United States v. Takhalov

Decision Date11 July 2016
Docket NumberNo. 13-12385,13-12385
PartiesUnited States of America, Plaintiff–Appellee, v. Albert Takhalov, Isaac Feldman, Stanislav Pavlenko, Defendants–Appellants.
CourtU.S. Court of Appeals — Eleventh Circuit

Kathleen Mary Salyer, John C. Shipley, Assistant U.S. Attorney, Wifredo A. Ferrer, Richard Daniel Gregorie, Daren Grove, Emily M. Smachetti, Michael Eric Thakur, U.S. Attorney's Office, Miami, FL, for PlaintiffAppellee.

Howard M. Srebnick, Black Srebnick Kornspan & Stumpf, PA, John E. Bergendahl, Law Offices of John E. Bergendahl, Richard Carroll Klugh, Jr., Law Offices of Richard C. Klugh, Richard Docobo, Richard Docobo, PA, Miami, FL, Marcia Jean Silvers, Marcia J. Silvers, PA, Coral Gables, FL, Myles H. Malman, Malman Malman & Rosenthal, Fort Lauderdale, FL, for DefendantsAppellants.

Before ED CARNES, Chief Judge, MARTIN, Circuit Judge, and THAPAR,* District Judge.

THAPAR, District Judge:

The wire-fraud statute, 18 U.S.C. § 1343

does not enact as federal law the Ninth Commandment given to Moses on Sinai.1 For § 1343 forbids only schemes to defraud , not schemes to do other wicked things, e.g. , schemes to lie, trick, or otherwise deceive. The difference, of course, is that deceiving does not always involve harming another person; defrauding does. That a defendant merely “induce[d] [the victim] to enter into [a] transaction” that he otherwise would have avoided is therefore “insufficient” to show wire fraud. See

United States v. Starr , 816 F.2d 94, 98 (2d Cir. 1987).

Here, the defendants feared that the jury might convict them of wire fraud based on “fraudulent inducements” alone. Hence they asked the district court to give the jurors the following instruction: that they must acquit if they found that the defendants had tricked the victims into entering a transaction but nevertheless gave the victims exactly what they asked for and charged them exactly what they agreed to pay. The district court refused to give that instruction, and the jury ultimately convicted the defendants of wire fraud and other crimes, most of which were predicated on the wire-fraud convictions. The question presented in this appeal is whether the district court abused its discretion when it refused to give the requested instruction.

I.
A.

During the defendants' trial, the parties disagreed about much of what happened in the clubs the defendants owned. But they did agree on one thing: that the defendants had tricked men to come into the defendants' clubs. The government presented evidence that the defendants had hired Eastern European women—known as “Bar Girls” or “B-girls”—to pose as tourists, locate visiting businessmen, and lure them into the defendants' bars and nightclubs. [DE 1121 at 39]. And the defendants did not seriously dispute that evidence: they admitted that they knew the B-girls concealed their relationship with the clubs to persuade the men to go to the clubs. Indeed, the defendants testified that they believed this scheme was a perfectly legitimate business model. [Id. at 59–60, 99].

The parties' stories diverged, however, as to what happened after the men entered the clubs. In the government's story, the defendants' scheme began with the B-Girls' lies but went far beyond that. Once inside the clubs, employees would pour vodka in the men's beer to get them drunker, misrepresent the prices of drinks, hide menus, cover up prices, and even forge the men's signatures on credit-card receipts. [Id. at 40–42].

The defendants' story, on the other hand, began and ended with the B-girls. Yes, they admitted they knew the B-girls were posing as tourists to get the men to come to the clubs with them. From there, though, they proceeded to mount what one might call the Casablanca defense, arguing that they were “shocked, shocked” to learn that fraud was taking place within their South-Beach versions of Rick's Café Américain .2 As for the swindling going on inside the clubs—the lying about prices, the forging of signatures, and so on—the defendants said that they knew nothing about it.

Instead, the defendants testified, they were merely investors in the clubs—or in charge of the credit-card transactions—but were not involved in the day-to-day workings of the clubs. [See id. at 60, 69–70, 86, 103]. In the defendants' story, none of these allegedly swindled men were truly victims: they knowingly entered the clubs, bought bottles of liquor, and drank them with their female companions. Thus, in the defendants' view, these men got what they paid for—nothing more, nothing less. [See id. at 62, 100–102].

B.

In addition to the factual dispute about what happened after the men came into the clubs, the parties also disagreed about the legal significance of the lies that the B-Girls used to get the men to come into the clubs in the first place. In the government's view, the jury could convict the defendants of wire fraud based on those lies alone. [See DE 1121 at 39–40; R. 1154 at 63]. The defendants argued just the opposite—that “just because they have [used promoters to persuade men to come back to the respective establishments] does not constitute fraud with regard to the wire fraud or conspiracy to commit these frauds.” [DE 1152 at 285].

