U.S. v. Nivica

• Decision Date: 05 June 1989
• Docket Number: 86-1855,Nos. 86-1842,s. 86-1842
• Parties: 29 Fed. R. Evid. Serv. 236 UNITED STATES of America, Appellee, v. Gjon N. NIVICA, Defendant, Appellant. UNITED STATES of America, Appellee, v. Mark L. PEDLEY, a/k/a Jack Williams, Mark Wellington, Defendant, Appellant. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 1110

887 F.2d 1110

29 Fed. R. Evid. Serv. 236

UNITED STATES of America, Appellee, v. Gjon N. NIVICA, Defendant, Appellant.

UNITED STATES of America, Appellee, v. Mark L. PEDLEY, a/k/a Jack Williams, Mark Wellington,

Defendant, Appellant.

Nos. 86-1842, 86-1855.

United States Court of Appeals First Circuit.

Heard June 5, 1989.

Decided Sept. 29, 1989.

John W. Marshall, by Appointment of the Court, with whom Homans, Hamilton, Dahmen & Marshall was on brief for defendant, appellant Gjon N. Nivica.

Robert A. Costantino, by Appointment of the Court, for defendant, appellant Mark L. Pedley.

Louis M. Fischer, Dept. of Justice, with whom Wayne Budd, U.S. Atty., was on brief for the United States.

Before BREYER, REINHARDT, ^* and SELYA, Circuit Judges.

SELYA, Circuit Judge.

"Money Makes the World Go Around" was the background music to which this farflung flim-flam was set. Centered around an offshore bank, Merchant Bank & Trust Co. (MBT), the scheme circled the globe, from Boston to the Bahamas and from Mexico to the Mariana Islands. The finale was a nineteen-count indictment against six defendants, including appellants Gjon Nivica and Mark Pedley Wellington. Following their conviction on numerous counts, ¹ Nivica and Wellington appeal. We believe that the show, though ingeniously contrived, is destined to close without an encore.

I. THE PLOT

We deem a full account of the convoluted machinations described by more than thirty witnesses over twenty-two trial days supererogatory. We start instead with a decurtate outline, to be supplemented as our discussion of specific issues may necessitate. We take the evidence as the jury could permissibly have found it, in the light most flattering to the prosecution, drawing all reasonable inferences in the government's favor. United States v. Ingraham 832 F.2d 229, 230 (1st Cir.1987), cert. denied, --- U.S. ----, 108 S.Ct. 1738, 100 L.Ed.2d 202 (1988); United States v. Cintolo, 818 F.2d 980, 983 (1st Cir.), cert. denied, 484 U.S. 913, 108 S.Ct. 259, 98 L.Ed.2d 216 (1987).

On September 1, 1982, Mexico nationalized its banking system, converted all dollar deposits to Mexican pesos, and restricted the exchange of pesos for dollars. The peso underwent severe devaluation. At the knock of opportunity, a black market sprang up to facilitate the conversion of pesos into dollars on terms more favorable than Mexican law permitted. Within a few weeks, David and Mark Wellington, nee Pedley, father and son, ² launched MBT. They invested $10,000 to acquire the corporate shell from James Phillips, a lawyer practicing in the Northern Mariana Islands (where the bank was chartered). Nivica, a Massachusetts attorney, acted as MBT's general counsel and recruited the bank's first board of directors, comprising three compliant individuals who were already directors of a Bahamian bank.

Once up and running, MBT attracted custom by offering to exchange dollars or dollar-value certificates of deposit (CDs) for pesos regardless of "official" restrictions. After receiving false assurances that MBT had assets worth millions of dollars and that its CDs were backed to 135% of value, clients flocked to invest. Many were fleeced. While some of the early checks and bank drafts were paid, most of the later ones were rejected for insufficient funds. Numerous CDs issued by MBT proved worthless. The tendered pesos disappeared, sold by the promoters to a California concern. All in all, the indications are that MBT bilked its patrons of more than $6,000,000 within a few short (but costly) months.

In January 1983, the show folded. Wellington was arrested by Mexican authorities and his father went into hiding. This prosecution and appellants' convictions followed in due course, bringing us to the lavish banquet of ostensible errors prepared for our digestion on appeal. At most, eight items warrant discussion. ³ We deal first with two claims asserted by Nivica alone. We next address a quartet of arguments made by Wellington. We then examine a matched set of grievances pressed by both defendants.

II. NIVICA'S INDEPENDENT CLAIMS

Defendants do not contest the legal adequacy of the government's proof that fraud was committed. Nivica, however, does challenge whether the evidence was sufficient to establish beyond reasonable doubt that he participated knowingly in the swindle. He also questions whether the trial court impermissibly shortstopped his ability to present a defense. We address these questions separately.

