U.S. v. Pelisamen

• Decision Date: 13 April 2011
• Docket Number: No. 10–10022.,10–10022.
• Citation: 641 F.3d 399
• Parties: UNITED STATES of America, Plaintiff–Appellee,v.Luis Kaipat PELISAMEN, Defendant–Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

641 F.3d 399

11 Cal. Daily Op. Serv. 4371

2011 Daily Journal D.A.R. 5303

UNITED STATES of America, Plaintiff–Appellee,

v.Luis Kaipat PELISAMEN, Defendant–Appellant.

No. 10–10022.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Feb. 17, 2011.Filed April 13, 2011.

OPINION TEXT STARTS HEREWest CodenotesRecognized as Unconstitutional18 U.S.C.A. § 1346

Douglas Cushnie, Esq., Saipan, MP, for the appellant.Kirk W. Schuler, Esq., Assistant United States Attorney, Saipan, MP, for the appellee.Appeal from the District Court for the Northern Mariana Islands, Alex R. Munson, Chief District Judge, Presiding. DC No. 1:08 cr 01–ARM 2.Before A. WALLACE TASHIMA, WILLIAM A. FLETCHER, and MARSHA S. BERZON, Circuit Judges.

OPINION

TASHIMA, Circuit Judge:

The United States Supreme Court has recently held that the offense of honest-services fraud codified at 18 U.S.C. § 1346 is unconstitutionally vague when applied to conduct other than bribery and kickbacks. Skilling v. United States, ––– U.S. ––––, 130 S.Ct. 2896, 2931, 177 L.Ed.2d 619 (2010). In this case, we must decide whether a conviction for wire fraud remains valid where the language of the indictment and the evidence offered by the government support a “money or property” theory of fraud, where the jury was instructed on both a “money or property” theory and an honest-services theory, and where the jury returned a special verdict form indicating that it had convicted the defendant on both theories. We hold that the “money or property” fraud conviction remains valid.

I. BACKGROUND

Defendant–Appellant Luis Pelisamen (“Defendant”), was convicted of wire fraud in connection with the unauthorized removal of funds from his grandmother's estate, of which he was the administrator. Rita Kaipat (“Rita”), Defendant's grandmother, died in 1959. Her estate included a parcel of real property that was taken in eminent domain by the Marianas Public Land Authority (“MPLA”), without compensation, in 1991 or 1992. In 1994, the Superior Court for the Commonwealth of the Northern Mariana Islands (“Superior Court”) determined that this property was actually held by Rita as customary trustee for herself and the other heirs of Vicenta Kaipat (“Vicenta”), presumably Rita's mother, but possibly her stepmother or other relative.¹

In December 2003, Defendant was appointed administrator of Rita's estate. After Defendant's appointment, he and his attorney at the time, Timothy Bellas (“Bellas”), negotiated with the MPLA for the overdue compensation for the land that had been taken in eminent domain. Following an initial offer of $100,000, Defendant succeeded in securing compensation in the significantly higher amount of $4.4 million. In May 2005, the $4.4 million in compensation was received from the MPLA and deposited into an account at the Bank of Guam that had been established by Bellas in the name of the estate. That fall, the Superior Court issued a Partial Decree of Distribution for Vicenta's estate, which divided the $4.4 million award three ways, with approximately $1.365 million going to the estate of Rita (Defendant's grandmother) and $1.365 million going to each of the estates of two other heirs of Vicenta. The Superior Court also awarded Defendant $161,500 in fees for his services as administrator of the estate.

Prior to the issuance of that decree, Defendant had terminated Bellas as his attorney and hired Joseph Arriola (“Arriola”) to replace him. Bellas controlled the account that held the $4.4 million in Vicenta's estate and was responsible for distributing the one-third shares to each of Vicenta's heirs. Bellas established a new bank account at the Bank of Guam to hold the $1.365 million due to Rita's estate and gave Defendant's new attorney Arriola access to those funds by adding him as a signatory to that account. In November 2005, Arriola depleted that account by obtaining a cashier's check for the funds in Rita's estate (now increased to $1.377 million, including accumulated interest). The request for the cashier's check that Arriola submitted to the Bank of Guam included an acknowledgment and consent signed by Defendant. The Bank of Guam then initiated a wire transfer of those funds to a new account at the Bank of Hawaii that had been set up by Arriola. Arriola added Defendant as a signatory to this new account shortly after it was established.

Per a Superior Court order issued in April 2006, Rita had five heirs, including Defendant's mother, each of whom was entitled to approximately $273,000. The $273,000 due to Defendant's mother was subject to further division between her five heirs, one of whom was Defendant. Thus, Defendant ultimately was entitled to an inheritance of $54,682. Between December 2005 and May 2006, however, Defendant and Arriola removed a total of $625,775 from Rita's estate, by writing a series of checks drawn on the Bank of Hawaii account that were signed by both of them. Checks totaling $348,500 were written to Defendant. Another $20,075 was taken out of the estate's account to pay a car dealership for a 2005 Nissan Frontier that Defendant had purchased. Checks totaling an additional $38,000 were written to Defendant's wife, and another $219,200 was given to Arriola.

