U.S. v. Lew, 88-1025

Citation875 F.2d 219
Decision Date12 May 1989
Docket NumberNo. 88-1025,88-1025
Parties27 Fed. R. Evid. Serv. 1371 UNITED STATES of America, Plaintiff-Appellee, v. Bill LEW, Defendant-Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)

Donald M. Re and Mona C. Soo Hoo, Donald M. Re, P.C., Los Angeles, Cal., for defendant-appellant.

Sanford Svetcov, Chief, Appellate Section, and Rodolfo M. Orjales, Asst. U.S. Atty., San Francisco, Cal., for plaintiff-appellee.

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

Before FARRIS, BOOCHEVER and HALL, Circuit Judges.

BOOCHEVER, Circuit Judge:

After a jury trial Bill Lew, an immigration attorney, was convicted of six counts of mail fraud under 18 U.S.C. section 1341 and five counts of making false statements to the United States Department of Labor (DOL) under 18 U.S.C. section 1001. He argues that under McNally v. United States, 483 U.S. 350, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987), the evidence was insufficient to support his conviction on the mail fraud counts. He also argues that the district court improperly allowed the introduction of evidence of other misconduct, limited his cross-examination of key witnesses, and allowed the introduction of testimony which resulted in improper vouching for the credibility of government witnesses.

BACKGROUND

Each of counts eight through sixteen of the superseding indictment alleged that Lew misrepresented to the DOL on a Form-750 that a company was engaged in a particular business and would employ a particular person when in fact Lew knew the company was not engaged in the business and would not legitimately employ the person. Lew was convicted on five of these counts. Each of counts one through seven of the superseding indictment alleged that, in connection with a scheme to defraud, Lew placed in the mail a DOL Form-750 on behalf of a particular alien. Lew was convicted on six of these counts.

A DOL Form-750 is an "Application for Alien Employment Certification." The form is signed by an employer and states that the employer will hire a particular alien for a particular position. Aliens seek employment certification from the DOL to facilitate obtaining permanent resident status from the Immigration and Naturalization Service (INS). To obtain DOL certification, an employer must first demonstrate that legal residents of the United States are not available to fill the position. If the DOL determines that the employer has exhausted the United States labor market, certification is approved. If DOL certification is obtained the employer can then seek permanent resident status for the alien by filing a form with the INS.

Joshua Chang referred approximately fifty alien clients to Lew. Lew would typically question the alien about his or her background. Often Chang would translate. Chang sometimes used two corporations with which he was affiliated, Hundred Deers Company and Shing Chi International, to facilitate obtaining DOL certification for Lew's clients. On other occasions a new company would be established to serve as the employer. After meeting with the aliens, Lew would prepare and mail DOL Forms-750 on behalf of the employers, tailoring the job requirements to the backgrounds of Lew's alien clients. After obtaining labor certification, Lew would have his secretary prepare immigration forms. Lew's secretary testified that sometimes Lew would tell her to put information on the forms that was different from the information the employer had provided.

Joshua Chang was indicted along with Lew. He testified at Lew's trial that he had agreed to testify truthfully and cooperate as part of a plea agreement.

DISCUSSION
I. MAIL FRAUD

Lew argues that there is no evidence that he obtained the money from his clients by defrauding them, and thus his conviction must be reversed under McNally v. United States, 483 U.S. 350, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987). The government responds that its theory of the case was that "the principal object of the mail fraud scheme was to defraud Lew's clients of the attorneys fees they paid him." The government also asserts that "the undisputed facts are that aliens paid Lew a fee for advice and assistance from him" and "they were deceived into believing that they could lawfully become permanent residents through Appellant's scheme."

The government, however, has been unable to refer us to, and we have been unable to find, any evidence in the record that Lew deceived his clients. Furthermore, a requested jury instruction that would have required a finding that Lew deceived his clients was denied. Lew argued that such an instruction was necessary because "mail fraud requires a relationship between the falsity and the collection of the money." Instead the jury was instructed that the "scheme was to make false statements to the United States for the purpose of obtaining money from defendant's clients."