A. Sufficiency of the Evidence.

In a fraud case, the government need not produce direct proof of defendant's scienter in order to convict. Circumstantial proof of criminal intent/guilty knowledge will suffice. United States v. Kaplan, 832 F.2d 676, 679 (1st Cir.1987), cert. denied, 485 U.S. 907, 108 S.Ct. 1080, 99 L.Ed.2d 239 (1988); United States v. Cincotta, 689 F.2d 238, 241 (1st Cir.), cert. denied, 459 U.S. 991, 103 S.Ct. 347, 74 L.Ed.2d 387 (1982). There is no pat formula for such proof; factual circumstances may signal fraudulent intent in ways as diverse as the manifestations of fraud itself. Here, we believe that the prosecution succeeded handsomely in proving scienter.

The government's evidence showed that Nivica occupied a central role in the scheme's execution. Many of MBT's worthless drafts were made on Nivica's own clients' trust account at Rockland Trust Company (Rockland) in Massachusetts. As each instrument was presented, Rockland solicited Nivica's written consent for disbursement. Nivica was well aware that the account lacked funds to pay MBT's aggregate drafts against it. He selectively authorized payment on a few occasions, but not on others. MBT paper (checks, bank drafts, wire transfers, and debt memos) drawn against Nivica's Rockland account totalled roughly $3,000,000; approximately two-thirds of it went unredeemed. The evidence supports the interpretation that Nivica stood at the center of the scheme, acting as the dispatcher who determined which instruments would be honored and which dishonored. On this basis, the jury could have found specific intent because defendant's involvement in the operations of the enterprise was so pervasive that his knowledge of its illegal nature became reasonably certain. See, e.g., Cincotta, 689 F.2d at 241.

Moreover, Nivica had ample notice that something was rotten in the Marianas. In addition to his knowledge of the rubber checks, a number of disgruntled persons--investors, depositors, and creditors--brought their complaints directly to him. Two Bahamian directors, Deighton Edwards and Walter Johnson, confronted Nivica about a check presented at Citibank for collection even though MBT had no funds there. The whole board eventually resigned because of inability to elicit a satisfactory explanation from Nivica anent the bad check. When Felipe Woloski, who was arranging currency swaps for MBT in Texas, informed the Wellingtons that MBT's checks were bouncing, he was told that Nivica would "straighten up" the transactions. Woloski called Nivica, who advised Woloski that he would "take care of it." Notwithstanding defendant's assurance, a number of these checks were never made good. Nivica gave equally sanguine guarantees to Victor Garcia Ventosa, an MBT customer. At time of trial, Garcia Ventosa was out of pocket some $800,000.

We need not paint the lily. These encounters were more than ample to put any reasonable person--let alone a sophisticated lawyer--on notice of the scheme. Yet, Nivica continued to participate and to offer innocent parties false assurances that the situation would be rectified. As late as the day before Wellington's arrest, Nivica told an MBT client, Ramon Sobero, "that everything was fine, that there was no problem in ... getting the money." Sobero lost $403,000. Oscar Martinez called Nivica after learning that one Wellington was in jail and the other on the lam. Nivica told him "not to worry because within a few days [an MBT officer] was going to arrive from Switzerland and that he would ... fix the whole problem." That, of course, never happened; Martinez lost $39,000. Guilty knowledge may be inferred where instances of fraud are repeatedly brought to a defendant's attention without prompting alteration of his facilitative conduct. See, e.g., United States v. Krowen, 809 F.2d 144, 147-48 (1st Cir.1987). In the face of unambiguous notice, Nivica's words and deeds bespoke complicity. The jury was entitled to interpret them in this vein.

There was also evidence showing that Nivica misrepresented and actively concealed material facts. He hid the true identities of "Johnson" and "Williams" while telling varying stories about their relationship to one another and their roles in MBT's operation. He assured Phillips, falsely, that he owned MBT's stock in his own right and was not operating as a "front man." ⁴ There was proof that Nivica knew Johnson and Williams--the true principals behind MBT--to be David and Mark Wellington; that he was aware they had been indicted on fraud charges in California; and that he knew they were fugitives from the indictment. The record is replete with evidence that Nivica strove mightily to conceal and/or dilute the force of this information. For example, he told Alan Peterson, an officer of Rockland, that MBT's owners and officers were associated with the Rockefeller family, and downplayed the Wellingtons' involvement (styling "Johnson" and "Williams" as MBT's "field representatives" in Mexico). During a meeting with Peterson and others, Nivica gave the audience extensive (and flattering) details about MBT's directors--neglecting to mention that, five days before, he had accepted the resignations of the entire board. His attempts to hide the truth, or cast it in a false light, were competent proof of guilty knowledge. See, e.g., id. at 147.

Nivica made numerous other misrepresentations. He repeatedly denied that MBT was doing business (illegally) in the United States, although many...