852 F.2d 434 (9th Cir. 1988), 86-1352, United States v. Bonanno

Docket Nº:86-1352.
Citation:852 F.2d 434
Party Name:UNITED STATES of America, Plaintiff-Appellee, v. Joseph Charles BONANNO, Jr., Defendant-Appellant.
Case Date:July 15, 1988
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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Page 434

852 F.2d 434 (9th Cir. 1988)

UNITED STATES of America, Plaintiff-Appellee,

v.

Joseph Charles BONANNO, Jr., Defendant-Appellant.

No. 86-1352.

United States Court of Appeals, Ninth Circuit

July 15, 1988

Argued April 12, 1988.

Submitted April 26, 1988.

As Amended Aug. 8, 1988.

Page 435

[Copyrighted Material Omitted]

Page 436

Charles R. Garry and Peter A. Leeming, San Francisco, Cal., for defendant-appellant.

Nancy Simpson, Asst. U.S. Atty., Sacramento, Cal., for plaintiff-appellee.

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

Before FERGUSON and LEAVY, Circuit Judges, and REDDEN, [*] District Judge.

REDDEN, District Judge:

Joseph Charles Bonanno, Jr. appeals his conviction, following a jury trial, for mail fraud, wire fraud and conspiracy. Bonanno urges five grounds for reversal: (1) outrageous governmental conduct; (2) entrapment; (3) the district court's failure to instruct the jury on the good faith defense; (4) the district court's abuse of its discretion in limiting cross-examination of a governmental witness; and (5) insufficient evidence to support the conviction. We affirm.

Joseph Charles Bonanno, Jr. was indicted with four codefendants: Salvatore ("Bill") Vincent Bonanno, Jerome Gatto, Virgil Redmond, and Lyle Green. The indictment alleged 47 counts including charges for violations of 18 U.S.C. Sec. 1341 (mail fraud), 18 U.S.C. Sec. 1343 (wire fraud), and 18 U.S.C. Sec. 371 (conspiracy). The indictment alleged that the defendants engaged in a scheme to defraud investors through the operation of their corporation, Sunburst Industries. The scheme involved devising fraudulent purchase orders for a "United States historical poster" to be produced and marketed by the defendants. Defendants sought to obtain funds on the strength of the fraudulent purchase orders.

Redmond died prior to trial and Green and Gatto entered guilty pleas. Salvatore Bonanno was found not guilty and all further references to Bonanno are to appellant Joseph Bonanno.

FACTS

In 1981, Gatto and Redmond formed Sunburst Industries and purchased the copyright to the poster from Green. Green had already sold "well more than 100%" of his interest in the poster to other investors. During late 1981 and 1982, Sunburst obtained several purchase orders, none of which were sound. We summarize:

The Unicap order was solicited by Gatto and was sent by Peter Pravettoni, president of Unicap and friend of both Gatto and Bonanno. Pravettoni knew he could not afford the posters and cancelled the December 1981 order in February of 1982.

Page 437

The Calco order was placed by Robert Price for his company, which was in chapter 11 bankruptcy. Calco could not afford its January 1982 order, and cancelled in February 1982. Price cancelled after Mike Hines, an investigator for the Utah Attorney General's office, advised Price that Sunburst was under investigation for its various poster transactions.

The Cal West purchase order was from a company owned by Joe Livingston, but managed by Gatto. It, too, was financially strapped and soon cancelled its order.

Asset Funding, a factoring company, loaned $200,000 to Sunburst based upon the Unicap and Cal West purchase orders. The repayment check was rejected for insufficient funds. Asset Funding then seized the inventory collateral.

The Federal Bureau of Investigation then recruited informant Lou Terra to pose as a potential investor in Sunburst. Terra himself faced criminal charges for his activities in real estate development and factoring money. Terra recorded a series of telephone conversations as well as face to face meetings with Bonanno, Gatto and the other defendants. These conversations involved the possibility of Terra factoring loans for posters.

On February 8, 1982, Gatto told Terra that Sunburst had a buyer for $350,000 worth of posters, requested $810,000 in funding from him, and sent Terra the Calco purchase order. Gatto then told Terra that Sunburst was shipping on the Unicap and Cal West purchase orders. Later, Gatto admitted that the Calco purchase order had been cancelled but said it was to be replaced. Several days later, Sunburst sent Terra information on another potential purchaser whom Bonanno identified as a "huge" marketer with connections to the Southland Corporation and its 7-11 store chain (the Bear Body/7-11 order). Bonanno told Terra that Sunburst would be selling posters in 7-11 stores nationwide. Gatto also told Terra that the posters were about to be shipped and asked for a loan. He offered to guarantee repayment by assignment of the poster copyright and inventory, and told Terra that Sunburst was not "strong" enough to provide a bank guarantee. Terra later learned that no Bear Body/7-11 purchase order existed. The Bowers order, another purchase order, was discussed by Terra, Gatto and Bonanno. During the course of the taped conversations regarding Bowers, Bonanno admitted that Bowers was "not in a position to buy the paperwork," but assured Terra that...

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