U.S. v. Andreen

• Decision Date: 26 September 1980
• Docket Number: No. 77-2889,77-2889
• Citation: 628 F.2d 1236
• Parties: 105 L.R.R.M. (BNA) 2941 UNITED STATES of America, Plaintiff-Appellee, v. Robert ANDREEN, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1236

628 F.2d 1236

105 L.R.R.M. (BNA) 2941

UNITED STATES of America, Plaintiff-Appellee, v. Robert ANDREEN, Defendant-Appellant.

No. 77-2889.

United States Court of Appeals Ninth Circuit.

Sept. 26, 1980.

Thomas P. Nugent, Haskins, Nugent, Newnham & Kane, San Diego, Cal., for defendant-appellant.

Thomas M. Coffin, Asst. U. S. Atty., argued, Michael H. Walsh, U. S. Atty., Thomas M. Coffin, Asst. U. S. Atty., on the brief, San Diego, Cal., for plaintiff-appellee.

Appeal from the United States District Court for the Southern District of California.

Before WALLACE and KENNEDY, Circuit Judges, and LUCAS, ^* District Judge.

KENNEDY, Circuit Judge:

Appellant Robert Andreen, an attorney licensed to practice in California, was indicted with numerous codefendants, and charged for violations of federal laws relating to the embezzlement of union trust funds. Andreen was indicted on nine counts for his role in various schemes to embezzle money and credits from trust funds established for San Diego construction workers. ¹ He had been the attorney for the trusts. The codefendants were trustees.

Andreen initially faced a jury trial with the codefendants. The trial court denied his motions to sever the counts and to sever Andreen's case from the other defendants. Andreen then waived trial by jury and elected to be tried by the court, simultaneously with eight codefendants' trial by jury. Following a three month trial, generating over 8,000 pages of testimony, the jury returned guilty verdicts on all counts as to Andreen's codefendants. We consider challenges to those convictions in separate dispositions. ² After receiving the jury verdict as to the codefendants, the court found Andreen guilty on four of nine counts. ³ He received a five-year sentence for each count, to run concurrently.

On appeal Andreen claims the evidence did not establish that he committed acts which are criminal offenses. He claims also that various procedural rulings of the trial court were error. We affirm Andreen's conviction on counts 1, 2, and 6B, and reverse as to count 9. The factual background of the case is complex. The summary of the case presented here is given upon viewing the facts, as we must, in the light most favorable to the prosecution.

Pursuant to collective bargaining agreements between the International Laborers' Union, Local 89 of San Diego and various employer associations, certain trust funds were created for the benefit of members of Local 89 and other designated employees of the signatories. The funds included: (1) San Diego County Construction Laborers' Pension Fund (pension trust) established October 15, 1963; (2) San Diego County Construction Laborers' Group Insurance Trust (health and welfare trust) established August 11, 1954; and (3) San Diego County Construction Laborers' Vacation Trust (vacation trust) established April 21, 1964. All three funds were established under the Taft-Hartley Act, which requires an equal number of union and management trustees. 29 U.S.C. § 186. ⁴ The boards of the three trusts had numerous overlapping memberships. ⁵

The embezzlement charges center primarily on two schemes: (1) the method used by the pension trustees to obtain "deferred compensation," calibrated by the value of pension credits; (2) the method used by trustees of the health and welfare and vacation trusts to obtain pension credits. These schemes for trustee remuneration obligated payments of more than $5,000,000 from the trust funds. Some trustees were also charged with embezzling trust funds by retaining payments far exceeding actual expenses for attending seminars and conferences. In addition, the health and welfare trustees and Andreen were charged with embezzlement by obtaining unauthorized physical examinations at trust expense. Finally, the indictment charged a conspiracy to accomplish the substantive counts. For purposes of this opinion, we need to consider only the counts relating to Andreen's aiding and abetting payments of unauthorized sums, as pensions or otherwise, to trustees of the pension trust; his aiding and abetting the unlawful payment of disability to trustee Haning; his receipt of a physical examination; and the conspiracy charge.

Unauthorized Compensation from Pension Trust (Count 2)

In count 2 the Government charged that pension trustees converted large sums of pension funds to their own use "pursuant to a so-called 'deferred compensation' plan." All agree that the Local 89 pension plan, involved in count 2, was a plan within the coverage of 18 U.S.C. § 664, which prohibits embezzlements from an employee pension fund. It is not disputed that trustees, in that capacity, were not employees under the plan, and as such were ineligible for pensions under a separate federal statute. See 29 U.S.C. § 186. Andreen claims that deferred compensation payments are distinct from pension payments and therefore legal. We need not address this point, although we think the Government's position has great merit, because an alternate prosecution theory presented to the trial court provides an adequate ground for affirmance. The Government's alternate theory is that even if deferred compensation is distinct from a pension, the compensation here was unreasonable and an unauthorized conversion of funds. The evidence of unreasonable compensation is compelling.

