314 F.3d 344 (9th Cir. 2002), 01-10458, United States v. Pace

Docket Nº:01-10458.
Citation:314 F.3d 344
Party Name:UNITED STATES of America, Plaintiff-Appellee, v. Don H. PACE, Defendant-Appellant.
Case Date:August 22, 2002
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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314 F.3d 344 (9th Cir. 2002)

UNITED STATES of America, Plaintiff-Appellee,

v.

Don H. PACE, Defendant-Appellant.

No. 01-10458.

United States Court of Appeals, Ninth Circuit.

Aug. 22, 2002

Argued and Submitted June 12, 2002.

Amended Dec. 24, 2002.

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[Copyrighted Material Omitted]

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Bruce R. Heurlin, Karp, Heurlin & Weiss, Tucson, AZ, for the defendant-appellant.

Christina M. Cabanillas, Assistant U.S. Attorney, Tucson, AZ, for the plaintiff-appellee.

Appeal from the United States District Court for the District of Arizona; Frank R. Zapata, District Judge, Presiding. D.C. No. CR-97-00208-FRZ.

Before: GOODWIN, HAWKINS and FISHER, Circuit Judges.

GOODWIN, Circuit Judge

Don Pace appeals his conviction and sentence for two counts of wire fraud, in violation of 18 U.S.C. § 1343, and one count of subscribing a false tax return, in violation of 26 U.S.C. § 7206(1). The main issue on appeal is whether venue existed in the District of Arizona. For the reasons that follow, we vacate Pace's wire fraud

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convictions but affirm his conviction for subscribing a false tax return.

Background

For 23 years, Don Pace ("Pace") worked as a successful trial attorney in Cleveland, Ohio. In 1986, he left his law practice and, two years later, formed Pace American Group ("PAG"), an insurance holding company. He remained president and CEO of the corporation until 1994. Pace also served as the vice president and director of American Bonding Company ("ABC"), a subsidiary of PAG providing surety bonds to construction contractors on federal, state, and local government projects. At the time of the alleged offenses, ABC was headquartered in Tucson, Arizona, and maintained a branch office in Pasadena, California.

In 1990, ABC expanded its business into Mexico and entered into a cooperative bonding agreement with Afianzadora Mexicana ("AFIMEX"). Under the terms of the agreement, ABC would reinsure and share the risks of bonds issued by AFIMEX in Mexico. In return, AFIMEX would remit a percentage of the bond premiums to ABC.

In 1992, AFIMEX deposited $17,919.28 of bond premiums to two bank accounts at the ABACO Financial Institution ("ABACO") in Mexico City. One account was under the name of ABC; the other was under American Insurance Group (AIG changed its name to Pace American Group in 1993). ABC was not aware that these accounts existed, and Pace did not disclose them to the company.

A. Count 78

On April 27, 1992, AFIMEX sent Pace a summary report of the premiums transferred to the ABC / AIG accounts at ABACO. It noted that two deposits had already been completed and that an additional $18,740 would be sent pursuant to wire transfer instructions from Pace. AFIMEX mailed this correspondence to AIG's business address in Tucson, Arizona.

Upon learning of the letter, Pace authorized his secretary to provide AFIMEX with his personal bank information. On April 27, 1992--the date of the letter--AFIMEX wrote a check out to ABC in the amount of $18,740, but mailed it to Pace's Ohio bank for deposit. The check did not clear because it was made payable to ABC. On June 19, AFIMEX successfully wired the money to Pace's bank account in Ohio.

B. Count 77

On April 30, 1992, Pace faxed ABACO instructions to transfer any funds in the ABC account to his personal bank account in Ohio. This fax was sent on letterhead from ABC's Pasadena office. On or about May 8, 1992 ( after Pace faxed his wire transfer instructions), ABACO wired $17,919.28 to Pace's personal account in Cleveland, Ohio.

C. Count 81

Pace's 1992 tax returns were prepared by accountant John Patton ("Patton") in Westlake, Ohio. Patton sent Pace a 1992 "organizer" in order to secure updated financial information from Pace for that tax year. The organizer was mailed to Pace's address in Arizona. Upon its receipt, Pace mailed a list of his 1992 income sources to Patton, but did not include any income from the AFIMEX and ABACO wire transfers.

Enclosed in the organizer was also a questionnaire regarding income. Pace checked "no" when asked whether he had any income from foreign sources in 1992. Pace further replied that he had no financial interest in, or signing authority over, any foreign bank accounts.

