United States v. Chang

• Decision Date: 24 September 2020
• Docket Number: Case No. 16-cr-00047-EJD-1
• Parties: UNITED STATES OF AMERICA, Plaintiff, v. JONATHAN CHANG, Defendant.
• Court: U.S. District Court — Northern District of California

UNITED STATES OF AMERICA, Plaintiff,
v.
JONATHAN CHANG, Defendant.

Case No. 16-cr-00047-EJD-1

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION

September 24, 2020

ORDER DENYING MOTIONS FOR JUDGMENT OF ACQUITTAL AND FOR A NEW TRIAL

Re: Dkt. Nos. 224, 225

Before the Court are Defendant Jonathan Chang's two post-trial motions: his Motion for Judgment of Acquittal pursuant to Federal Rule of Criminal Procedure 29, Dkt. No. 224, and his Motion for a New Trial pursuant to Federal Rule of Criminal Procedure 33, Dkt. No. 225. This Order follows full briefing and oral argument, which was heard on August 3, 2020. For the reasons below, the Court will DENY both motions.

I. BACKGROUND

Defendant Jonathan Chang and his wife and codefendant, Grace Chang, were charged with one count of conspiracy to commit wire fraud (Count 1); four counts of wire fraud (Counts 2-5); one count of conspiracy to commit money laundering (Count 6); and three counts of money laundering (Counts 7-9). Dkt. No. 1 (Indictment). The Indictment charged Mr. and Mrs. Chang with engaging in a scheme through which they fraudulently obtained money, short-term loans, and real property from the church Home of Christ 4 ("HOC4") and from church donor Cher Wang. Id. ¶¶ 9-22. Mr. and Mrs. Chang were longtime members of HOC4; Mr. Chang was also part of the church leadership during periods of the scheme to defraud. Dkt. No. 237-1 (Tr. at 1339-40). The

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Indictment alleges, among other things, that Defendant falsely represented to Cher Wang that two organizations he established and controlled—Home of Christ Associates, LLC and Home of Christ Associates, Inc., (collectively, "HOCA")—were affiliated with HOC4 in order to obtain donations that were intended for HOC4. Indictment ¶ 10. Defendant is further alleged to have fraudulently induced HOC4 to transfer funds from its financial account to HOCA's account and to sell its church facility to HOCA. Id. ¶¶ 19-20. The scheme allegedly spanned September 2004 to January 2016 and resulted in a loss of approximately $7.4 million by Cher Wang and HOC4. Id. ¶¶ 9, 22.

This Court conducted a 13-day jury trial in August and September 2019, at the conclusion of which the jury found Jonathan Chang guilty of four counts of wire fraud (Counts 2-5) and three counts of money laundering (Counts 7-9). See Dkt. Nos. 199 (minute entry), 200 (verdict form). However, the jury did not reach a unanimous decision as to whether Jonathan Chang committed Counts 1 and 6 or as to whether Grace Chang committed any of the nine counts; accordingly, the Court declared a mistrial as to those counts. See Dkt. Nos. 199, 200. The Government subsequently dismissed without prejudice all the charges that resulted in a mistrial. Dkt. No. 221.

On February 10, 2020, Defendant Jonathan Chang filed both his Motion for a Judgment of Acquittal pursuant to Federal Rule of Criminal Procedure 29, Dkt. No. 224 ("Rule 29 Mot."), and his Motion for a New Trial pursuant to Federal Rule of Criminal Procedure 33, Dkt. No. 225 ("Rule 33 Mot."). The Motion for Judgment of Acquittal was originally timely made at trial, see Dkt. No. 204 (8/27/29 Tr. at 88); it challenges the sufficiency of the evidence to support Mr. Chang's wire fraud and money laundering charges. The Motion for a New Trial reiterates Defendant's challenge to the sufficiency of the evidence. It is also brought on the additional grounds that the Court committed evidentiary errors in admitting the testimony of the Government expert and certain exhibits seized under the search warrant; that there was a material variance between the Indictment and the proof at trial; and that the Government discussed in its closing argument certain facts not introduced at trial. The Government opposed both motions on March 4,

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2020, see Dkt. No. 237 ("Opp. re Rule 29 Mot."), Dkt. No. 238 ("Opp. re Rule 33 Mot."), and Defendant replied on March 11, 2020, see Dkt. No. 242 ("Reply re Rule 29 Mot."), Dkt. No. 243 ("Reply re Rule 33 Mot.").

In addition, on March 31, 2020, Defendant filed a supplemental brief in support of his Motion for a New Trial. Dkt. No. 246 ("Def. Supp. Br."). There, Defendant seeks a new trial on the additional ground that, pursuant to the Ninth Circuit's March 20, 2020 decision in United States v. Miller, 953 F.3d 1095 (9th Cir. 2020), the Court improperly instructed the jury on the intent to defraud element of wire fraud. The Government responded in a supplemental opposition brief filed May 1, 2020, arguing that the instructional error was harmless. Dkt. No. 252 ("Gov't Supp. Br.").

Both motions were heard via Zoom hearing on August 3, 2020, Dkt. No. 258, and are now ripe for the Court's decision.

