U.S. v. Cohen, 97-1888

• Decision Date: 19 February 1999
• Docket Number: 98-1004,No. 98-1004,No. 97-1888,97-1888
• Citation: 171 F.3d 796
• Parties: UNITED STATES of America, Appellant inv. Gerson COHEN, Appellant in
• Court: U.S. Court of Appeals — Third Circuit

Page 796

171 F.3d 796

UNITED STATES of America, Appellant in No. 97-1888 v. Gerson COHEN, Appellant in No. 98-1004

No. 97-1888, 98-1004.

United States Court of Appeals, Third Circuit.

Argued June 8, 1998.

Reargued Jan. 12, 1999.

Opinion filed Feb. 19, 1999.

Michael R. Stiles, Walter S. Batty, Jr., Amy L. Kurland (Argued), Office of the United States Attorney, Philadelphia, PA, Counsel for Appellant/Cross-Appellee United States of America.

Catherine M. Recker (Argued), Aeryn S. Fenton, Welsh & Recker, P.C., Philadelphia, PA, Counsel for Appellee/Cross-Appellant Gerson Cohen.

Before: SCIRICA, NYGAARD, and ROTH, ^* Circuit Judges.

OPINION OF THE COURT

NYGAARD, Circuit Judge.

A jury convicted Gerson Cohen of mail fraud for paying kickbacks to a grocery store's purchasing agents. Cohen challenges his conviction, claiming that the evidence was insufficient; that the Court improperly admitted evidence that his co-conspirators had pleaded guilty; and that the Court wrongfully denied judicial immunity to a defense witness. We will affirm his conviction. The Government appeals Cohen's sentence, claiming that the District Court erred in calculating the enhancement by using the dollar value of the bribes rather than the benefit conferred by the bribe, and by granting a reduction for accepting responsibility. We will vacate Cohen's sentence and remand for resentencing.

I.

Butler Foods, a wholesale meat distribution company, sells meat to supermarket chains, individual grocery stores, and restaurants. Butler Foods' salesmen made illegal cash payments to customers' meat managers to induce them to purchase from Butler Foods. The payments usually amounted to one penny per pound of meat purchased, provided that the customer bought at least 10,000 pounds a week. After customers made qualifying purchases, Larry Lipoff, part owner of Butler Foods, gave the kickback money to his salesmen, who then delivered the cash to the meat managers.

Gerson Cohen, a meat salesman for Butler Foods, participated in this illegal payment scheme. From 1992 through 1995, Cohen paid kickbacks totaling $111,548.21 to five meat managers for Thriftway Food Stores. In addition to Cohen's regular salary by corporate check, Butler Foods paid Cohen $500 per week in cash. He failed to report this income on his tax returns for three years, resulting in a tax deficiency of $23,939. He was charged with twenty-five counts of mail fraud, in violation of 18 U.S.C. § 1341, and three counts of subscribing a false tax return, in violation of 26 U.S.C. § 7206. The District Court severed the charges and convened a jury trial on mail fraud.

The jury convicted Cohen on all twenty-five counts of mail fraud. He then pleaded guilty to the three counts of income tax fraud. Applying U.S.S.G. § 2B4.1 to Cohen's participation in the kickback scheme, the District Court initially assigned a base offense level of 8, then enhanced it 6 levels by using the actual dollar amount of the kickbacks. It granted Cohen a decrease of 2 levels under U.S.S.G. § 3B1.2(b) for his minor role in the offense. The Court then considered Cohen's tax offenses and assigned a combined offense level of 14 under U.S.S.G. § 3D1.4. Finally, the Court granted Cohen a reduction of 2 levels for accepting responsibility under U.S.S.G. § 3E1.1. The District Court sentenced Cohen to twenty-eight concurrent terms of five months in prison, five months home confinement, three years supervised release, a $7500 fine, and a $1400 special assessment.

II.

A.

Cohen first argues that the Government's evidence was insufficient to prove that he used the U.S. mail. We disagree. An essential element of mail fraud is "the use of the United States mails in furtherance of the fraudulent scheme." United States v. Hannigan, 27 F.3d 890, 892 (3d Cir.1994). This element requires some competent evidence that, as a routine business practice or office custom, the type of document at issue in the case was sent through the U.S. mail. See id. at 893-94. As we indicated in Hannigan, "the prosecution need not affirmatively disprove every conceivable alternative theory as to how the specific correspondence was delivered," but "some reference to the correspondence in question is required." Id. at 892-93.

