U.S. v. Brutzman

Citation731 F.2d 1449
Decision Date01 May 1984
Docket NumberNo. 83-5036,83-5036
Parties15 Fed. R. Evid. Serv. 1130 UNITED STATES of America, Plaintiff-Appellee, v. Robert BRUTZMAN, Defendant-Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)

Richard Marmaro, Asst. U.S. Atty., Los Angeles, Cal., for plaintiff-appellee.

Joel Levine, Stilz, Boyd, Levine & Handzlik, Los Angeles, Cal., for defendant-appellant.

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

Before CHAMBERS, SNEED and BOOCHEVER, Circuit Judges.

BOOCHEVER, Circuit Judge:

Brutzman was indicted on thirty-five counts of mail fraud in violation of 18 U.S.C. Sec. 1341. The counts were severed into two groups for trial. 1 Brutzman was convicted in a jury trial of ten of the nineteen counts on which he was tried. 2 On appeal, Brutzman raises a number of issues, including the failure to grant immunity to a defense witness, limitation of cross-examination, the admission of evidence of the manner of Brutzman's use of misappropriated funds, procedural misconduct, the failure to give instructions, and failure to prove mailings for the purpose of executing a fraudulent scheme. We find no reversible error and therefore affirm the conviction.

FACTS

In 1979 Robert Brutzman formed a company by the name of Morgan, Warner, Leeds & Rhodes (MWLR), which, among other things, packaged and sold tax shelter investments in trucks, computers and cattle. The investment package that formed the basis of the indictment offered investors an opportunity to purchase diesel trucks that would be leased to trucking companies and thereby qualify the investor for depreciation and investment tax credit. Each investor paid MWLR a consulting fee of approximately $3,000. MWLR assured investors that the fee would be placed in a separate trust account (the truck deposit trust account) and would be refunded in full if MWLR failed to produce the investment package promised. Out of the 450 investors in the program, only ten received a truck investment program. Only 115 received refunds of their consulting fees.

The proof at trial established that Brutzman transferred large amounts of money from the truck deposit trust account to the general business account for MWLR, over which he had exclusive control. He used the monies to pay advance commissions to salesmen notwithstanding the total lack of successful implementation of the program. In addition, he used the funds to cover working expenses of MWLR, purchase computers for a second investment program, give bonuses to employees notwithstanding the absence of money in the general account to cover the checks, and pay his own personal expenses. A substantial amount of money from the truck deposit trust account was transferred to Stuart Arnett, MWLR's attorney.

Brutzman maintains that he did no more than attempt to keep the business afloat. The jury did not agree. We find substantial evidence in the record to support the judgment of conviction and find no reversible error.

1. Defense Witness Immunity

The district court denied Brutzman's motion for immunity for his attorney, Arnett, a prospective defense witness whose testimony Brutzman claims was crucial for his defense. This court has emphatically rejected the argument that the sixth amendment provides a defendant with a right to demand use immunity for defense witnesses who invoke their privilege against self-incrimination. United States v. Alessio, 528 F.2d 1079, 1081 (9th Cir.), cert. denied, 426 U.S. 948, 96 S.Ct. 3167, 49 L.Ed.2d 1184 (1976). The government has exclusive authority to decide if and when to prosecute. Id.

Although we agree with Brutzman that the government's authority to decide if and when to seek immunity for a witness must be exercised in a manner consistent with the due process guarantees of the fifth amendment, Alessio, 528 F.2d at 1082; Government of Virgin Islands v. Smith, 615 F.2d 964, 970 (3d Cir.1980), we do not believe that Brutzman was denied a fair trial in this case. Most of the testimony Brutzman sought was cumulative, and what was not cumulative was not exculpatory. This is not a case where two eyewitnesses have conflicting stories to tell, and the government seeks and obtains immunity for its own eyewitness while refusing to request immunity for defendant's eyewitness. Such an abuse would deny defendant any semblance of a fair trial. See Earl v. United States, 361 F.2d 531, 534 n. 1 (D.C.Cir.1966), cert. denied, 388 U.S. 921, 87 S.Ct. 2121, 18 L.Ed.2d 1370 (1967) (dictum). The jury had before it all the facts and claims that Brutzman intended to elicit from Arnett. The trial was not rendered unfair by the court's refusal to order the prosecutor to grant that witness immunity. See Alessio, 528 F.2d at 1082.

