U.S. v. Diggs

• Decision Date: 14 August 1981
• Docket Number: Nos. 79-1741,79-1753,s. 79-1741
• Citation: 649 F.2d 731
• Parties: 8 Fed. R. Evid. Serv. 1076 UNITED STATES of America, Plaintiff-Appellee, v. Jerry DIGGS, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Peter OLIVEREZ, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 731

649 F.2d 731

8 Fed. R. Evid. Serv. 1076

UNITED STATES of America, Plaintiff-Appellee, v. Jerry DIGGS, Defendant-Appellant.

UNITED STATES of America, Plaintiff-Appellee, v. Peter OLIVEREZ, Defendant-Appellant.

Nos. 79-1741, 79-1753.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Oct. 10, 1980.

Decided June 29, 1981.

Rehearing Denied Aug. 14, 1981.

Harold L. Perry, Oakland, Cal., for defendant-appellant Oliverez.

Jerrold M. Ladar, Stephen W. Sommerhalter, San Francisco, Cal., for defendant-appellant Diggs.

Jo-Lynne O. Lee, Asst. U. S. Atty., San Francisco, Cal., for plaintiff-appellee.

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

Before TRASK and KENNEDY, Circuit Judges, and TASHIMA, District judge. ^*

TRASK, Circuit Judge:

This is a consolidation of two criminal appeals. Appellants Diggs and Oliverez were each indicted on two counts of mail and wire fraud and one count of conspiracy to commit mail and wire fraud, 18 U.S.C. §§ 371, 1341, 1343. A jury found them guilty on all counts. Appellants make various assignments of error relating to the admissibility of certain evidence, the sufficiency of the evidence supporting the jury verdict, and the district court's denial of several defense motions. We affirm.

I

Appellants' fraudulent scheme involved the issuance of negotiable paper e. g., certificates of deposit and letters of credit by a fictitious bank owned by Diggs (the Bank). ¹ Such paper was used by Bank clients to obtain legitimate bank loans for which they otherwise did not qualify because of insufficient collateral. A client would list the worthless paper as a personal asset on his or her loan application, and the Bank would vouch for the existence and declared value of the paper. As a fee for this service, the Bank received a portion of the loan proceeds, usually ten percent. Oliverez functioned as the Bank's "exclusive agent" in the United States, for which he received forty percent of all service fees paid to the Bank by clients that he had solicited.

Three attempted loan transactions formed the basis of the indictment. In the first, a rancher needed a letter of credit to obtain a commercial loan from the First Security Bank of Idaho. The Bank agreed to supply the letter for a fee, and subsequently represented to First Security that it was financially capable of providing 100 percent loan guarantees. In the second, some importers needed security or a guarantee to obtain a loan of $100,000 from the Genossenschaft Bank of West Germany. During negotiations with the importers, Diggs and Oliverez told them that the Bank had assets of $40,000,000. The Bank eventually issued a $100,000 certificate of deposit in return for $10,000, and telexed Genossenschaft to confirm issuance of the certificate.

The last transaction involved issuance of a letter of credit for four and one-half million dollars to Grebe, an individual who required financing to develop oil fields in West Virginia. The transaction was handled primarily by Grebe's attorney, Miller. During negotiations, Oliverez told Miller that the Bank was a licensed, full-service investment bank with United States assets of $50,000,000 against only $190,000 of liabilities, in addition to substantial off-shore assets. He further told Miller that the Bank had recently undergone an independent audit which confirmed these figures. In response to inquiries from Grebe's contemplated lender, the Bank sent through the mails bogus financial statements purporting to show its multi-million dollar net worth.

A federal grand jury returned an indictment charging Diggs and Oliverez with two counts of mail fraud, two counts of wire fraud, and one count of conspiracy to commit mail and wire fraud in connection with their operation of the Bank. After a ten-day trial, a jury returned verdicts of guilty on all counts as to both defendants.

II

Diggs contends that the district court erred in denying his pre-trial motion to suppress evidence seized pursuant to a subpoena duces tecum issued to the owner of a motel. The motel was Diggs' residence during the period when the acts forming the basis of the indictment were alleged to have occurred. The court denied the motion, finding the evidence seized to have been abandoned property.

A warrantless search or seizure of abandoned property is not unreasonable under the Fourth Amendment. Abel v. United States, 362 U.S. 217, 241, 80 S.Ct. 683, 698, 4 L.Ed.2d 668 (1960); United States v. Kress, 446 F.2d 358, 361 (9th Cir. 1971). The test of abandonment is whether the alleged owner has retained a reasonable expectation of privacy in the articles alleged to have been abandoned. United States v. Haddad, 558 F.2d 968, 975, n.6 (9th Cir. 1977); United States v. Wilson, 472 F.2d 901, 903 (9th Cir.), cert. denied, 414 U.S. 868, 94 S.Ct. 176, 38 L.Ed.2d 116 (1973). A finding of abandonment is reviewed under the clearly erroneous standard. United States v. Humphrey, 549 F.2d 650, 652 (9th Cir. 1977).

