U.S. v. Mosesian

• Decision Date: 07 February 1994
• Docket Number: 91-10197,Nos. 91-10188,s. 91-10188
• Parties: NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel. UNITED STATES of America, Plaintiff-Appellee, v. Paul Suren MOSESIAN, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee v. Lawrence Clay ROCKER, Defendant-Appellant
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1346

972 F.2d 1346

NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel.

UNITED STATES of America, Plaintiff-Appellee, v. Paul Suren MOSESIAN, Defendant-Appellant.

UNITED STATES of America, Plaintiff-Appellee v. Lawrence Clay ROCKER, Defendant-Appellant

Nos. 91-10188, 91-10197.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Feb. 13, 1992.

Decided Aug. 18, 1992.

Order Granting Rehearing and Modifying Memorandum

Oct. 4, 1994.

Order Vacating Oct. 4, 1993 Order, Denying Rehearing and

Rehearing En Banc and Modifying Memorandum Feb. 7, 1994.

Before GOODWIN, FARRIS and POOLE, Circuit Judges.

MEMORANDUM ^*

Appellants Paul Mosesian and Lawrence Rocker appeal their convictions on one count of conspiracy and four counts of mail fraud arising from a scheme to artificially inflate the value of a race horse in order to obtain increased mortality insurance proceeds. The defendants argue that (1) the district judge should have recused himself because his involvement in the case created an appearance of impropriety; (2) the conspiracy charges were barred by the statute of limitations; (3) they received inadequate assistance from their defense counsel; (4) the mail fraud prosecution was barred by the Tenth Amendment to the United States Constitution; (5) the district judge erroneously failed to provide an appropriate instruction to the jury and incorrectly admitted certain evidence; (6) the government did not meet its burden of proof as to all elements of the mail fraud charges; and (7) the district court improperly sentenced them pursuant to the United States Sentencing Guidelines. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm the defendants' convictions and sentences.

I.

This case involves the tale of an investment gone sour and the disappointed risk-taker's resort to unlawful means to regain his lost dollars. The subject of the ill-fated investment, a quarter horse born to a sire known for his show and breeding prowess, died under suspicious circumstances. The owner used a sham sales agreement and the United States mail to convert this unfortunate happenstance into a device for securing a payback of his losses from the insurers of the animal.

Classy Doc Bar was born a foal of the famous quarter horse Doc Bar and a mare known as Classy Red in the spring of 1973. Doc Bar had produced other offspring that had been quite successful on the performance circuit, earning in excess of $50 million. Classy Doc Bar, however, failed to extend the winning tradition of his ancestry, earning $19.00 in 1974, $90.10 in 1975, nothing in 1976 and 1977, $301.34 in 1978, and $140.84 in 1979. Classy Doc Bar also did not prove to be a productive stallion, siring an average of less than six foals per year during his lifetime. ¹ Owned by David and Frances Linder of Tulare, California between 1974-78 and by Francine Linder and Charles Allen between 1978-81, Classy Doc Bar was purchased by defendant Paul Mosesian in 1981 for $275,000. Mosesian launched several failed attempts between 1982-84 to improve Classy Doc Bar's breeding performance. In 1984, Mosesian decided that he could best recoup his investment by showing Classy Doc Bar. The horse earned $744.39 that year.

Mosesian's desire to find a way to improve Classy Doc Bar's profitability was apparently motivated by a rapid decline of the cutting horse market starting in 1984. Mosesian was paying back a $250,000 loan he had obtained to facilitate the purchase of the horse, and insurance premiums on the horse amounted to $20,000 per year. By the end of 1984, Mosesian had invested approximately $500,000 in Classy Doc Bar, but the horse's value had dropped to approximately $50,000. In November, 1984 Mosesian unsuccessfully attempted to increase the mortality insurance on Classy Doc Bar to a level above the then-$500,000 limit.

Shortly thereafter, in early January 1985, Mosesian informed insurance broker Ronald Dumm that he had sold the horse to defendant Lawrence Rocker for $750,000. Rocker was to pay $50,000 by February 1, 1985 and the balance over a ten year period. Mosesian instructed Dumm to obtain an additional $250,000 in insurance coverage and forwarded to him a purchase agreement and sales contract purportedly memorializing the Mosesian-Rocker transaction. Rocker applied for mortality insurance on Classy Doc Bar on January 21, 1985. Shortly thereafter, The Insurance Company of Ireland issued a policy providing additional coverage of $150,000 on the horse. Rocker also forwarded an application signed by himself and Mosesian for an additional $100,000 coverage on March 1, 1985, but Dumm never placed the application with insurance companies for approval. Thus, the total insured value of Classy Doc Bar after the purported sale to Rocker was $650,000.