Our task on review is circumscribed. A conviction must be sustained if there is substantial supporting evidence, viewed in the light most favorable to the Government. Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 469, 86 L.Ed. 680 (1942). The critical inquiry on review is whether, after viewing the evidence in such a light, a rational trier of fact could conclude that the accused was guilty beyond a reasonable doubt. United States v. Jones, 592 F.2d 1038, 1041 (9th Cir. 1979). Because the Government has the burden of proving every element of the offense beyond a reasonable doubt, this standard must be applied to each essential element of the crime. American Tobacco v. United States, 328 U.S. 781, 787, 66 S.Ct. 1125, 1128, 90 L.Ed. 1575 (1946); United States v. Bailey, 607 F.2d 237 (9th Cir. 1979), cert. denied, 445 U.S. 934, 100 S.Ct. 1327, 63 L.Ed.2d 769 (1980).

1. The Scope of § 664

By enacting § 664 in 1962, Congress made it a federal crime to embezzle, steal, or willfully and unlawfully convert or abstract assets of an employee welfare or pension benefit plan. 1962 U.S.Code Cong. & Ad.News 1532, 1538, 1547. The legislative history indicates that the intended purpose of § 664 was to preserve welfare and pension funds for the protection of those entitled to their benefits. 1962 U.S.Code Cong. & Ad.News 1532. See United States v. Santiago, 528 F.2d 1130, 1133 (2nd Cir.), cert. denied, 425 U.S. 972, 96 S.Ct. 2169, 48 L.Ed.2d 795, (1976). The statute provides:

Any person who embezzles, steals or unlawfully and willfully abstracts or converts to his own use or to the use of another, any of the moneys, funds, securities, premiums, credits, property, or other assets of any employee welfare benefit plan or employee pension benefit plan, or of any fund connected therewith, shall be fined not more than $10,000, or imprisoned not more than five years, or both.

As used in this section, the term "any employee welfare plan or employee pension benefit plan" means any such plan subject to the provisions of the Welfare and Pension Plans Disclosure Act. ⁶

The accepted definitions apply to the extent the statute uses traditional terms. See Colella v. United States, 360 F.2d 792 (1st Cir.), cert. denied, 385 U.S. 829, 87 S.Ct. 65, 17 L.Ed.2d 65 (1966); Woxberg v. United States, 329 F.2d 284 (9th Cir.), cert. denied, 379 U.S. 823, 85 S.Ct. 45, 13 L.Ed.2d 33 (1964). "Embezzlement" is such a term. It encompasses the fraudulent appropriation of the property of another by one in lawful possession thereof. See United States v. Dupee, 569 F.2d 1061, 1064 (9th Cir. 1978). The concept of unlawful conversion encompasses the use of property, placed in one's custody for a limited purpose, in an unauthorized manner or to an unauthorized extent. See Morissette v. United States, 342 U.S. 246, 272, 72 S.Ct. 240, 254, 96 L.Ed. 288 (1952); Woxberg v. United States, supra.

The statute goes beyond traditional concepts of embezzlement, however, and imposes liability for an intentional breach of special fiduciary duties imposed by other regulatory statutes or governing instruments. See 29 U.S.C. § 186(c). ⁷ The statute defines an offense "the common thread (of which) is that the defendant, at some stage of the game, has taken another person's property or caused it to be taken, knowing that the other person would not have wanted that to be done." United States v. Silverman, 430 F.2d 106, 126-27 (2d Cir. 1970). The essence of the crime is theft and in the context of union funds or pension plans the offense includes a taking or appropriation that is unauthorized, if accomplished with specific criminal intent. In this respect lack of authorization may be shown if the diversion is substantially inconsistent with the fiduciary purposes and objectives of the union funds or pension plan, as set forth by statutes, bylaws, charters, or trust documents which govern uses of the funds in question. Whatever imprecision attends this definition is remedied substantially by the requirement of scienter, which is an essential element of the crime. Cf. Screws v. United States, 325 U.S. 91, 65 S.Ct. 1031, 89 L.Ed. 1495 (1945). The act to be criminal must be willful, which means an act done with a fraudulent intent or a bad purpose or an evil motive. ⁸

The decided cases interpreting section 664 are few, but a number of opinions have addressed the meaning of a like statute, which prohibits embezzlements from union funds. 29 U.S.C. § 501(c). Parallel language was used in 29 U.S.C. § 501(c) and 18 U.S.C. § 664. ⁹ Furthermore, Congress passed the two statutes for a similar purpose: to preserve the...