Diggs argues that the finding of abandonment was erroneous. He relies for this conclusion on United States v. Botelho, 360 F.Supp. 620 (D.Haw.1973). In that case, the court held that tenants who had not been given a notice to vacate leased premises, as required by Hawaii law, retained a reasonable expectation of privacy in those premises even though they had not paid their rent. Id. at 626. Because he was never given a formal notice of eviction by the motel, Diggs argues that he cannot be found to have abandoned the property that he left there.

We do not view Botelho as persuasive authority. The test in this circuit for determining whether property is abandoned is not "whether all formal property rights have been relinquished, but whether the complaining party retains a reasonable expectation of privacy in the articles alleged to be abandoned." United States v. Wilson, supra, 472 F.2d at 902. Here there is ample evidence that Diggs had no such expectancy. Diggs left his room at the motel owing $1,000 in back rent, and was not seen or heard from after August 25, 1978. The motel terminated his tenancy after it received in the mail the key to Diggs' former room instead of the payment which Diggs had promised to send. At no time did Diggs attempt to retrieve any of the property left in the motel room. ² The trial court's conclusion that Diggs no longer had a reasonable expectation of privacy in the articles in the room on November 2, 1978, when the subpoena was issued, was not clearly erroneous. Additionally, because Diggs abandoned the motel room long before the search, he lacked standing to challenge the breadth of the subpoena. See Rakas v. Illinois, 439 U.S. 128, 143, 99 S.Ct. 421, 430, 58 L.Ed.2d 387 (1978); Katz v. United States, 389 U.S. 347, 353, 88 S.Ct. 507, 512, 19 L.Ed.2d 576 (1967); United States v. Haddad, supra. The district court's denial of Diggs' motion to suppress is, therefore, affirmed.

III

Oliverez contends that there was insufficient evidence as a matter of law for the jury to convict him of violating sections 371, 1341, and 1343. The standard of review of such a contention is whether the evidence, viewed in the light most favorable to the government, was sufficient to permit a rational conclusion by the jury that the accused was guilty beyond a reasonable doubt. United States v. Friedman, 593 F.2d 109 (9th Cir. 1978); United States v. Young, 573 F.2d 1137, 1139 (9th Cir. 1978). In making this assessment, the reviewing court should not substitute its own inferences for those of the jury. United States v. Nelson, 419 F.2d 1237, 1241 (9th Cir.), cert. denied, 396 U.S. 1060, 90 S.Ct. 751, 24 L.Ed.2d 754 (1970).

Conspiracy is established when there is an agreement to accomplish an illegal objective or to achieve a legal objective by illegal means, an overt act in furtherance of such objective, and the intent necessary to commit the underlying offense. United States v. Oropeza, 434 U.S. 1080, 98 S.Ct. 1276, 55 L.Ed.2d 788 (1978); United States v. Friedman, supra, 593 F.2d at 115. The conspiracy need not be proved by direct evidence; a common scheme or plan may be inferred from circumstantial evidence. Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 469, 86 L.Ed. 680 (1942); United States v. Turner, 528 F.2d 143 (9th Cir.), cert. denied, 429 U.S. 837, 97 S.Ct. 105, 50 L.Ed.2d 103 (1975). In order to obtain a conviction for mail fraud, the government need only prove that the defendant was a knowing participant in a fraudulent scheme that utilized the mails. United States v. Price, 623 F.2d 587 at 591-592 (9th Cir. 1980); United States v. Beecroft, 608 F.2d 753, 757 (9th Cir. 1979). Likewise, to prove a charge of wire fraud, the government need only show that the defendant knowingly participated in a scheme to defraud others by use of interstate communications facilities. United States v. Corey, 566 F.2d 429, 430 n.2 (2d Cir. 1977); United States v. Wise, 553 F.2d 1173, 1174 (8th Cir. 1977).

In the present case, the government established that there was an agreement between Oliverez and Diggs whereby Oliverez would act as the Bank's agent in the United States and receive a portion of the service fees collected by the Bank. Oliverez made false and fraudulent representations in two of the transactions charged in the indictment, ³ and there is strong evidence to support the inference that he did so knowingly. ⁴

Viewing the evidence in the light most favorable to the government, we conclude that the jury could reasonably have found that there was an agreement between Oliverez and Diggs to accomplish an illegal objective, and that Oliverez had the requisite intent to commit mail fraud. See United States v. Friedman, supra; United States v. Price, supra. We also conclude that there was sufficient evidence for the jury to find that Oliverez committed both mail and wire fraud. ⁵

IV

At trial, a witness testified to having made three deposits in the...