878 F.2d 267 (9th Cir. 1989), 88-1160, United States v. Kato

Docket Nº:88-1160.
Citation:878 F.2d 267
Party Name:UNITED STATES of America, Plaintiff-Appellee, v. Yasuhiro KATO, Defendant-Appellant.
Case Date:June 20, 1989
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

Page 267

878 F.2d 267 (9th Cir. 1989)

UNITED STATES of America, Plaintiff-Appellee,


Yasuhiro KATO, Defendant-Appellant.

No. 88-1160.

United States Court of Appeals, Ninth Circuit

June 20, 1989

Argued and Submitted Jan. 10, 1989.

Brook Hart, Hart & Wolff, Honolulu, Hawaii, for defendant-appellant.

Mark J. Bennett, Asst. U.S. Atty., Honolulu, Hawaii, for plaintiff-appellee.

Appeal from the United States District Court for the District of Hawaii.

Before NORRIS, NOONAN and LEAVY, Circuit Judges.

LEAVY, Circuit Judge:

Kato appeals his convictions for conspiracy against the United States, 18 U.S.C. Sec. 371 (1982), mail fraud, 18 U.S.C. Sec. 1341 (1982), and false statement, 18 U.S.C. Sec. 1001 (1982 & Supp. IV 1986). Kato contends that his conviction for mail fraud, based on allegations that he defrauded the Federal Aviation Administration into issuing

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pilot licenses to those unqualified to receive them, is invalid under McNally v. United States, 483 U.S. 350, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987), because the pilot licenses are not property. He also contends that his conspiracy conviction must be reversed because it might have been based on the insufficient ground of an agreement to commit mail fraud by defrauding the FAA into issuing pilot licenses. Finally, Kato contends that his false statement conviction was based on an instruction improper under Pinkerton v. United States, 328 U.S. 640, 66 S.Ct. 1180, 90 L.Ed. 1489 (1946), and must be reversed. We reverse the mail fraud conviction, affirm the conspiracy and false statement convictions, and remand for resentencing.


In January 1987, Kato, Charles Rogers, and Coral Hansen were indicted for conspiring to defraud the United States and the FAA, to violate the federal mail fraud statute, and to violate the federal statute against making false statements (Count 1). The indictment also charged the defendants with the substantive offenses of mail fraud (Counts 2-10), and false statements (Counts 11-19).

The following is a summary of the allegations in the indictment. Kato ran the American Flying Academy (AFA), a flight training school in Hawaii. His objective was to bring Japanese citizens to Hawaii to obtain FAA private pilot licenses. Kato recruited Rogers, who was authorized by the FAA to administer FAA written tests taken in his presence, under strict examination conditions, in California. Rogers furnished test papers and answer sheets to Kato in Hawaii. Kato and his agents allowed some applicants to take the test, then reviewed their answers and changed them when necessary. Other students had the answer sheets partially filled out by Kato or his agents; still others simply signed their names and never saw the test papers again. Kato gave the papers to Rogers, who forwarded them to the FAA, where they were graded. Rogers, who was also authorized by the FAA to give flight tests, certified that AFA students passed oral and flight tests given in California, when in fact they had not passed or had not even taken the tests.

Kato recruited Hansen, who was authorized by the FAA to give oral and flight tests. She gave such tests without having the required evidence that the examinee had passed the written test. Hansen also passed a number of students who were unable to read, speak, or understand English, despite her responsibility under FAA regulations to determine that the examinee had facility in English. Hansen passed some students without conducting the required oral and flight tests, and she falsified the dates of flight tests on some certification applications. When Hansen certified that students had passed all examinations, Kato, Hansen, or their agents took the completed certificate applications and the written test scores to the FAA in Honolulu, who then mailed them to FAA headquarters in Oklahoma. Subsequently, the FAA issued unrestricted private pilot licenses to the students.

Before trial, Rogers and Kato moved to dismiss counts one through ten for failure to charge a crime under McNally, 107 S.Ct. 2875, which holds that the mail fraud statute applies only when a victim has been defrauded of money or property. The trial court denied the motion. Codefendants Rogers and Hansen pleaded guilty to conspiracy.

At trial Kato again raised the McNally issue by means of a motion for acquittal after the government had presented its case. The motion was denied. The jury found Kato guilty of all counts charged.

I. Mail Fraud Under McNally

Title 18 U.S.C. Sec....

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