In McNally the defendants were state political leaders who designated a particular company to provide insurance policies to the state. In return, this company provided monetary kickbacks to companies in which the defendants held interests. 483 U.S. at 351-54, 107 S.Ct. at 2877-78. The fraud alleged was a failure to disclose to the state the state officials' financial interests in these transactions. Such a fraud was not sufficient to sustain a conviction under the mail fraud statute, because only the government was deceived and the mail fraud statute does not protect the intangible right to good government. 483 U.S. at 358-62, 107 S.Ct. at 2881-82.

The government attempts to distinguish this case from McNally by arguing that in McNally the Court simply limited the mail fraud statute to schemes designed to obtain money or property, holding that depriving the government of its right to have its affairs conducted honestly was insufficient to constitute a violation of the mail fraud statute. The government contends that after McNally the elements of mail fraud remain unchanged, except that the intent of the scheme must be to obtain money or property. Thus, the government argues, even if misrepresentations were not made to the clients, the conviction should be sustained because Lew obtained money.

While it is true that after McNally the elements of mail fraud remain unchanged except that the intent of the scheme must be to obtain money or property, the Court made it clear that the intent must be to obtain money or property from the one who is deceived: "the words 'to defraud' commonly refer 'to wronging one in his property rights by dishonest methods or schemes,' and 'usually signify the deprivation of something of value by trick, deceit, chicane or overreaching.' " 483 U.S. at 358, 107 S.Ct. at 2880-81 (quoting Hammerschmidt v. United States, 265 U.S. 182, 188, 44 S.Ct. 511, 512, 68 L.Ed. 968 (1924)).

This case is indistinguishable from McNally. In McNally, as here, the defendants did obtain money in connection with the wrongdoing toward the government. The missing element in McNally was that the money was not received from the party deceived--the government. In United States v. Bonallo, 858 F.2d 1427 (9th Cir.1988), a bank employee was convicted of bank fraud for making automatic teller withdrawals and then altering the computer records so that the withdrawals would be charged to the accounts of other customers rather than his own. See id. at 1432. One of Bonallo's arguments on appeal was that, while it was the bank that was deceived, the intent was to obtain money from bank customers who were charged, not the bank, and thus there was no intent to defraud the bank. Id. at 1434 n. 9. The court responded that because banks reimburse the accounts of customers who are wrongly charged, Bonallo was effectively harming the bank when he altered the records. Id. Thus, Bonallo contained the element that was missing in McNally and in the case at bar: an intent to obtain money or property from the victim of the deceit. See also United States v. Mitchell, 867 F.2d 1232, 1233 (9th Cir.1989) (reversing mail fraud conviction because "[a]lthough both indictments alleged a scheme to obtain money and property, neither alleged a scheme to obtain them from the governmental body" which was deceived); United States v. Egan, 860 F.2d 904, 909 n. 2 (9th Cir.1988).

In McNally, on appeal the government asserted that misrepresentations were made to the company from whom the money was received. Here the government claims that misrepresentations were made to Lew's clients. However, there as here "there was nothing in the jury charge that required such a finding." McNally, 483 U.S. at 361, 107 S.Ct. at 2882. Because the jury instructions permitted conviction for conduct not within the reach of section 1341, the convictions on the mail fraud counts must be reversed.

II. OTHER MISCONDUCT EVIDENCE

A judge's determination to admit "other crimes" evidence is reviewed for abuse of discretion. See United States v. Feldman, 788 F.2d 544, 557 (9th Cir.1986). A district court is accorded wide discretion in making this determination. Id.; see also United States v. McKoy, 771 F.2d 1207, 1214 (9th Cir.1985) ("sound discretion").

A. Evidence Regarding False Statements to the INS

Lew contends that the district court erred in admitting evidence that he made false statements to the INS. He argues that this was "other misconduct evidence," since he was charged with making false statements to the Department of Labor, not the INS, and that its probative value was substantially outweighed by the danger of unfair prejudice. See McKoy, 771 F.2d at 1214. He argues that the evidence should have been excluded under Rules 404(b) and 403 of the Federal Rules of Evidence.

Lew based his defense in part on the argument that he was simply mistaken as to whether the jobs described on the DOL forms were really available. The evidence of false statements to the INS was relevant because it tended to establish...

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