2. Limitation of Cross-Examination

Brutzman claims that the court abused its discretion in excluding evidence of an existing civil lawsuit between Brutzman and a co-defendant who testified for the government. We cannot agree. To avoid time-wasting exploration of collateral matters the trial court, in its discretion, may limit cross-examination. United States v. Weiner, 578 F.2d 757, 766 (9th Cir.) (per curiam), cert. denied, 439 U.S. 981, 99 S.Ct. 568, 58 L.Ed.2d 651 (1978). The trial court allowed defense counsel to establish the pendency of a civil lawsuit between Brutzman and the government's witness, McGarry, to show the witness' potential bias against the defendant. The court merely refused to admit into evidence the specific allegations of that civil complaint. We find no abuse in the trial court's precluding further exploration of the collateral issue.

3. Admission of Evidence of Brutzman's Use of Misappropriated Funds

The trial court admitted evidence of the manner in which Brutzman used substantial amounts of investors' monies to pay for various business and personal expenses. Brutzman claims that that evidence was intended to inflame the jury and, therefore, should have been excluded or at least should have been admitted only with a limiting instruction.

We cannot agree that the trial court abused its discretion in concluding that the probative value of the evidence was not outweighed by its potential prejudicial effect. The misuse of the funds directly established the fraudulent nature of the scheme. See United States v. Krohn, 573 F.2d 1382, 1388-89 (10th Cir.), cert. denied, 436 U.S. 949, 98 S.Ct. 2857, 56 L.Ed.2d 792 (1978).

Brutzman's argument on appeal that without a limiting instruction admission of the evidence was an abuse of discretion is unavailing. United States v. Brickey, 426 F.2d 680 (8th Cir.), cert. denied, 400 U.S. 828, 91 S.Ct. 55, 27 L.Ed.2d 57 (1970), upon which Brutzman relies, is inapposite for two reasons. First, the Brickey court did not hold that admission of such evidence in a mail fraud prosecution necessarily must be accompanied by a limiting instruction. It merely held that the court in that case properly limited the scope of the relevancy of the testimony. Id. at 686. Second, Brutzman did not request the instruction at trial. It was not "plain error" for the district court to fail to give a limiting instruction not requested by the defendant. See Fed.R.Crim.P. 52(b); United States v. Smith, 520 F.2d 544, 549 (8th Cir.1975), cert. denied, 429 U.S. 925, 97 S.Ct. 328, 50 L.Ed.2d 294 (1976). See also United States v. Wilson, 690 F.2d 1267, 1273-74 (9th Cir.1982), cert. denied, --- U.S. ----, 104 S.Ct. 205, 78 L.Ed.2d 178 (1983) (not plain error for district court to admit unobjected to evidence).

4. Prosecutorial Misconduct

Brutzman claims that it was misconduct for the government to elicit testimony from Robert Marre to show that Brutzman misrepresented the business history of MWLR to investors when the government knew that Brutzman himself was misled by Richard Marre into believing the story he told. We cannot agree. MWLR was a company started by Brutzman in 1979. It was not a company with a long and illustrious history originating in Zurich during the war years as Brutzman would have investors believe, and Richard Marre did not mislead Brutzman into believing that history. The testimony of both Richard and Robert Marre was relevant to show the fraudulent nature of Brutzman's scheme.

Brutzman additionally claims that the government's depiction of Brutzman as one who intentionally avoided contact with disgruntled investors seeking refunds was misconduct when the government knew that the business was closed only after advice of counsel and issuance of a Cease and Desist Order by the California Corporations Commissioner. The evidence at trial revealed that MWLR ran out of money in December 1980. The record supports the trial court's conclusion that regardless of any advice of counsel or Cease and Desist Order, MWLR's financial situation forced its closure. We review a trial court's denial of a motion for mistrial under a clearly erroneous standard. See United States v. Pruitt, 719 F.2d 975, 978 (9th Cir.1983) (per curiam); United States v. Ochoa-Sanchez, 676 F.2d 1283, 1289 (9th Cir.1982), cert. denied, 459 U.S. 911, 103 S.Ct. 219, 74 L.Ed.2d 174 (1983). In the context of the record as a whole, we cannot say the trial court clearly erred in denying the motion for a mistrial. Even if the prosecutor's questioning in either of these areas could be construed as misconduct, we are convinced that it did not deny Brutzman a fair trial. Any error was harmless. See United States v. Pruitt, 719 F.2d at 978; United States v. Ochoa-Sanchez, 676 F.2d at 1289.

5. Jury Instructions

Brutzman contends that the trial court erred in refusing to give an advice of counsel instruction, a missing witness instruction, and an instruction on the inferences that may be drawn from the prosecutor's failure to produce evidence. On appeal, the adequacy of jury instructions is determined by examining the instructions as a whole. United States v. Boekelman, 594 F.2d 1238, 1240 (9th...

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