II. MOTION FOR JUDGMENT OF ACQUITTAL

Rule 29 provides that a court "may set aside the verdict and enter an acquittal" if "the evidence is insufficient to sustain a conviction." Fed. R. Crim. P. 29(a), (c). However, "[t]he hurdle to overturn a jury's conviction based on a sufficiency of the evidence challenge is high." United States v. Rocha, 598 F.3d 1144, 1153 (9th Cir. 2010). The verdict must stand if, "after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt." United States v. Niebla-Torres, 847 F.3d 1049, 1054 (internal quotation marks and citations omitted). The Court is mindful that, under this standard, "it is not the district court's function to determine witness credibility" or otherwise substitute its view of the evidence for the jury's. United States v. Alarcon-Simi, 300 F.3d 1172, 1176 (9th Cir. 2002). Instead, all "conflicting evidence is to be resolved in favor of the jury verdict." United States v. Corona-Verbera, 509 F.3d 1105, 1117 (9th Cir. 2007). Stated differently, "the government does not need to rebut all reasonable interpretations of the evidence that would establish the defendant's innocence, or 'rule out every

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hypothesis except that of guilt beyond a reasonable doubt.'" United States v. Nevils, 598 F.3d 1158, 1164 (9th Cir. 2010) (quoting Jackson v. Virginia, 443 U.S. 307, 326 (1979)).

As noted above, Defendant Jonathan Chang moves for a judgment of acquittal under Federal Rule of Criminal Procedure 29 as to all seven counts of which he was convicted on the ground that no reasonable juror could have found guilt beyond a reasonable doubt based on the Government's evidence at trial. The Court first addresses Defendant's arguments as to the wire fraud charges (Counts 2-5) and then turns to the money laundering charges (Counts 7-9).

A. Wire Fraud Counts

Counts 2-5 of the Indictment charged that Defendant Chang committed wire fraud, in violation of 18 U.S.C. § 1343. To convict a defendant of wire fraud, the jury must find beyond a reasonable doubt: "(1) the existence of a scheme to defraud; (2) the use of wire, radio, or television to further the scheme; and (3) a specific intent to defraud." United States v. Jinian, 725 F.3d 954, 960 (9th Cir. 2013). A scheme to defraud is a scheme or plan "for obtaining money or property by means of false or fraudulent pretenses, representations, or promises." 18 U.S.C. § 1343; see United States v. Miller, 953 F.3d 1095, 1103 (9th Cir. 2020); see also Shaw v. United States, 137 S. Ct. 462, 469 (2016). "In order to prove a 'scheme to defraud,' the jury must find that the defendant employed 'material falsehoods.'" United States v. Lindsey, 850 F.3d 1009, 1013 (9th Cir. 2017) (quoting Neder v. United States, 527 U.S. 1, 20 (1999)). However, "the government is not required to prove any particular false statement was made" so long as the evidence shows that the scheme as a whole "was reasonably calculated to deceive." United States v. Woods, 335 F.3d 993, 998 (9th Cir. 2003)); accord United States v. Namvar, 498 F. App'x 749, 751 (9th Cir. 2012).

As noted above, the Indictment alleges a "scheme to defraud [Cher Wang] and HOC4 by utilizing HOCA to solicit donations and short-term loans from C.W., as well as obtain money and real property from HOC4." Indictment ¶ 9. The scheme involved material misrepresentations in that Defendant Chang allegedly led Cher Wang and her agents "to mistakenly believe that HOCA

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was acting on behalf of and for the benefit of HOC4, when in truth and fact, HOCA was in no way affiliated with HOC4 and was controlled exclusively by Jonathan and Grace Chang." Id. ¶ 11. The Government sought to establish such misrepresentation through evidence that Mr. Chang represented "that the money received by [Home of Christ] Associates, Inc., was 'exclusively' for religious, non-profit purposes," and when in truth he used the funds for personal purchases. Opp. re Rule 29 Mot. at 13-14.

With regard to the second element of wire fraud, "the use of wire . . . to further the scheme," the Indictment identifies the four wire transfers that form the basis of each Count:

Count	Date	Initiated From	To	Description
2	02/11/2011	TAIWAN	CALIFORNIA	Wire transfer in the; amount of $15,975; from C.W.'s; charitable foundation; to HOC Associates,; Inc.'s Wells Fargo; Account *7117
3	03/22/2011	TAIWAN	CALIFORNIA	Wire transfer in the; amount of $15,975; from C.W.'s; charitable foundation; to HOC Associates,; Inc.'s Wells Fargo; Account *7117
4	04/12/2011	TAIWAN	CALIFORNIA	Wire transfer in the; amount of $15,975; from C.W.'s; charitable foundation; to HOC Associates,; Inc.'s Wells Fargo; Account *7117
5	05/10/2011	TAIWAN	CALIFORNIA	Wire transfer in the; amount of $15,975; from C.W.'s; charitable foundation; to HOC Associates,; Inc.'s Wells Fargo; Account *7117

Id. ¶ 26. These transfers were four instances of regular monthly donations made by Cher Wang's

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charitable foundation from October 2004 until 2011. Id. ¶ 13. The parties stipulated that the wires were interstate wires. Dkt. No. 209 (Tr. at 956-957).

Finally, to establish Mr. Chang's specific intent to defraud, the Government sought to show that...