


The district court heard testimony, outside the presence of the jury, to determine whether Professor Lausier was qualified to testify as an expert witness. Although Lausier admitted that he had no formal training in identification of counterfeit securities, Chang argued that Lausier was qualified to testify because he had expert knowledge regarding the history of, and purpose for, the issuance of obligations like the Certificate. The district court rejected Chang's argument, ruling that (1) "the [only] fact in issue is the authenticity of [the Certificate]"; (2) "whether such things were ever in fact validly issued" was not relevant; and (3) Professor Lausier's testimony would not be admitted because he was not qualified to opine as to the authenticity of the specific instrument at issue, the Certificate. The district court also ruled that Lausier's testimony would be "a complete waste of the jury's time."

Chang contends the district court conceded that Professor Lausier was well-qualified to testify as to the "underlying indicia of authenticity"2 but improperly excluded the testimony because Lausier was unable "to opine on the ultimate question." Chang cites United States v. Rahm , 993 F.2d 1405 (9th Cir. 1993), in which an expert's testimony was excluded, in part, because she was unable to form a conclusive opinion based on the facts presented to her. See id. at 1411-12. We reversed in Rahm, stating that trial courts "may not seek -- or require -- conclusiveness" in considering "the strength of an expert's opinion." Id. at 1412. But Rahm is clearly distinguishable because Lausier intended to testify that the Certificate was authentic, so the district court could not have been concerned with the conclusiveness of his opinion. Rather, the district court

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properly rejected the qualifications upon which Professor Lausier was to base his conclusion, given that he had no experience in identifying counterfeit foreign securities.

Chang also cites Rahm for the proposition that it is reversible error to exclude expert testimony pertaining to a defendant's "sole intended defense," id. at 1415, here the authenticity of the Certificate. This is not an accurate characterization of the defense's case. Chang's principal defense at trial was that he believed the Certificate to be genuine (thereby negating an intent to defraud), not that the Certificate was, in fact, genuine. Lausier's expert testimony was proffered only to support the latter defense.3

In addition, Chang argues that (a) the...

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