Cohen himself need not have placed the particular documents into the U.S. mail. A mailing is knowingly caused within the terms of the statute "[w]here one does an act with knowledge that the use of the mails will follow in the ordinary course of business." Pereira v. United States, 347 U.S. 1, 8-9, 74 S.Ct. 358, 363, 98 L.Ed. 435 (1954). ¹ Here, the bookkeeper for Butler Foods, who supervised the clerical workers who were responsible for generating and mailing invoices, testified extensively about the company's standard business practice for billing its customers. She testified that after the meat invoices were prepared, they were placed in envelopes, run through the postal meter, and put in a U.S. mail bin which Lipoff took to the post office in his car. She testified that Butler Foods never used any delivery method other than the U.S. mail for any of its invoices, and that the Thriftway invoices at issue in this case were handled in the normal manner.

A manager at the company testified that it was standard practice to pick up the invoices in the U.S. mail bin and drop them off at the post office, and that he himself did this on occasion. Finally, an accountant for the Thriftway stores testified that it was normal business practice for his company to receive Butler Foods' invoices through the U.S. mail. This testimony provides sufficient evidence that Butler routinely delivered its invoices through the U.S. mails.

B.

Next, Cohen argues that the District Court erred by admitting evidence that the three Thriftway meat managers whom the Government called as witnesses had pleaded guilty to receiving kickbacks from Cohen. Cohen contends that this evidence was inadmissible under Federal Rule of Evidence 403 because the risk that the jury would convict him based on his co-conspirators' guilty pleas substantially outweighed their probative value. We review the admission of such evidence only for abuse of discretion. See United States v. Gaev, 24 F.3d 473, 476 (3d Cir.1994).

Although the plea agreements of co-conspirators are not admissible to prove the defendant's guilt, they are admissible for some purposes: to rebut the inference that the defendant was unfairly singled out for prosecution, to dampen attacks on credibility, to foreclose an inference that the prosecution is hiding evidence, to explain the witness's firsthand knowledge of the defendant's misdeeds, and to elicit facts bearing on the witness's credibility. In Gaev, we held that the general principle applicable to the admission of such testimony is this: "If a co-conspirator who appears as a witness has pleaded guilty, the trier of fact should know about the plea agreement in order properly to evaluate the witness's testimony, unless that would unduly prejudice the defendant." Id.

Cohen argues that admitting the guilty pleas of the three Thriftway meat managers was an abuse of discretion because he promised not to attack their credibility on that basis. However, "[w]hile plea agreements have often been admitted in response to actual or anticipated attacks on a witness's credibility, an attack is not always necessary to justify their introduction." Id. at 477-78. Even absent any suggestion by Cohen, it would have been natural for the jury to wonder why Cohen was prosecuted but the meat managers were not. Moreover, the guilty pleas were admissible to impeach the credibility of the managers, whose testimony supported Cohen's claim that paying kickbacks was a common practice in the wholesale meat industry, and therefore, not criminal. That these same managers had entered guilty pleas for accepting the payments contradicted this testimony. The District Court concluded that admitting the guilty pleas was proper for one or all of the reasons cited in Gaev and would not be unduly prejudicial to defendant Cohen.

In any case, a proper limiting instruction will normally cure a potentially prejudicial admission of plea agreements. The District Court instructed the jury not to draw conclusions or inferences about Cohen's guilt from the fact that prosecution witnesses had pleaded guilty to similar charges. Because the Government proffered the evidence for valid purposes, and the District Court gave a sufficient limiting instruction, admitting the guilty pleas was well within the Court's discretion.

C.

Cohen also claims that the District Court erred by refusing to confer judicial immunity on a witness crucial to his defense. According to Cohen's proffer, Larry Lipoff, part owner of Butler Foods, would have testified that Harold Friedland, owner of several Thriftway stores, admitted knowing of Cohen's kickbacks to two Thriftway meat managers. That knowledge, the defense contends, would have prevented Cohen from being found guilty under the fraud statute. When Cohen attempted to call him as a defense witness, Lipoff invoked his Fifth Amendment privilege against self-incrimination. The Government refused to immunize Lipoff, who was under investigation for his role in the kickback scheme, and the District Court refused Cohen's request to confer judicial immunity on Lipoff.

A judge may confer immunity on a defense witness who otherwise refuses to testify if five conditions are met: the immunity is properly sought in the district court, the witness is available to testify, the proffered testimony is clearly exculpatory, the proffered testimony is essential to the defense, and there is no strong governmental interest against the immunity. See Government of V.I. v. Smith, 615 F.2d 964, 972-73 (3d Cir.1980). A potential prosecution of the prospective witness is a sufficient governmental interest to countervail a grant of judicial immunity. See United States v. Lowell, 649 F.2d 950, 965 ...