At the close of evidence, the defendants asked for a jury instruction to support this theory. Specifically, they asked the court to instruct the jury that [f]ailure to disclose the financial arrangement between the B-girls and the Bar, in and of itself, is not sufficient to convict a defendant of any offense[.] [DE 921 at 1]. The court denied that theory-of-the-defense instruction, however, because the court did not believe it was “an accurate statement of the law.” [DE 1152 at 285, 289].

During closing argument, the government argued exactly what the defendants had expected it would argue: that the B-girls' concealment of their bar-affiliation to the men were material misrepresentations sufficient to constitute fraud. [DE 1154 at 63 (“The first lie was by the girls to get them to come to the clubs by not telling them that they work for the clubs and got a percentage and this was material. This was important because, as even the defendant's own witness told you, had they known that these women worked for the clubs they likely wouldn't have even gone.”) ]. When defense counsel stood up to make their closing arguments, they did so in front of a jury that had just heard that the B-girls' lies were material and had never received an instruction to the contrary. Perhaps for this reason, defense counsel focused their efforts elsewhere, arguing that there was not enough evidence to connect the defendants to the other fraudulent activities at the clubs. Specifically, the defendants argued that they were not involved in the alleged fraud that took place within the clubs, [id. at 147–48, 183, 191, 214–15], and that they did not believe they were doing anything illegal. [Id. at 147–48, 170–71, 201–02]. Following closing arguments, the jury convicted the defendants on several counts, including multiple counts of wire fraud and money laundering. [D.E. 954; D.E. 956; D.E. 957]. This appeal followed.

II.

We review for an abuse of discretion a district court's refusal to give a requested jury instruction. United States v. Dohan , 508 F.3d 989, 993 (11th Cir. 2007)

.

A.

To show that the district court abused its discretion when it refused to give a proposed jury instruction, a defendant must first show that the requested instruction was a correct statement of the law.

United States v. Eckhardt , 466 F.3d 938, 947–48 (11th Cir. 2006)

. We review the legal correctness of a [requested] jury instruction de novo.” Fid. Interior Const., Inc. v. Se. Carpenters Reg'l Council of United Bhd. of Carpenters & Joiners of Am ., 675 F.3d 1250, 1259 (11th Cir. 2012).

1.

The law in question here is the wire-fraud statute, which makes criminal any “scheme or artifice to defraud.”3 18 U.S.C. § 1343

. The statute itself, however, does not explain what constitutes such a scheme or artifice. United States v. Bradley , 644 F.3d 1213, 1240 (11th Cir. 2011). Thus, the meaning of the phrase “scheme to defraud” has been “judicially defined.” United States v. Pendergraft , 297 F.3d 1198, 1208 (11th Cir. 2002). And that definition is a broad one, “broad[er] ... than the common law definition of fraud.” Id. It is a “reflection of moral uprightness, of fundamental honesty, fair play and right dealing in the general and business life of members of society.” Gregory v. United States , 253 F.2d 104, 109 (5th Cir. 1958).

[D]espite its breadth,” however, “the judicial definition” of a “scheme to defraud” has some limits. Bradley , 644 F.3d at 1240

. The most important limit is obvious from the statute itself: the scheme must be a scheme to defraud rather than to do something other than defraud. For Congress could have made criminal any “scheme” simpliciter , but chose not to do so. The first question presented in this case, then, is what the word “defraud” means.

To answer that question, we turn first to the dictionaries. For [t]he ordinary-meaning rule is the most fundamental semantic rule of interpretation.” Antonin Scalia & Bryan A. Garner, Reading Law 69 (2012). And “to determine the common usage or ordinary meaning of a term, [we] often turn to dictionary definitions for guidance.” CBS Inc. v. PrimeTime 24 Joint Venture , 245 F.3d 1217, 1223 (11th Cir. 2001)

; see also

Stein v. Paradigm Mirasol, LLC , 586 F.3d 849, 854 (11th Cir. 2009) (noting that [a] term that is undefined in a statute carries its ordinary meaning” and turning first to the dictionary to determine that meaning). Black's defines the word “defraud” as [t]o cause injury or loss to (a person or organization) by deceit.” Black's Law Dictionary 516 (10th ed. 2014.). Webster's says much the same. Webster's Third New International Dictionary 593 (2002) (defining the word “defraud” as “to take or withhold from (one) some possession, right, or interest by calculated...

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