The sale of Classy Doc Bar, however, was apparently no sale at all. Rocker's down payment of $50,000 was returned to Mosesian through a series of bank transfers between accounts held by the two defendants and several companies owned by them. In addition, contrary to a specific agreement in the sales contract, Rocker never paid any of the premiums on the horse insurance policy. Mosesian paid $18,000 for insurance after the alleged sales contract was executed. Rocker also failed to pay any of the costs of boarding Classy Doc Bar and made no attempt to breed or show the horse. The value of Classy Doc Bar at the time of the purported sale to Rocker was between $25,000 and $75,000.

Classy Doc Bar died at a boarding stable in Tulare, California on April 11, 1985. The circumstances surrounding the horse's death were somewhat unusual, and its cause was indeterminable. Two veterinarians testified that Classy Doc Bar's death could not have resulted from natural causes and that the lack of any indication of a struggle by the horse was inconsistent with a hypothesis that pulmonary edema was responsible. After Classy Doc Bar's death Rocker made no attempt to collect the insurance proceeds; he admitted that he acted as if the sales contract did not exist as of the time the horse died. Rocker testified before the grand jury that between one month and six weeks after Classy Doc Bar's demise, he told Mosesian that "[he] didn't want no part of this," that he would not file an insurance claim, and that Mosesian should return his money. Mosesian, however, did attempt to collect insurance proceeds on Classy Doc Bar. His efforts included the mailing of four letters.

The first letter, dated May 20, 1985, was sent to Fred Whittet, an adjuster for the INA insurance company. INA had provided a $200,000 policy on Classy Doc Bar. Mosesian informed Whittet that a sale had occurred and that he had received the down payment from Rocker and included a proof of loss form, a copy of the purported Mosesian-Rocker sales agreement, and a copy of Rocker's $50,000 down payment check. The second letter, dated May 21, 1985, was sent to Roger Mitchell, an adjuster for GAB Business Services, Inc. Mosesian requested that GAB forward the $200,000 proceeds on the INA policy to him and again enclosed photocopies of the Mosesian-Rocker agreement and the down payment check. The third letter was sent to Whittet on June 6, 1985. It stated that Mosesian believed that the company should pay on its policy based on the alleged sales price to Rocker and was accompanied by another copy of the down payment check. Whittet's response informed Mosesian that INA had ordered appraisals on Classy Doc Bar and requested the horse's breeding records, official show records, and information about the persons who had physical custody of Classy Doc Bar during Mosesian's ownership. On July 5, 1985, Mosesian advised Whittet that he did not possess the requested information and objected to the planned appraisals. The fourth letter was dated the same day and was sent to adjuster C.W. Jukes. It demanded payment of $150,000 in insurance proceeds and threatened litigation if the demand was not met within ten days. Shortly thereafter, Mosesian sued the insurance carriers; the law firm McCormick, Barstow, Sheppard, Wayte and Carruth; McCormick, Barstow partner Gordon Park; Dumm; and investigator William Graham in California state court. See Mosesian v. Park, No. 345940-1, Superior Court of California in and for the County of Fresno (filed February 13, 1989).

On March 8, 1990, a grand jury for the Eastern District of California indicted Mosesian and Rocker on four counts of mail fraud, 18 U.S.C. § 1341, and one count each of conspiracy to commit mail fraud, 18 U.S.C. § 1871, and aiding and abetting mail fraud, 18 U.S.C. § 2. Both defendants were convicted on all counts on December 20, 1990. On April 8, 1991, Mosesian was sentenced to thirty months in federal prison and to pay a $15,000 fine and Rocker was sentenced to serve twenty four months in federal prison. The defendants timely appealed.

II.

Mosesian and Rocker contend that Judge Coyle's ties to his former law firm, which was a defendant in the civil case related to Classy Doc Bar's death filed by Mosesian; his investments with his former law partners; his social relationships with colleagues in private practice; and his prior involvement in contentious litigation opposite Mosesian required recusal under 28 U.S.C. §§ 455(a), (b)(1), (b)(2), (b)(4), and (b)(5)(iii). "Disqualification ... is generally a matter confided to the conscience of the particular judge." Margoles v. Johns, 660 F.2d 291, 299 (7th Cir.1981) (quoting Weiss v. Hunna, 312 F.2d 711, 714 (2d Cir.), cert. denied, 374 U.S. 853 (1963)), cert. denied, 455 U.S. 909 (1982). Accordingly, we review a district judge's refusal to recuse himself for an abuse of discretion. E. & J. Gallo Winery v. Gallo Cattle Co., slip op. 6917, 6944 (9th Cir., June 22, 1992);...