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Using the information provided in the organizer, Patton compiled Pace's 1992 statement of financial condition and sent it to Pace in Arizona. The statement did not list the ABC / AIG accounts at ABACO, and it did not report the $36,659.28 that Pace received as a result of the wire transfers. Pace verified the accuracy of the 1992 statement and assured Patton that, "to the best of [his] knowledge and belief," he had "made all financial records and related data available" to Patton. The confirmation letter listed Pace's Arizona address in its heading.

When Patton completed the tax return, he sent it to Pace in Tucson. Pace testified that he reviewed the return while he was out of town on a business trip and that he signed the return while he was in Buffalo, New York.

D. Procedural history

On April 6, 1997, a federal grand jury filed an 81-count superseding indictment charging Pace with: conspiracy to commit mail fraud, mail fraud, wire fraud, money laundering, subscribing a false tax return, and forfeiture. 1

At trial, through the testimony of AFIMEX employee Carolina Garcia-Mena ("Garcia-Mena"), the government introduced a number of financial documents between AFIMEX and ABC, including: (1) an April 27 letter sent by AFIMEX in which it reported $18,740 in premiums owed to ABC; and (2) an April 30 correspondence from Pace to ABACO, confirming his instructions to wire all amounts deposited into the ABC / AIG accounts at ABACO to Pace's personal account in Ohio.

On December 14, 2000, the jury acquitted Pace on all but three counts: Counts 77 and 78 (wire fraud) and Count 81 (making and subscribing a false tax return).

Several weeks after the jury verdict, the government disclosed a letter Garcia-Mena had written to the IRS two years earlier ("the IRS letter"). The IRS letter was written in response to the government's desire to utilize her as a trial witness. Garcia-Mena indicated that she could not confirm the accuracy of bank documents issued before she assumed a managing position at the treasury department of AFIMEX. She then recommended Julian Salle-Arevalo as a more appropriate witness.

Pace moved for a new trial because of the untimely disclosure of the IRS letter. The district court found that the content of the IRS letter was already elicited during Garcia-Mena's cross-examination and denied the motion. At sentencing, Pace requested a downward departure based on the late disclosure. The district court denied the motion and granted a downward departure only for aberrant behavior. The court then ordered Pace to pay ABC $36,659.28 in restitution and sentenced him to four months of imprisonment, followed by concurrent two-year terms of supervised release on each count.

Discussion

A. Wire fraud

Pace argues that venue for Counts 77 and 78 did not lie in Arizona because the "essential conduct" of wire fraud was not committed there. The government contends that venue appropriately lay in Arizona pursuant to one of two statutes. First, it contends that venue could lie pursuant to the "continuing offense" statute of

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18 U.S.C. § 3237(a) because Pace's wire fraud scheme was "begun" or at least "continued" while he was in Arizona. Alternatively, the government contends that venue was proper under the "high seas" statute, 18 U.S.C. § 3238, because the wire transfers originated in Mexico.

Article III of the Constitution, the Sixth Amendment, and Rule 18 of the Federal Rules of Criminal Procedure guarantee that a defendant will be tried in the state where the crime was committed. U.S. Const. art. III, § 2, cl. 3; U.S. Const. amend. VI; Fed.R.Crim.P. 18. When a defendant has been indicted on multiple counts, venue must be proper for each count. United States v. Corona, 34 F.3d 876, 879 (9th Cir.1994). The government bears the burden of establishing venue by a preponderance of the evidence. United States v. Angotti, 105 F.3d 539, 541 (9th Cir.1997). "[D]irect proof of venue is not necessary where circumstantial evidence in the record as a whole supports the inference that the crime was committed in the district where venue was laid." United States v. Childs, 5 F.3d 1328, 1332 (9th Cir.1993) (internal quotation marks and citation omitted).

In order to decide whether venue was proper in the District of Arizona, we "must initially identify the conduct constituting the offense (the nature of the crime) and then discern the location of the commission of the criminal acts." United States v. Rodriguez-Moreno, 526 U.S. 275, 279, 119 S.Ct. 1239, 143 L.Ed.2d 388 (1999); accord United States v. Ruelas-Arreguin, 219 F.3d 1056, 1061 (9th Cir.2000). To determine the "nature of the crime," we look to the "essential conduct elements" of the offense. See Rodriguez-Moreno, 526 U.S. at 280, 119 S.Ct. 1239. 2

The wire fraud statute, 18 U.S.C. § 1343, provides:

Whoever, having devised or intending to devise any scheme ... to defraud, or for obtaining money or property by means of false or fraudulent pretenses ... transmits or causes to be transmitted by means...

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