In January 2008, both Defendant and Arriola were indicted of one count of conspiracy to commit wire fraud, one count of wire fraud, one count of conspiracy to commit money laundering, and two counts of money laundering. ² Defendant was convicted on all counts.³ After his motion for a new trial was denied, the district court sentenced Defendant to sixty months' imprisonment on each count, to be served concurrently, plus restitution in the amount of $626,775. Defendant timely appealed.

II. ANALYSISA. Jurisdiction

We have jurisdiction pursuant to 28 U.S.C. § 1291 (granting jurisdiction over appeals from all final decisions of the District Court of Guam), and 48 U.S.C. § 1824 (applying “[t]hose portions of Title 28 which apply to ... the District Court of Guam” to the District Court for the Northern Mariana Islands).

B. The Impact of Skilling

The indictment charged Defendant with the commission of wire fraud in violation of 18 U.S.C. § 1343 and specified that such wire fraud was for the purposes of “obtaining money and property.” The indictment does not mention 18 U.S.C. § 1346, which provides that the behavior punishable under § 1343 includes a scheme or artifice “to deprive another of the intangible right of honest services.” Nonetheless, the district judge instructed the jury that it could convict Defendant if it found that he had either (1) “defrauded the heirs of the Estate of Rita Kaipat,” or (2) “deprived the heirs ... of their right to honest services,” or (3) done both. The verdict form permitted a conviction on the wire fraud charge if the jury found Defendant guilty of a scheme or plan to defraud the heirs “and/or” a scheme or plan to deprive them of honest services. The jury checked the boxes for both forms of fraud.

After Defendant had been convicted, the Supreme Court decided Skilling, in which it held that the honest-services fraud codified in 18 U.S.C. § 1346 is unconstitutionally vague when applied to conduct other than bribery and kickbacks. Defendant now argues that the holding in Skilling renders the jury's verdict constitutionally infirm.

1. Standard of Review

The proper standard of review for this claim merits some discussion. Defendant did not object to the jury instructions in the district court. Generally, a failure to object to jury instructions means that appellate courts may review the instructions only for “plain error that affects substantial rights.” Fed.R.Crim.P. 52(b); see Fed.R.Crim.P. 30(d). The plain-error standard applies even if, as is the case here, there were no legal grounds for challenging the instructions at the time they were given, but such legal grounds have since arisen due to a new rule of law arising between the time of conviction and the time of appeal. See Johnson v. United States, 520 U.S. 461, 464–68, 117 S.Ct. 1544, 137 L.Ed.2d 718 (1997). The plain-error standard of review dictates that reversal is warranted only where there has been (1) error; (2) that is plain; (3) that affects substantial rights; and (4) where the error seriously affects the fairness, integrity, or public reputation of judicial proceedings. Id. at 466–67, 117 S.Ct. 1544; United States v. Olano, 507 U.S. 725, 732, 113 S.Ct. 1770, 123 L.Ed.2d 508 (1993); United States v. Davenport, 519 F.3d 940, 943 (9th Cir.2008).

Generally, the defendant bears the burden of persuasion on the third prong (affects substantial rights) of the plain-error test. See Olano, 507 U.S. at 741, 113 S.Ct. 1770. Defendant argues, however, that the burden of persuasion shifts to the prosecution when, as is true in this case, the error was not clear at the time of the conviction, but a supervening decision renders it so by the time of appeal. The Second Circuit has held that the burden does shift in these sorts of cases. United States v. Viola, 35 F.3d 37, 42 (2d Cir.1994), abrogated on other grounds by Salinas v. United States, 522 U.S. 52, 118 S.Ct. 469, 139 L.Ed.2d 352 (1997).

This circuit has not adopted the Viola burden-shifting rule and contrary to Defendant's assertion, the framework has not been adopted in other circuits either. See United States v. Gonzalez–Huerta, 403 F.3d 727, 734–35 (10th Cir.2005) (noting that the Supreme Court in Johnson had an opportunity to apply and endorse the Viola “presumed prejudice” rule and did not do so); United States v. Kramer, 73 F.3d 1067, 1074 n. 17 (11th Cir.1996) (declining to follow Viola ); see also Lowery v. United States, 3 A.3d 1169, 1174 (D.C.2010) (describing Viola as “one exception of uncertain authority” to the rule that defendant bears the burden of persuasion on prejudice). Moreover, the Second Circuit itself has acknowledged that the Supreme Court may have implicitly overruled Viola by not shifting the burden in Johnson, which also...